Oregon SB 951: New Restrictions on the Corporate Practice of Medicine in Oregon

On June 9, 2025, Oregon Gov. Kotek signed Senate Bill 951 into law, imposing significant new limitations on corporate involvement in medical practices. This legislation reinforces and expands Oregon's existing restrictions on the corporate practice of medicine, as well as the state's long-standing bar against non-licensed individuals and entities exercising influence or control over medical decision-making.

The new law is consistent with a broader national trend toward restricting the involvement of management services organizations and private equity in healthcare. The restrictions in SB 951 are among the most stringent in the country and will have significant implications for non-licensed entities entering into ownership and contractual arrangements with licensed medical professionals and professional medical entities in Oregon.

Overview of SB 951

Under the new law, a management services organization (MSO)[1] and its owners, directors, officers, or employees (MSO Agents) will be prohibited from participating in several types of arrangements, decisions, and other activities with medical groups.[2] Until the passage of SB 951, many of these activities and arrangements between MSOs and medical groups were generally permissible.

Below is a summary of the new limitations on MSOs, the exceptions to those limitations, the available tools for private enforcement, and the timing for the implementation of SB 951.

Ownership and Control

With respect to any medical group that has a contract for management services with an MSO, neither the MSO nor any of its MSO Agents may:

• Own a majority of the equity in the medical group; or
• Control a majority of the equity in the medical group.

Additionally, MSO Agents may not serve contemporaneously as a director, officer, employee, or independent contractor of both the MSO and the medical group the MSO manages.

These limitations on MSO ownership and control do not apply when either:

• The medical group engages in the practice of telemedicine[3] and if such medical group does not have a physical location in the State of Oregon where patients receive services; or
• The MSO is a Coordinated Care Organization under the Oregon Medicaid program prior to January 1, 2026.[4]

Equity and Asset Control

An MSO and its MSO Agents may not control the equity or assets of a medical group entity by:

• Voting through proxy or other power the equity of a medical group that the MSO manages;[5]
• Entering into an agreement to control or restrict the sale or transfer of the equity, interest, or assets of a medical group (unless an exception applies, as described below); or
• Issuing equity or causing a medical group (or its subsidiary or affiliate) to issue equity.

This category of limitations under SB 951 includes several significant exceptions. Specifically, a management services agreement may allow an MSO to control or restrict the sale or transfer of the medical group's equity, interest, or assets under the following specific circumstances:

• The suspension or revocation of the professional license of an owner of the medical group's equity who is also a licensed physician, nurse practitioner, or physician assistant (Licensed Owner);
• The disqualification of a Licensed Owner from owning equity in the medical group;
• The exclusion, debarment, or suspension of a Licensed Owner from a federal healthcare program (or an investigation of the same);
• The indictment of a Licensed Owner for a felony or another crime that involves fraud or moral turpitude;
• If the medical group breaches its contract for management services with the MSO; or
• The Licensed Owner's death, disability, or permanent incapacity.

Financial Acts

MSOs and MSO Agents may not make or control the following financial determinations for a medical group:

• Paying dividends (or equivalent) from the medical group;
• Acquiring the majority of the equity of a medical group; or
• Financing the acquisition of the majority of the equity of a medical group.

Management/Clinical Decisions

MSO and MSO Agents may not exercise "de facto control" over administrative, business, or clinical operations of a medical group in a manner that affects the medical group's clinical decision-making or the nature or quality of medical care that the medical group delivers. Specifically, MSOs and MSO Agents cannot have final decision-making authority over the following medical group decisions:

• Hiring or terminating physicians (MDs and DOs), nurse practitioners, or physician assistants/associates ("Licensees");
• Setting work schedules for Licensees;
• Determining compensation for Licensees;
• Specifying the terms of employment of Licensees;
• Setting clinical staffing levels for Licensees;
• Specifying the amount of time a Licensee may spend with a patient;
• Diagnostic coding decisions;
• Clinical standards or policies;
• Billing and collection policies;
• Advertising a medical group's services under a different name;
• Setting rates for Licensees' services; and
• Negotiating, executing, performing, enforcing, or terminating the medical group's payor contracts.

Notwithstanding the enumerated list of decisions in SB 951 that an MSO or MSO Agent may not control, the law expressly permits MSOs and MSO Agents to:

• Assist the medical group to carry out the decisions listed above;[6]
• Purchase, lease or possess medical group assets;[7]
• Provide support, advice and consultation to the medical group on its business operations (e.g., accounting, budgeting, personnel management, real estate and facilities management, and compliance with applicable laws, rules, and regulations); or
• Advise regarding the medical group's payor contracts, including setting criteria for reimbursement rates.

Exceptions

SB 951 recognizes broad exceptions to the limitations described in Sections 1-4 above for several types of individuals and organizations. Some of the notable exceptions apply to MSOs that are also authorized to operate in Oregon as:

• Hospitals;
• Long-term care facilities;
• Residential care facilities;
• Licensed opioid treatment program;
• Licensed medical providers that primarily provide office-based or medication-assisted treatment services, a provider of withdrawal management services or a sobering center;
• Medical groups that themselves act as an MSO or own a majority interest in an MSO; or
• MSOs that contract to provide management services to PACE organizations, mental health or substance use disorder crisis line providers, or certain Indian health program, Tribal Behavioral Health or Native Connections program providers.

Enforcement

Contracts that violate a prohibition under SB 951 will be deemed void and unenforceable. Licensees and medical groups that suffer damages from an MSO's violation of SB 951 will be entitled to bring claims for actual damages, an injunction against the acts that violate the law, or other equitable relief. Punitive damages and attorney's fees may also be awarded.

Additional Covenants

SB 951 also imposes limitations on the ability of MSOs to enter into agreements with Licensees that contain nondisclosure, non-disparagement, and other restrictive covenants such as non-compete restrictions. The law restricts entering into a noncompetition agreement with a Licensee unless certain criteria are met. For example, the agreement may be permitted if it is imposed by a medical group that does not have an agreement with an MSO, is entered into with the Licensee who holds an ownership interest of more than 10% of entity's outstanding interests, or the restrictions do not last beyond the sale of a Licensee's interest in the entity. The law invalidates any nondisclosure or nondisparagement agreement between a Licensee and an MSO or hospital that does meet the specified criteria, except in certain circumstances.

Timing

SB 951 was passed pursuant to an emergency declaration "for the immediate preservation of the public peace, health and safety." Accordingly, certain provisions of the bill take effect immediately upon its passage. However, SB 951 also provides a transition period for currently existing MSOs and medical groups to adapt to the new requirements.

The following table summarizes the effective dates of the key provisions of SB 951 described above.

Looking Ahead

This legislation represents one of the strictest interpretations of the corporate practice of medicine doctrine, limiting the ways in which professional medical practices engage with MSOs.

This legislation reflects a broader national trend of states increasing oversight on healthcare consolidation backed by private equity. As Oregon leads the way with this strict approach, other states may follow, potentially reshaping the landscape of healthcare management in medical practice.