Oregon Governor signed Senate Bill 951 into law on June 9, 2025, strengthening restrictions on how managed service organizations can control medical practices and imposing new limitations on non-compete agreements for medical professionals.
Oregon Senate Bill 951 officially became law on June 9, 2025, targeting the corporate practice of medicine through restrictions on managed service organizations (MSOs). The legislation prohibits MSOs from owning majority shares in medical entities, serving as directors or officers, controlling share transfers, or exercising de facto control over administrative, business, or clinical operations.
SB 951 specifically restricts MSOs from determining medical entities' employee compensation, work schedules, hiring procedures, clinical policies, service pricing, and diagnostic coding decisions. The law also limits physicians' ability to enter agreements that control equity transfers in medical entities.
The legislation imposes governance restrictions preventing non-licensed professionals from removing practice directors and establishes new covenant restrictions that invalidate most noncompete and nondisclosure agreements between medical professionals and MSOs, with limited exceptions for ownership interests exceeding 10% equity.
SB 951 creates specific exemptions for hospitals, PACE organizations, certain behavioral health entities, and out-of-state telemedicine companies. MSOs can continue providing support services that don't impact clinical decision-making, including payroll, human resources, employment screening, purchasing, accounting, budgeting, personnel management, real estate management, and payer negotiations.
The law targets MSO-PC structuring arrangements where physicians participate on both sides of the business relationship. Practice governance restrictions prevent external parties from removing practice directors except in cases involving director misconduct.
Covenant restrictions invalidate non-disclosure or non-disparagement agreements between medical professionals and MSOs, hospitals, or hospital-affiliated clinics, except in limited circumstances including negotiated settlements.
Oregon House Majority Leader Ben Bowman, who sponsored SB 951, said "We're the first people to confront the fact that private equity firms and corporations are controlling physician behavior in this country."
State Rep. Cyrus Javadi, a Republican co-sponsor, emphasized the law's intent: "We're not banning investment, we're banning interference."
Robert Frolichstein, president of the American Academy of Emergency Medicine, testified that "In emergency medicine, the need for these controls is heightened as we encounter vulnerable patients who may not have adequate health-care coverage."
Ellie Booth, a public policy manager for One Medical (owned by Amazon), countered that the bill would "result in higher costs to patients, increase administrative burdens and have a negative impact on patient-centered decision-making."
Bowman clarified the law's purpose: "We were intentional about designing a solution that preserves the ability of clinicians to accept outside financial support to fund innovation, expansion or other things. What we are regulating is the 'how' of the clinic, the decision-making within the clinical setting."
SB 951 implements a three-phase timeline:
Managed Service Organizations (MSOs) provide administrative and business support services to medical practices while allowing physicians to maintain clinical autonomy. The corporate practice of medicine doctrine traditionally prohibits non-licensed entities from owning or controlling medical practices to preserve physician independence in clinical decision-making. MSO-PC structures have emerged as arrangements where MSOs provide business services while physicians retain ownership through professional corporations, but these relationships have raised concerns about maintaining true physician control over medical practice decisions.
SB 951 represents one of the most comprehensive state-level restrictions on private equity involvement in healthcare, directly challenging the growing trend of MSO-backed consolidation in medical practices. The legislation forces existing MSO-physician arrangements to restructure within four years, potentially disrupting established business models and financing structures across Oregon's healthcare sector.
The law's covenant restrictions eliminate a key mechanism MSOs use to retain physicians and protect business investments, potentially reducing private equity interest in Oregon medical practices. For multi-state healthcare platforms and telehealth providers, Oregon's stringent requirements create compliance complexity that may influence broader operational strategies and state-by-state structuring decisions.
Medical entities and MSOs operating in Oregon must immediately review their contractual arrangements and begin planning structural changes to meet the 2029 compliance deadline. The legislation signals a potential model for other states considering similar restrictions on corporate involvement in medical practice, making Oregon a testing ground for preserving physician autonomy against private equity consolidation trends.
Private equity firms may reassess or limit their involvement due to new restrictions that reduce control over medical operations.
Noncompliance could lead to regulatory penalties, contract nullification, or challenges to business licenses.
The invalidation of noncompete agreements may give physicians more flexibility but could discourage MSOs from long-term investments in talent.