Oregon Revises Corporate Practice of Medicine Law: Implementing More Restrictions on Corporate Involvement in Medical Practices

On June 9, 2025, Oregon Democratic Gov. Tina Kotek signed into law SB 951, which implements additional restrictions on the operations of management services organizations (MSOs) that furnish administrative services to medical practices in Oregon. Under Oregon’s existing corporate practice of medicine (CPOM) law, originally established in 1947, medical practices must be majority-owned by state-licensed physicians. This bill revises the CPOM law in a number of important ways.

First, in addition to preventing corporations from holding a majority ownership interest in medical practices, employees, shareholders, directors, officers, members, and managers of MSOs are now also restricted from holding such ownership interests.

Second, MSOs are specifically restricted from certain activities deemed to allow for “de facto” control over a medical entity’s decision-making, including

• “Hiring or terminating, setting work schedules or compensation for, or otherwise specifying terms of employment of medical licensees;
• Setting clinical staffing levels, or specifying the period of time a medical licensee may see a patient, for any location that serves patients;
• Making diagnostic coding decisions;
• Setting clinical standards or policies;
• Setting policies for patient, client or customer billing and collection;
• Advertising a professional medical entity’s services under the name of an entity that is not a professional medical entity;
• Setting the prices, rates or amounts the professional medical entity charges for a medical licensee’s services; or
• Negotiating, executing, performing, enforcing or terminating contracts with third-party payors or persons that are not employees of the professional medical entity."

Leaving such decisions to physicians was already considered a best practice in many states, but MSOs operating in Oregon should carefully review their arrangements and revise them as needed to ensure proper delegation of responsibilities.

Finally, MSOs are prohibited from entering into stock transfer restriction agreements with the owners of medical practices. These agreements are a common tool of MSOs to ensure alignment between the parties. With the passage of this bill, MSOs in Oregon will have to turn to alternative options already used in other states in which stock transfer restriction agreement usage is considered questionable.

The new bill does not extend these restrictions to entities, such as hospitals, behavioral healthcare providers, and telemedicine providers, or to certain individuals, such as individuals who provide healthcare services on behalf of a professional entity and own less than 10% interest in the professional medical entity, among others. The MSO restrictions apply on January 1, 2026, to entities organized and transfers of ownership after the effective date of the bill. For entities that existed before the effective date, there is a three-year adjustment period, and the MSO restrictions do not apply until January 1, 2029.

In addition to the MSO restrictions described above, SB 951 implements other measures to restrict corporate control over medical practices.

• The bill prohibits noncompetition agreements that restrict the practice of medicine or nursing in some circumstances.
• It further prohibits the creation of and renders void non-disclosure and non-disparagement agreements between a medical licensee and an MSO or a hospital under certain circumstances.

These restrictions apply immediately to contracts entered into or renewed after the bill’s passage.

Some healthcare investors may already be structuring their arrangements in a manner that complies with the new bill, whereas others may need to make changes to be in compliance. If you have questions about the implications of Oregon’s new bill, please contact the Sidley lawyer with whom you usually work or one of our team members listed below. Sidley will also continue to closely monitor developments in CPOM legislation in other states.