The landscape for Management Services Organizations (MSOs) in Oregon has shifted. With the signing of Senate Bill 951 (SB 951) and the subsequent amendments in House Bill 3410 (HB 3410), Oregon now boasts the strictest Corporate Practice of Medicine (CPOM) regulations in the United States.
Whether you are a private equity investor, an MSO executive, or a healthcare provider, understanding these compliance timelines and operational restrictions is critical to avoiding "void and unenforceable" contracts.
What is an MSO and Why is Oregon Changing the Rules?
A Management Services Organization (MSO) provides non-clinical administrative support (billing, HR, staffing) to medical practices. Historically, this allowed non-physicians to invest in healthcare while leaving clinical decisions to licensed professionals—a essential workaround in states with strict CPOM doctrines.
However, Oregon lawmakers enacted SB 951 to prevent "de facto" corporate control over clinical care, effectively closing loopholes used by some aggressive "friendly PC" structures.
Key Compliance Deadlines
The effective dates for these new restrictions depend on when your MSO was established:
| MSO Status | Effective Date |
| Formed on or after June 9, 2025 | January 1, 2026 |
| Formed prior to June 9, 2025 | January 1, 2029 |
| New/Renewed Contracts | Effective Immediately |
4 Major Restrictions Under SB 951 & HB 3410
1. Ownership and Governance Limitations
MSOs and their affiliates (including shareholders, directors, and even independent contractors under HB 3410) are now prohibited from:
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Owning or controlling a majority stake in a managed medical practice.
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Exercising a proxy to vote on shares of the medical practice.
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Issuing stock or restricting the transfer of equity (with narrow exceptions for contract breaches).
2. The "De Facto" Control Ban
The law identifies specific administrative tasks that are now considered illegal corporate interference. MSOs may no longer control:
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Hiring/Firing: Setting procedures for clinical staff.
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Compensation: Determining work schedules or pay rates.
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Clinical Standards: Setting diagnostic coding or clinical policies.
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Financials: Setting prices for medical services or negotiating third-party payor contracts.
3. Restrictive Covenants (Noncompetes)
SB 951 and HB 3410 significantly weaken an MSO's ability to retain talent through contracts.
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Void Agreements: Most noncompete and nondisclosure agreements that restrict the practice of medicine are now void.
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Recruitment Exceptions: Noncompetes may only be enforceable if the entity provides "recruitment investment" documentation. These are capped at 3 years (or 5 years in designated shortage areas).
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Ownership Threshold: A physician must own at least 1.5% of the entity for a noncompete to be potentially valid.
4. Expansion via HB 3410
HB 3410 refined SB 951 by allowing minor exceptions. For instance, clinicians providing services may hold up to 10% ownership in an MSO, provided they are compensated at fair market value and maintain professional independence.
Steps for Compliance: What Should You Do Now?
The potential impact of these laws is nationwide, as other states often look to Oregon as a regulatory bellwether.
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Audit Existing MSAs: Review your Management Services Agreements for "de facto" control triggers.
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Review Governance: Ensure no MSO officers are overstepping into board-level roles within the medical practice.
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Update Restrictive Covenants: Transition away from broad noncompetes that may now be unenforceable under Oregon law.
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Prepare for 2026/2029: If you are an existing MSO, use the "glide path" to restructure your equity and voting rights before the 2029 deadline.
Contact Bochner PLLC for a comprehensive compliance consultation to ensure your Oregon operations remain secure, enforceable, and ahead of the curve.
