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Oregon Enacts Legislation Limiting Role of Private Equity in Healthcare

What the new act and its changes in corporate practice of medicine law mean for ASCs

BY STEPHEN ABRESCH | JUNE 18, 2025

Oregon Governor Tina Kotek signed SB 951 into law on June 9, enacting legislation that has implications for the ownership of healthcare facilities in the state and employment agreements for physicians.

As enacted, SB 951 introduces noteworthy new provisions to state law regarding management services organizations (MSO), professional medical entities (PME) and noncompetition agreements. MSOs, defined as entities that provide management services to PMEs, including services such as payroll, human resources, employment screening and employment relations, as well as their directors, shareholders, members, managers, officers and employees are prohibited from specified forms of ownership or control over a PME. These include: owning or controlling a majority of shares in a PME; receiving compensation to manage or direct the management of a PME; controlling or restricting the sale or transfer of a PME’s shares, interests or assets; issuing shares of stock or causing the issuance of shares of stock in a PME or in a subsidiary or in an affiliate of a PME; paying dividends from shares or an ownership interest in a PME; acquiring or financing the acquisition of the majority of shares in a PME; or exercising de facto control over administrative, business or clinical operations of a PME in a manner that affects the professional medical entity’s clinical decision-making or the nature or quality of medical care that the PME delivers.

Under these provisions, “de facto control” includes having ultimate decision-making authority over matters such as hiring and termination, setting clinical staffing levels, making diagnostic coding decisions, setting the prices the PME charges for a medical licensee’s services, and negotiating, executing, performing, enforcing or terminating contracts with third-party payers or persons who are not employees of the PME. The requirements become effective on January 1, 2026, for MSOs and PMEs incorporated after the bill’s effective date (June 9, 2025) and on January 1, 2029, for MSOs and PMEs that existed prior to the bill’s effective date.

The provisions pertaining to noncompete agreements make any agreements that restrict the practice of medicine or the practice of nursing void and unenforceable, unless the medical licensee subject to the agreement is a shareholder or member of the other party to the agreement, or if the agreement is with a PME that provides the medical licensee with documentation of the PME’s “protectable interest” and is valid for only three years after the medical licensee’s date of hire.

Background

The ideas behind SB 951 took shape well before the start of Oregon’s 2025 legislative session. HB 4130, introduced by Representative Ben Bowman, Oregon House Majority Leader, and considered during the state’s 2024 legislative session, contained many similar provisions to those found in SB 951. Despite passing the House, the measure succumbed to stakeholder concerns and the limitations of Oregon’s short, one-month-long budget session.

In both years, proponents of the measures pointed to recent purchases of primary care providers in the state by Amazon and Optum as evidence that corporate entities and private equity were becoming too deeply involved in healthcare. In his press release announcing the introduction of HB 4130 in 2024, Representative Bowman framed the issue as a matter of whether doctors or corporate executives would be in charge of patient care, and struck a similar note in his press release announcing the passage of SB 951, saying, “With the passage of this bill, every Oregonian will know that decisions in exam rooms are being made by doctors, not corporate executives.”

Opponents noted the important role MSOs play in healthcare and the unintended consequences that could stem from restricting certain ownership models. The Oregon Ambulatory Surgery Center Association (OASCA) noted in its testimony that there is no dispute that physicians need to be at the center of decision-making for patient care but highlighted the impact the legislation could have on ASCs: potentially chilling the ability of centers to attract and retain senior physicians, driving management companies and their resources out of the state, and leaving physician-owned clinics with only one alternative for sale and investment—hospitals. OASCA and other organizations like the ERISA Industry Committee and the Chamber of Progress also pointed to the ways MSOs support physicians by handling nonmedical operations like scheduling and bookkeeping, and the new burdens SB 951 could place on physicians by denying them these partnerships.

Even before SB 951 was signed into law, opponents of the legislation were successful in convincing its legislative backers that fixes were necessary to avoid the most negative impacts of the bill. HB 3410, introduced in January as a study bill, was amended on June 6 with language amending the provisions of SB 951, at the time unsigned. Supported by Representative Bowman and still actively being negotiated, current language would remove prohibitions on persons affiliated with MSOs from managing a PME the MSO is contracted with as well as make changes to exceptions surrounding ownership interests in MSOs and PMEs and the control of transfer or sales of stock, interests or assets.

It is still unclear what Oregon’s new approach to MSOs will ultimately look like, and other outlets have already noted that the complexity of SB 951 creates a high likelihood of unintended consequences. For ASCs, the concerns are captured by remarks made by OASCA president Ryan Grimm after SB 951 was signed into law: “We agree with Rep. Bowman’s intent to keep physicians in the driver’s seat in providing care for patients but have differing opinions on the approach. Our concern with this bill is that it potentially restricts investment opportunities and innovative ownership structures that could drive down prices for patients and the healthcare system as a whole.”

Write Stephen Abresch at sabresch@ascassociation.org with any questions.