What MSOs and DSOs Need to Know About Oregon SB 951

A Landmark Shift in Corporate Practice of Medicine and MSO Structuring

The Oregon legislature has taken a definitive step toward redefining the boundaries between clinical control and corporate involvement in medical and dental practices. With the enactment of Senate Bill 951 (SB 951) on June 9, 2025, the state has effectively redrawn the lines governing who may own, control, or influence healthcare entities.

Oregon’s passage of SB 951 closed a loop within Or. Rev. Stat. §58.375, frequently utilized by Management Service Organizations (MSOs) and Dental Service Organizations (DSOs). This makes it arguably the most stringent Corporate Practice of Medicine (CPOM) regulation in the nation. This legislation not only impacts Oregon's existing statutory framework, but also signals a potential turning point for regulatory reform across the country. We’ll explain how in this article.

What does SB 951 do?

SB 951 is a new Oregon law that prohibits MSOs from owning or controlling medical and dental practices, placing sharp limits on administrative influence and reshaping the CPOM landscape. Here’s how. 

Traditionally, when a PE-backed MSO wished to acquire or partner with a medical or dental practice in Oregon, the structure was relatively straightforward. The MSO would enter into a Management Services Agreement (MSA) with the practice, as well as take a minority stake in the practice itself. 

However, with the eleventh-hour signature of Governor Tina Kotek, Oregon’s passage of SB 951 eliminated the ability of the MSO to own a piece of the practice. In fact, it even took things a step further by putting guardrails around the administrative and managerial duties that an MSO can offer to a clinical practice.

How do stakeholders feel about the passage of SB 951?

SB 951 introduces sweeping changes to how MSOs can interact with licensed practices, including banning ownership, restricting management control, and invalidating common restrictive agreements.

Proponents of SB 951 state that it aims to protect physician autonomy, insulate clinical decisions from profit-driven interference, and reaffirm the principle that only licensed professionals should direct patient care.

Opponents, however, take a drastically different view. They believe that this change is a massive overreach of the state government, and will have an adverse impact on much needed investment into healthcare infrastructure in the state.As one of our national healthcare clients stated after the passage of SB 951: 

“This bill changes the conversation. We’re now forced to rethink the structure of every deal in Oregon, which will likely have the net effect of reduced practice values. That’s just not fair for providers who have worked so hard to build a scalable and sellable business.”

Key Takeaways from SB 951 and MSOs

• SB 951 eliminates MSO ownership in Oregon clinical entities and places strict limits on administrative influence, significantly altering the landscape for private equity and MSO-backed platforms.

• MSOs can no longer enter into non-compete, non-disclosure, or non-disparagement agreements with licensed providers, an aggressive restriction not seen in other states.

• Clinicians affiliated with an MSO cannot serve on the board or own shares in the clinical entity, requiring a clean separation between MSO control and clinical governance.

• Transfer restrictions are now limited, meaning MSOs can no longer block a provider from selling their ownership interest in the professional entity, disrupting many existing exit strategies.

• This law may serve as a national model, and stakeholders in CPOM or hybrid jurisdictions should proactively assess their compliance and restructuring needs.

  
  

How will SB 951 roll out? 

SB 951 includes a phased implementation schedule to allow time for compliance:

• June 9, 2025 (Immediately upon enactment): The bill is in effect for policy and enforcement purposes.

• January 1, 2026: All new MSO arrangements and newly formed professional entities must comply.

• January 1, 2029: All existing arrangements must be brought into compliance.

This provides a limited window for practices, MSOs, and investors to revisit and revise their current structures without facing legal exposure.

Interaction with Or. Rev. Stat. §58.375

As noted above, O.R.S. §58.375 previously permitted non-licensed individuals or entities to own equity in a professional corporation (PC) or professional limited liability company (PLLC), provided that licensed professionals retained majority ownership. This structure allowed many MSOs to adopt minority ownership or contractual control models while maintaining CPOM compliance. 

SB 951 functionally overrides this statute by both redefining "control" to include broad operational and administrative influence and prohibiting any ownership interest in a clinical entity by the MSO if it also provides management services.While §58.375 technically remains on the books, its practical effect has been neutralized. In short, SB 951 closes the door on hybrid ownership/control models that have been widely used in MSO transactions.

Does this impact your MSO? Alternative structures to consider.

In light of SB 951, MSOs and their stakeholders must immediately begin considering how to shift their models to fall into compliance. These are considerations for MSOs:

• Separate ownership and services completely. The professional entity must be 100% owned and controlled by licensed professionals, while the MSO may provide non-clinical support pursuant to an MSA. Note that even licensed stakeholders cannot be equity holders in both the MSO and the clinical practice.

• Use fixed-fee or fair market value compensation for management services, rather than profit-sharing or revenue-based models that may imply control.

• Clearly delineate responsibilities in MSO agreements to ensure all clinical decisions remain exclusively with licensed providers.

We also anticipate a possible increase in two other models:

• Franchise-like support models, where the MSO licenses branding and back-office systems without exercising operational control.

• Tech-enabled platforms that offer software tools (not management services), creating separation between functionality and governance.

A First-of-Its-Kind Law with National Implications

SB 951 is the first law of its kind to explicitly regulate the Corporate Practice of Medicine with such precision and scope. It effectively cuts off MSO ownership pathways that have long been used in Oregon and may inspire copycat legislation in other states. For MSOs and investors operating nationally, this means planning for structural compliance in Oregon could offer a strategic blueprint for adapting elsewhere.

In most states that strictly prohibit unlicensed ownership in any clinical entity, SB 951 may not signal a practical change. But in jurisdictions where partial non-professional ownership is allowed, this legislation reshapes the legal and operational risk landscape.With the healthcare regulatory environment evolving rapidly, we expect other states to take notice and possibly follow suit.

Next Steps and Action Items for MSOs and DSOs

At Marti Law Group, we’ve helped structure MSO arrangements in nearly every CPOM and hybrid jurisdiction across the country. Given this landmark shift, we strongly advise reaching out to legal counsel as soon as possible.

For those in Oregon, ask your attorney to:

• Review your existing MSO agreements and corporate structure to decide on a path forward.

• Avoid any ownership or influence mechanisms that could be construed as "control".

• Reassess deal models in all jurisdictions with partial-ownership allowances.

For those outside of Oregon:

• Analyze if your state has proposed legislation that could follow suit (many do).

• Conduct a thorough review of your model with your legal counsel.

If you operate or invest in healthcare practices in Oregon or similar jurisdictions, contact our team for a comprehensive structure review or planning session tailored to your organization’s goals.