Oregon Governor Tina Kotek has signed SB 951—which, as we noted on June 4, 2025, disrupts historically accepted corporate practice of medicine (CPOM) structures by banning arrangements that are inherent to friendly PC models and placing limitations on Management Service Organizations (MSOs).

SB 951 is now Oregon law, with staggered effective dates. 

The new law will be the strictest in the nation when it comes to limiting health care ownership and influence, and it seems certain to affect corporate investment in the state’s medical sector.

Yet in an unusual twist, the Oregon legislature is now poised to pass related legislation, HB 3410A, that would amend portions of SB 951 in the course of the same legislative session.

Introduced in January, HB 3410 originally ordered the Oregon Health Authority to merely “study health care” and to submit a report, with possible legislative recommendations, to the committees of the state Legislative Assembly related to health, by September 15, 2026. By early June, this directive had gained new life as HB 3410A, as a means to amend SB 951. It had become apparent that the latter would soon become law, and necessary fixes had already been identified.

HB 3410A

HB 3410A, as amended, would make changes relating to the SB 951 prohibition that an MSO or its shareholders, directors, members, managers, officers, or employees may not own or control a majority of shares in a professional medical entity (PME)—individually, or in combination with the MSO or any other shareholder, director, member, manager, officer, or employee or contractor (adding contractor to SB 951).

HB 3410A would remove SB 951’s prohibition that an MSO or its shareholders, directors, members, managers, officers, or employees may not serve as a director of officer of, be an employee of, with, or receive compensation from, an MSO to manage a PME with which the MSO has contracted.

As currently written, HB 3410A clarifies that a PME may enter into an agreement with a shareholder of a PME and an MSO to control or restrict a transfer or sale of the PME’s stock, interest, or assets, under certain conditions. Regarding the conditions under which PMEs may enter into such agreements, a PME’s breach of contract for management services with an MSO is expanded to include a shareholder or member’s breach of contract for management services with the PME or an MSO on behalf of the PME. HB 3410A would further allow individuals who provide services for the PME to be a shareholder, director, or manager of an MSO if they do no own more than 10 percent of shares in the PME and are compensated at the market rate for services provided.

HB 3410A would also change the criteria in SB 951 establishing when a noncompetition agreement between a medical licensee and another is valid and enforceable. This includes if the ownership interest of a medical licensee in a PME is 1.5 percent or more of the entire ownership or membership interest—a change from 10 percent in SB 951. Such an agreement would also be valid under HB 3410A if it is with a PME that provides the medical licensee with documentation of the PME’s “recruitment investment” (changing SB 951’s “protectable interest”) and has a term that is not longer than:

• Five (5) years from the date when the medical licensee was hired, if the licensee is directly providing medical services, health care services, or clinical care in a health professional shortage area; or
• Three (3) years, if not.

Takeaways

Even before the enactment of SB 951, Oregon law required that in a professional corporation organized for the purpose of practicing medicine, licensed physicians must hold the majority of each class of shares entitled to vote; must constitute a majority of directors; and must make up most officer positions. MSOs typically adapt by agreeing to manage nonclinical operations in exchange for an equity stake or ownership in a professional corporation (PC) owned by physicians—in a friendly PC model that complies with CPOM laws while allowing physicians to focus on non-administrative tasks.

As passed by the Oregon legislature and signed by the governor, SB 951 aims to amend Oregon’s CPOM law to prevent those who are not physicians from both running the company and controlling physicians who make medical decisions. The new law does not ban MSOs yet limits their ability to control physician decision-making. Those investing or planning to invest in health care entities in Oregon will now need to proceed carefully to ensure compliance with SB 951—whether amended or not by HB 3410A—and stay alert as to changes in other states that may enact similar legislation.

SB 951 is a complex piece of legislation which almost certainly will have unanticipated impacts as it is implemented. As mentioned in our last post, litigation is expected.