Oregon SB 951 Targets MSO Control in Medical Practices, Complicates PE Strategies

Key takeaways

• SB 951 significantly limits MSO ownership and control in medical practices.
• SB 951 imposes staggered compliance deadlines, with key provisions taking effect in 2026 and 2029.
• The law voids certain noncompete agreements restricting medical and nursing practice.

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On June 9, 2025, Senate Bill 951 (“SB 951”) was signed into law by Oregon’s Governor. SB 951 imposes new and significant restrictions on certain common arrangements in private equity-backed management service organization (“MSO”) relationships with medical entities. This adds to Oregon’s already robust corporate practice of medicine framework. It also adds a new level of complexity to those MSOs seeking to do business in Oregon.

Generally, SB 951 imposes restrictions on MSOs and their owners, managers, officers, and employees, including prohibiting them from, among other things: (i) owning or controlling majority interests in a professional medical entity with which the MSO contracts; (ii) serving as directors, officers, employees, or independent contractors of the professional medical entity; (iii) controlling or restricting or agreeing to do those things in connection with the sale or transfer of ownership interests in professional medical entities; and (iv) exercising administrative, business, or clinical operations control over a professional medical entity.

SB 951 explicitly permits an MSO to provide services that do not constitute de facto control over administrative, business, and clinical operations in a manner that does not affect clinical decision-making or the quality of medical care. Further leasing or taking assignment assets in an arms-length transaction with a professional entity is permitted, as is providing support, advice, and consultation on business-related matters.

SB 951 applies only to certain medical providers and does not include dental providers in its purview. Certain medical providers are exempt as well, including hospitals, behavioral health facilities, and other enumerated excepted entity types.

SB 951 also voids certain noncompetition agreements that restrict the practice of medicine and nursing.

There are staggered effective dates for the new restrictions, seemingly to permit time for existing arrangements to be reformulated if necessary. Accordingly, for MSOs and professional medical entities in existence before June 9, 2025, and not sold or transferred after that, the effective date for compliance is January 1, 2029. For all others, the effective date is January 1, 2026.

Finally, it should be noted that circumstances remain somewhat fluid, as House Bill 3410 (“HB 3410) has been passed by the Oregon legislature and is currently under consideration by Oregon’s Governor. HB 3410 specifically modifies certain of SB 951’s restrictions, including the restriction on common individuals serving as directors, officers, or employees of a professional medical entity and the MSO with which it contracts.

If doing or planning to do healthcare business in Oregon, care should be taken to ensure that proposed arrangements are structured to comply with the new legal and regulatory landscape.

If you have any questions about the information in this alert, please contact Joe Dragovic, Dean Gould, or your Dykema relationship attorney.