Oregon Management Services Agreement Guide: Writing an Agreement Around SB 951's List of Prohibited Controls
Oregon is the strictest state for MSO agreements. SB 951 voids terms that implement prohibited control and gives practices and licensees a private right of action with punitive damages and fees.
Key Highlights
- An MSO and its owners, managers and employees may not own or vote practice shares, restrict their transfer, issue stock, receive dividends or hold de facto control over hiring, staffing, coding, clinical standards, billing policy, prices, payer contracts or advertising names.
- An MSO may provide support and advice on accounting, budgeting, personnel management, real estate, facilities and legal compliance if none of it amounts to de facto control.
- Contract provisions that implement a prohibited act are void, with private remedies including punitive damages and attorney fees.
- SB 951 voids non-competes and non-disclosure and non-disparagement agreements between a licensee and an MSO, with exceptions.
How to Price the Management Fee
SB 951 sets no fee cap, but because it voids provisions that implement prohibited control, a fee design that effectively sets physician pay, staffing or prices raises risk, which is an inference from the text. We use a fixed fee for defined administrative services.
What the Practice Must Keep
The practice keeps ultimate decision-making over hiring, firing, schedules and compensation of licensees, clinical staffing levels and visit length, diagnostic coding, clinical standards, patient billing and collection policies, advertising under a non-practice name, prices and payer and non-employee contracts. A practice may relinquish or transfer control of operations only through a shareholder agreement among, and for the benefit of, the majority physician shareholders.
Terms to Avoid
Avoid any term giving the MSO equity, votes or proxies, control over share transfers except the listed triggers, stock issuance, dividends, financing a majority acquisition, or de facto control of the functions above. A practice that functions as an MSO or owns a majority of its MSO is exempt as we read the statute, and counsel should confirm any reliance on an exemption. A telemedicine entity with no Oregon patient-care location is exempt only from the ownership and proxy prohibitions.
Term, Records and Departing Clinicians
Non-competes between a licensee and an MSO or hospital are void, with exceptions such as a licensee who owns 1.5% or more, a documented recruitment investment of at least 20% of annual salary with limits of three to five years, or a licensee who does not provide direct clinical care. Non-disclosure and non-disparagement agreements between a licensee and an MSO or hospital are void except after departure or in a negotiated settlement.
Filings, Notices and Watch Items
The rules apply since January 1, 2026 to MSOs and practices organized on or after June 9, 2025, and from January 1, 2029 to existing ones. A federal case against a hospital system settled in 2026 before any ruling, so no court has interpreted the law. Health Care Market Oversight covers transactions where one party has averaged $25 million of revenue and another at least $10 million, so a small cash-pay practice is very unlikely to reach it.
Drafting Checklist
- Fee: fixed for defined administrative services.
- No equity: no ownership, votes or proxies for the MSO.
- Functions: hiring, staffing, coding, standards, billing, prices, payer contracts and ad names stay with the practice.
- Transfers: no MSO control except the listed triggers.
- Advisory only: the MSO advises and performs, it does not decide.
- Non-competes and NDAs: void with the MSO.
How We Draft It
Patients pay the physician-owned practice, the practice pays the management company a fixed monthly fee under the agreement, and the management company pays MedGrid a fixed monthly retainer for consulting. The management company never practices medicine, and the agreement never moves a clinical decision to it. Our template follows the same flat-fee design in every state, with the state-specific limits below layered on top.
Disclaimer
This article is general educational information, not legal advice. Management agreement rules change and differ by state, and this summary draws on our published state guide, parts of which rest on secondary sources, so have health care counsel in the state review any agreement before you sign.
MedGrid MSO provides management services to independently owned practices; it does not practise medicine and does not direct clinical decisions. Requirements vary by state and by service, and change over time — nothing on this page is legal or medical advice. Talk to us or your own counsel before making a structural decision for your clinic.