Oregon Practice Structure Guide: What SB 951 Allows an MSO to Do and What It Bars

Entity and Ownership

Oregon physicians practice through a professional corporation under the Oregon Professional Corporation Act, and the 2025 compilation renumbered the physician section to ORS 58.500, so older alerts citing ORS 58.375 mean the same provision. Articles are filed with the Secretary of State naming the professional service, and the name must include professional corporation, P.C. or Prof. Corp. Oregon has no P.A. or S.C. entity. Oregon-licensed physicians must hold a majority of each class of voting shares and be a majority of the directors, all officers other than the secretary and treasurer must be Oregon-licensed physicians, and the Oregon Medical Board may require more than a majority.

SB 951 added that directors and officers can be removed only by a majority vote of the physician shareholders or directors, with listed for-cause exceptions, and that a practice may relinquish or transfer control of administrative, business or clinical operations only through a shareholder agreement among, and for the benefit of, the majority physician shareholders. We did not find an Oregon Medical Board rule that actually requires professional corporation registration.

What SB 951 Bars an MSO From Doing

SB 951 was signed June 9, 2025 and amended by House Bill 3410 in July 2025. It defines an MSO as an entity that provides management services to a professional medical entity under a written agreement for monetary compensation, and it need not be private-equity backed. Management services are payroll, human resources, screening, employee relations or other administrative or business services that are not the practice of medicine. The MSO and its owners, directors, managers, officers, employees and contractors may not:

• Own or vote: own or control a majority of the practice's shares, exercise a proxy or vote the shares, or acquire or finance the acquisition of a majority.
• Control transfers: control or agree to control or restrict a sale or transfer of the practice's shares, interests or assets, except on listed triggers such as license loss, federal exclusion, a felony or fraud indictment, a breach of the management contract, or death or incapacity.
• Issue stock or take dividends: issue practice stock or pay dividends from practice shares.
• Hold de facto control: exercise de facto control over administrative, business or clinical operations in a way that affects clinical decision-making or care quality, which includes ultimate decision-making authority 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 rates, and payer and non-employee contracts.

What an MSO May Still Do and the Exemptions

The statute lets an MSO provide support, advice and consultation on accounting, budgeting, personnel management, real estate and facilities and legal compliance, advise on payer, value-based and vendor contracts, and buy or lease practice assets in an arm's-length deal, so long as none of it amounts to de facto control. It exempts a practice that functions as an MSO or owns a majority of the MSO's shares, which we read as the textual basis for a physician-owned practice that owns its own management company. An individual practitioner holding 10% or less and paid at market rate is exempt. A route for physicians who serve as directors of both entities requires that all entities were organized and under agreements before January 1, 2024, so it is closed to new structures. A telemedicine entity with no Oregon patient-care location is exempt only from the ownership and proxy prohibitions, and the control, transfer, stock and dividend prohibitions still apply. Have Oregon counsel confirm any reliance on an exemption.

Effective Dates and Enforcement

The rules first applied on January 1, 2026 to MSOs and practices organized in Oregon on or after June 9, 2025, and apply on January 1, 2029 to entities that existed before June 9, 2025. There is no grandfathering for a new formation. We could not confirm how the text treats out-of-state entities.

Contract provisions that implement a prohibited act are void, and a medical licensee or practice has a private right of action against the MSO and its owners, managers and employees for damages, injunction, punitive damages and attorney fees. Several law-firm alerts describe attorney general civil penalties, but we did not find that language in the enacted text we read, and an Oregon Department of Justice attorney reportedly said the final form gave it no enforcement capability. Agency enforcement is unsettled. A federal case in 2026 against a hospital system, a staffing company and a friendly-PC entity settled before any ruling, so no court has interpreted the law, and we found no Oregon Medical Board rule or FAQ implementing it.

Non-Competes, Disclosure Agreements and Market Oversight

SB 951 voids non-competes between a licensee and an MSO or hospital, 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. It also voids non-disclosure and non-disparagement agreements between a licensee and an MSO or hospital, except after departure or in a negotiated settlement.

Oregon's Health Care Market Oversight program reviews transactions where one party has averaged $25 million or more in revenue over three years and another has at least $10 million, so a small cash-pay practice and management company is very unlikely to reach it. The program also covers forming an MSO as prescribed by rule, which we did not read.

Med Spa Rules

Oregon has no med spa statute or facility license we could find. A 2015 Oregon Medical Board statement says patients of a med spa are the medical director's patients with the same standard of care, that diagnosis and treatment-plan development cannot be delegated to anyone not licensed to exercise independent medical judgment, and that only the director may order, own, possess or access scheduled medications. It states no on-site presence requirement.

How We Structure It

As a rule we set up a professional corporation owned by the licensed physician, with no exceptions for what looks like a more flexible state. Patients pay the physician-owned practice. The practice pays the management company a fixed monthly fee under a written management services agreement. The management company pays MedGrid a fixed monthly retainer for consulting. The MSO never practices medicine, and the physician makes every clinical decision. In Oregon the management company is drafted as an advisory and administrative vendor with no authority over any item SB 951 lists, and the practice keeps ultimate decision-making over all of them.

Disclaimer

This article is general educational information, not legal advice. Entity and corporate practice rules change, and parts of this summary rest on secondary sources, so have health care counsel in the state confirm the structure before you form or sign anything.