Oregon Senate Passes New Bill to Limit Corporate Influence on Independent Medical Practices

The Oregon Senate voted Tuesday to pass a bill to address the increasing number of independent medical practices that partner with private equity firms and national healthcare conglomerates to circumvent limitations on corporate control in medicine.

Senate Bill 951, which sets out regulations over corporate ownership of doctor’s offices and medical clinics, passed by 21-8. The bill seeks to underpin Oregon’s prohibitions on corporate control of medical practices and clinics, but opponents argued that the legislation would weaken already struggling medical practices.

Legally, licensed physicians must hold a majority stake of at least 51% in medical practices, but there has been an increasing trend for independent medical practices to use a loophole to partner with national healthcare brands and private equity firms by using management service organizations (MSOs) to contract with clinics to provide financial, administrative and technological support.

A physician with no real decision-making power over patient care is then named as the owner of a medical practice on paper.

The bill doesn’t ban independent practices from partnering with MSOs, but third-party management companies would be barred from making any final calls on patient care, staffing levels, and appointment lengths.

The bill also closes the gaps in restrictive employment contracts that lock doctors into corporate-run clinics and deals with noncompete and nondisclosure agreements.

SB 951 would be phased in, giving medical practices three years to comply. The measure now heads to the House for approval.