Last year, Oregon State Rep. Ben Bowman introduced HB 4130, which sought to curtail the level of control and influence that management service organizations (MSOs) can have over licensed healthcare providers. That bill encountered resistance, stalled, and ultimately failed to make it to the governor’s desk for signature. This year, Rep. Bowman has returned with SB 951, which contains changes he hopes will enable the bill to avoid the fate of HB 4130. If passed into law, the new version will arguably make Oregon one of the most restrictive states in the nation for MSOs that seek to own and operate medical practices.

SB 951 is premised on the simple idea that lay people should not be telling physicians and other licensed healthcare professionals how to practice medicine. But the bill is complex, since it attempts to close many of the avenues that MSOs and other non-physician-led entities have developed over the years to maintain their toehold in the healthcare marketplace. In particular, the bill focuses on MSOs that enter into written contracts to provide payroll, human resources, billing and collections, and other administrative and business services to professional medical entities. Bowman and his colleagues recognize that MSOs play a useful role in the Oregon medical arena, because they enable physicians and other healthcare providers to focus less time on running their businesses and more time on practicing medicine. But the proposal’s advocates say the pendulum has swung too far. They contend that MSO-inspired practice models occasionally force healthcare providers to choose between doing the right thing for their patients and doing the right thing for their own pocketbooks.

SB 951 attempts to reset the power balance between MSOs and medical practices. Most notably, it prohibits MSOs and their agents from owning or controlling any practice with which they have an active management service agreement. The legislation also bars MSOs from participating in “hiring, terminating, evaluating the performance of, setting work schedules or compensation for, or otherwise specifying the terms of employment” of any licensed healthcare professionals employed by the practices they manage. In addition, SB 951 strictly limits the circumstances under which non-compete, non-disclosure, and non-disparagement agreements between licensed healthcare professionals and third parties may be enforced. These restrictions are designed to limit the harm that can result when providers are contractually barred from working in a particular community or expressing concerns about overreaching corporate managers.

Opponents argue that SB 951 unfairly targets and maligns MSOs. They point out that MSOs and similar companies can infuse needed capital, expertise, and resources into Oregon’s healthcare system, enabling medical practices to adopt state-of-the-art technologies and business methods they would be unable to afford or implement on their own. They also express discomfort with the distinction that SB 951 draws between MSOs and hospitals, the latter of which are exempted from the most restrictive provisions of the bill. Opponents of SB 951 caution that passage of the bill might have the unintended effect of reducing patient access and healthcare quality, while raising prices. As a case in point, they note that a financially struggling medical practice already has limited options for keeping its doors open—the most straightforward being acquisition by a hospital or a layinvestor. SB 951 may effectively eliminate the latter solution.

SB 951 is scheduled for a Senate work session on March 25. This meeting will give legislators yet another chance to debate the extent to which the government should rein in market forces that have led to increased consolidation and corporatization of the healthcare industry. The outcomes of these discussions could be very consequential for Oregon’s healthcare providers and their patients, especially given the daunting financial challenges that many medical practices and hospitals are facing. While many Oregonians are leery of the prospect of their local providers being run by MSOs and other profit-seeking corporations, the alternative may be having those providers go out of business altogether.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact an attorney.