Oregon tightens control on physician practice ownership, indirectly impacting office-based surgery

Editor's Note

Oregon has enacted the nation’s strictest law yet to curb corporate control of physician practices, a move that could indirectly affect office-based surgery (OBS) centers structured as medical clinics. As reported by Modern Healthcare on June 13, the new law reinforces the state’s corporate practice of medicine doctrine by explicitly requiring that licensed physicians retain operational control—not just paper ownership—of their practices. Companies such as private equity firms and tech-driven conglomerates can no longer manage core clinical decisions through proxy arrangements.

The law mandates that physicians hold at least 51% ownership of any practice and prohibits non-physician entities from influencing care-related operations, even if they technically manage back-office functions. Lawmakers targeted loopholes that allowed corporations to install “captive” or “friendly” physicians in name only, while centralizing real authority in management service organizations.

While the statute is primarily framed around clinics and medical offices, it may extend to certain office-based surgical practices, especially those acquired by private equity or organized under MSO models. If those centers are structured as physician practices, they now fall under stricter scrutiny regarding who exercises clinical control.

Oregon House Majority Leader Ben Bowman (D), who championed the bill, said the goal is to reverse rising costs, declining quality, and physician burnout linked to consolidation. “Any decision that impacts patients must be made by a physician,” Bowman stated in the article. He emphasized that this law defines “control” explicitly, limiting how much authority can be outsourced to non-clinicians.

The law also includes broader provisions, such as restricting non-compete clauses and non-disparagement agreements, and dovetails with Oregon’s existing healthcare market oversight program. That program reviews all mergers and acquisitions for their impact on cost, access, and quality.

While critics argue the policy may drive more doctors to sell to hospital systems, state officials note such transactions are already subject to oversight. Bowman indicated that other sectors, such as dental or hospital-based care, may come under similar regulation in the future. The article positions Oregon as a bellwether, suggesting that other states may follow as the corporatization of healthcare intensifies.