Healthcare Private Equity Soon to Face Significant Hurdles in Oregon

With Oregon Governor Tina Kotek’s signing of Senate Bill 951 (“OR SB 951”) yesterday (June 9, 2025),¹ Oregon has now passed the highest state legislative barrier in the country on private equity investment in healthcare. As described below, this development could have critical significance to the regulatory landscape of corporate practice of medicine (CPOM) across the nation—well outside of the state of Oregon.

What Is Changing?

OR SB 951’s enactment means that overlapping ownership and control between management services organizations (“MSOs”) and the medical practices they manage will be significantly limited. MSOs and their agents will be prohibited from managing, directing the management of, or participating in managing professional medical entities with which the MSOs have contracts for management services. MSOs’ ability to enter into equity transfer restriction agreements with medical practices to control or restrict transfers or sales of medical practices will also be limited to few circumstances, such as the revocation of practitioners’ licenses.

In addition, OR SB 951 prohibits entry into (and voids existing) restrictive covenants between MSOs and physicians. It also prohibits retaliation against medical professionals for violating the void agreements.

Who Is Affected?

Private equity investors and large corporate owners—that is, frequent users of MSO structures to manage medical practices—are the primary focus of OR SB 951. With OR SB 951’s passage, private equity investors and strategics should work with healthcare counsel to analyze their holdings in Oregon to ensure compliance with the law.

When Is SB 951 Effective?

OR SB 951 becomes effective for new market entrants January 1, 2026, and has a three-year period (until January 2029) to bring existing arrangements into compliance.

How SB 951 Could Be a Harbinger of What Is to Come

In the wake of highly visible health system bankruptcies (including some that were private-equity backed), certain states with already robust CPOM restrictions have sought to limit private equity investment in healthcare (see our recent Dechert OnPoint regarding the proliferation of CPOM statutes around the country).

Oregon’s new law may be a canary in the coal mine for the passage of similar laws in other states. As Oregon House Majority Leader Ben Bowman (D-Tigard) noted, “We’re at an inflection point in this country when it comes to the corporatization of healthcare.”² That inflection point may serve to hamper private equity’s current operating model in the space if laws like OR SB 951 become more numerous.

The Dechert Healthcare Team has issued this Flash Alert, with a more detailed alert to follow shortly, to provide strategic counsel for stakeholders like private equity sponsors and other investors navigating the new healthcare regulatory environment.

The authors wish to thank summer associate George Yang for his contributions to this OnPoint.