This is not legal advice. Foundry PC is not a law firm. Work with licensed healthcare counsel on your specific structure.
If you launched a digital health company before 2025, the MSO-PC structure you were handed probably came from a template that had barely changed in a decade. A physician owns the professional corporation on paper. The MSO holds a stock transfer restriction agreement that lets it swap that physician out at will. The MSO controls hiring, billing, payer contracts, and the bank account. Everyone signs, and nobody thinks about it again.
That template is now a liability in several states. Here's a plain-language summary of what moved.
Oregon: the friendly PC model is effectively banned for new arrangements
Oregon's SB 951 (amended by HB 3410) is the strictest CPOM law in the country. For MSOs and professional medical entities formed after June 9, 2025, the restrictions took effect January 1, 2026. Pre-existing arrangements have until January 1, 2029.
The law prohibits an MSO, its owners, and its officers from owning or controlling a majority of the professional entity it manages. It restricts overlapping ownership and governance between the two entities, limits the stock transfer arrangements that let an MSO replace the physician owner, and voids many physician noncompetes. There is a partial carve-out for telemedicine entities with no physical Oregon location where patients are seen, but it does not reach every restriction.
Practical takeaway: if Oregon is on your state list, you need Oregon-specific counsel and probably an Oregon-specific structure. Do not assume your 50-state template covers it.
California: same doctrine, new enforcement teeth
California has always been a strict CPOM state. What changed on January 1, 2026 is enforcement. SB 351 codifies CPOM restrictions specifically against private equity and hedge funds and gives the Attorney General authority to seek injunctions directly, rather than waiting on a medical board complaint. AB 1415 expands the state's pre-transaction notice regime to cover MSOs and certain investors.
The California AG has also signaled, in a 2026 amicus filing, that an MSO's unilateral right to replace a PC's physician owner is exactly the kind of provision it considers evidence of improper control. So is MSO control over coding and billing decisions, payer contracting, clinically based hiring and firing, and equipment selection.
Practical takeaway: strip the "MSO can replace the physician for any reason" language. Move clinical hiring, coding, and payer contracting decisions into the PC's authority, with the MSO providing support, not control.
Vermont, New York, and the transaction-review wave
Vermont's Act 133 took effect July 1, 2026 and follows the Oregon direction. New York's S8442, introduced in the 2025 to 2026 session, would require physicians to hold a majority of voting shares, a majority of board seats, and key officer roles in any medical PC. As of this writing it has not been enacted, but it tells you where New York's legislature is headed.
Separately, Massachusetts, Indiana, New Mexico, Connecticut, Maine, Colorado, and Illinois have added or expanded transaction-review and transparency requirements. These don't ban the model, but they mean forming an MSO relationship or acquiring a practice may now trigger a notice filing with a waiting period.
What didn't change
Roughly 33 states have some form of CPOM restriction. In the large majority of them, the friendly PC and MSO structure remains lawful when done properly: a licensed physician genuinely owns the PC, the PC controls clinical decisions, the MSO provides administrative and technology services under a management services agreement at fair market value, and the paperwork matches the practice.
Texas, Florida, and most of the South and Midwest have not moved in the Oregon direction. Non-CPOM states like Florida remain the natural home for a "super PC" that foreign-qualifies into other permissive states.
The 2026 playbook
- Substance over form. Regulators are reading your operations, not just your contracts. If the MSO's ops team is making clinical staffing calls, your documents don't matter.
- Real physician control. The physician owner should approve clinical policies, credentialing, and clinical hiring, and should be paid a flat fair-market stipend, not a share of revenue.
- Narrow the stock transfer restriction. Limit MSO-triggered transfers to defined events (loss of license, death, disability, material breach), not "at MSO's discretion."
- State-specific overlays. One template, plus riders for California, Oregon, New York, Texas, and any transaction-review state you operate in.
- Annual review. Effective dates are staggered through 2029. Put a calendar reminder on it.
How Foundry PC fits
Foundry PC helps digital health and multi-state practice founders form MSO-PC structures, match with a vetted physician PC owner or collaborating physician, and keep the structure current as states change the rules. Legal work is performed by independent healthcare counsel you engage directly; Foundry handles matching, project management, templates, and ongoing coordination.
If your structure predates 2025, book a 20-minute call and we'll walk through what a 2026 review looks like.