This is not legal advice. Foundry PC is not a law firm.
Two years ago, "corporate practice of medicine" was a diligence checkbox. Now it's an active legislative category in a dozen states, with a private right of action in one and Attorney General enforcement authority in another. Here's the 2027 outlook.
The direction of travel
Three forces are pushing states the same way: concern about private equity in healthcare, high-profile practice closures attributed to corporate management, and physician advocacy organizations that have made the friendly PC model a target. The AMA featured Oregon's law at its 2026 state advocacy summit as a model. Expect more states to introduce bills modeled on it.
The bills fall into three types:
- Oregon-style structural bans that prohibit MSO ownership and governance overlap with professional entities and restrict stock transfer arrangements.
- California-style enforcement expansions that give Attorneys General direct authority and extend transaction-notice regimes to MSOs.
- Transaction-review and transparency laws that don't ban the model but require notice, waiting periods, and disclosure for practice transactions.
What to watch
Oregon. The 2029 compliance date for pre-existing arrangements is the biggest single deadline. Companies with Oregon structures formed before June 2025 should plan restructuring in 2027 so they're not scrambling in 2028. Also watch how the telemedicine carve-out is interpreted; early enforcement actions and guidance will define its scope.
New York. S8442 or a successor bill requiring physician-majority governance in medical PCs. If enacted, structures relying on MSO-appointed directors or officers will need to change. Build physician-majority governance now regardless.
California. Implementation of SB 351 and AB 1415. Watch for the AG's first enforcement actions under its new direct authority, and for how OHCA handles MSO transaction notices. The 2026 amicus positions on physician replacement rights and MSO control over coding and contracting will likely become enforcement priorities.
Texas, Washington, and other states with pending proposals. Bills restricting private equity or strengthening CPOM were introduced or discussed in several states in 2025 and 2026. Some will return in 2027 sessions.
Federal. FTC and DOJ interest in private equity healthcare roll-ups continues. This doesn't directly affect a startup's MSO-PC structure but shapes the political environment states are responding to.
Physician noncompetes. The trend toward voiding them (Oregon and others) will continue. Structures that rely on noncompetes to protect the MSO's investment should shift to non-solicit, confidentiality, and economic terms.
What this means for a company launching or scaling in 2027
- Build for the strictest state you're in, then relax where you can. A structure with real physician governance, defined transfer events, fair-market flat compensation, and PC control of clinical decisions passes in every state. One built for Florida and stretched to California doesn't.
- Assume transaction notices. If you'll raise money or acquire practices in 2027, put a notice analysis on the deal calendar.
- Operate the structure, don't just sign it. Enforcement is reading operations.
- Get a dated counsel memo every year. Investors and acquirers will ask for one dated after the latest effective date.
What hasn't changed, and probably won't
The friendly PC and MSO model remains lawful in the large majority of CPOM states when done properly. No state has banned MSOs. No state has banned non-physician ownership of the management company. The model is being constrained toward what it was always supposed to be: a physician-owned, physician-governed practice that contracts for administrative services at fair value. Companies that were already operating that way have little to change.
How Foundry PC is preparing
Foundry tracks state legislation and updates our template suite and eligibility reviews as laws change. Every client structure includes a state-specific overlay for the states that have moved, and our ongoing engagement includes notification when a state you operate in changes its rules.
If you'd like a 2027 readiness review of your structure, book a 20-minute call. We'll go state by state.