Until June 2025, Oregon was a moderate CPOM state — one where the doctrine existed, was enforced through case law, and required MSO-PC structuring for digital health companies, but where the specific mechanics were flexible enough that a well-drafted structure could operate with reasonable latitude. That era is over. Oregon Senate Bill 951, signed into law in June 2025, fundamentally changed Oregon's CPOM landscape. It not only codified the doctrine into statute for the first time but added prescriptive, specific requirements for MSO-PC structures that go further than any other state in the country.

Oregon is now the most restrictive CPOM jurisdiction in the United States by statute. If you operate a digital health company that serves Oregon patients, you need to understand both where Oregon's CPOM doctrine came from and what SB 951 now specifically requires. This guide covers the full picture: the pre-SB 951 common law foundation, the new statutory requirements, the compliance deadlines for new versus existing MSOs, the exemptions that apply, and what your MSO-PC documentation needs to include to operate lawfully in Oregon today.

Oregon CPOM Before SB 951: The Common Law Foundation

Oregon's corporate practice of medicine doctrine developed primarily through case law rather than statute. The foundational case is Sisemore v. Standard Optical Co., decided in 1947, in which the Oregon Supreme Court held that an optical company operating a vision care department and employing optometrists was engaged in the unauthorized practice of optometry. While optometry-specific, the court's reasoning — that professional practice requires professional licensure, and a corporation cannot hold such a license — established the intellectual framework that Oregon courts and the Oregon Medical Board applied to medicine as well.

In the decades following Sisemore, Oregon's CPOM doctrine developed incrementally through medical board guidance, state attorney general opinions, and the accumulated practice of healthcare attorneys who structured Oregon medical practices to keep clinical authority nominally — and substantively — in physician hands. The pre-SB 951 framework required MSO-PC structures for digital health companies operating in Oregon, but left the specific mechanics of those structures largely to the parties. A well-drafted MSA with clear clinical governance provisions generally satisfied Oregon requirements, even if the economic terms of the MSO-PC arrangement were heavily weighted toward the MSO.

This flexibility enabled a generation of national digital health companies to operate in Oregon with structures that were primarily designed for California or Texas compliance, adapted at the margins for Oregon. SB 951 ended that approach by codifying specific structural requirements that cannot be satisfied by a generic national MSO-PC structure.

Oregon SB 951: What the New Law Says

Oregon SB 951, signed by Governor Kotek in June 2025, establishes Oregon's CPOM requirements in statute for the first time. The law is notable not just for codifying the doctrine but for the specificity of its structural requirements — particularly its provisions governing MSO insider ownership of PCs and the permissible scope of Stock Transfer Restriction Agreements (STRAs).

The Core Prohibition

SB 951 codifies the fundamental CPOM principle: non-physician corporations may not practice medicine in Oregon, directly employ physicians in a way that subordinates clinical judgment to corporate decision-making, or control the professional decisions of Oregon-licensed physicians through ownership, contractual arrangement, or financial incentive structure. This is not new doctrine — it restates the common law position established by cases like Sisemore. What is new is that it now exists in statute and is subject to the enforcement mechanisms that come with statutory violation.

MSO Insider Ownership Restriction

One of SB 951's most significant new requirements is the restriction on ownership of the contracting PC by MSO "insiders." Under SB 951, persons or entities that are insiders of the MSO — which includes MSO owners, investors, employees, and their affiliates — may not own a majority of the PC that contracts with the MSO. This provision directly targets the common practice of using a "friendly physician" who holds PC equity at the direction of (and effectively on behalf of) the MSO investor.

The practical implication: the physician who owns the Oregon PC must be genuinely independent of the MSO — not an employee of the MSO, not an investor in the MSO, and not a person whose PC equity is held in a way that effectively functions as MSO equity. Oregon is specifically targeting arrangements where the structural form of physician ownership has no corresponding substance. Companies whose national MSO-PC structures use physicians with close economic ties to the MSO need to restructure those relationships for Oregon compliance.

Stock Transfer Restriction Agreement Limitations

STRAs — the agreements that restrict transfer of PC equity and typically grant the MSO a call option to acquire PC equity upon triggering events — are a core component of virtually every MSO-PC structure. SB 951 does not prohibit STRAs, but it restricts them to a narrow list of permissible triggers. Under the new law, an STRA may only be triggered by:

  1. Revocation or suspension of the physician-owner's Oregon medical license
  2. Exclusion of the physician-owner from federal healthcare programs (Medicare/Medicaid exclusion)
  3. Death or permanent disability of the physician-owner
  4. Felony indictment of the physician-owner
  5. Material breach of the Management Services Agreement by the PC

These are exclusively clinical, professional, or legal integrity triggers — none of them are business performance triggers. This means that STRAs in Oregon may not include provisions that allow the MSO to exercise the call option because the PC failed to meet financial targets, growth benchmarks, operational KPIs, or any other commercially motivated criteria. STRAs used in other states that include broad "for cause" or financial default triggers must be rewritten for Oregon to remove those provisions.

SB 951's STRA restrictions are the most specific CPOM structural requirements in the country. They are designed to prevent the MSO from using the call option as a de facto control mechanism. Your standard national STRA almost certainly does not comply — it needs to be specifically redrafted for Oregon.

The Mental Health and SUD Exemption

SB 951 includes an exemption for mental health and substance use disorder (SUD) facilities. These entities are not subject to the MSO insider ownership restriction and STRA limitations in the same way that general medical practices are. The exemption reflects the legislature's recognition that the mental health and SUD care delivery ecosystem in Oregon relies heavily on non-traditional organizational structures, including community mental health organizations and certified community behavioral health clinics (CCBHCs), that should not be disrupted by the new law's structural requirements.

Companies operating exclusively in Oregon mental health or SUD services should still maintain compliant structures under Oregon's general CPOM doctrine — the exemption from SB 951's specific structural rules does not create a CPOM-free zone for behavioral health. But the exemption does mean that the new STRA and ownership restrictions do not apply to your behavioral health Oregon operations the same way they apply to your primary care or specialty telehealth operations.

Compliance Deadlines: New vs. Existing MSOs

SB 951 establishes different compliance timelines depending on when the MSO was formed:

New MSOs (Formed After June 9, 2025)

MSOs formed after June 9, 2025 — the effective date of SB 951 — must comply with all new requirements by January 1, 2026. This is an extremely short runway. Any digital health company that has formed or restructured its MSO entity after June 9, 2025 and intends to contract with an Oregon PC must have its compliant documentation in place by the start of 2026. There is no grace period for new structures.

Existing MSOs (Formed Before June 9, 2025)

MSOs that were in existence before the SB 951 effective date have a longer transition window. These entities must come into compliance with SB 951's requirements by January 1, 2029. This three-year transition period gives existing Oregon digital health operations time to restructure their physician ownership arrangements and redraft their STRA documents without disrupting ongoing clinical operations. However, "have until 2029" should not be read as "do nothing until late 2028." Restructuring an MSO-PC arrangement — particularly one that requires transitioning to an independent physician-owner — takes time and requires careful legal and operational coordination.

The Oregon Medical Board and SB 951 Enforcement

The Oregon Medical Board (OMB) is the primary enforcement authority for physician conduct and licensing in Oregon. SB 951 gives the OMB explicit statutory authority to act against MSO-PC arrangements that violate the new law's requirements, in addition to its existing authority to discipline physicians whose corporate arrangements compromise professional independence.

The OMB's enforcement posture under SB 951 is still developing — the law is new, and the Board is in the process of issuing guidance on implementation. However, the statutory authority is clear: the OMB can investigate complaints, conduct hearings, and impose sanctions for violations. Digital health companies entering Oregon after June 2025 should assume that the OMB is attentive to SB 951 compliance, not that the new law will be unenforced in practice.

Building an SB 951-Compliant MSO-PC Structure

Designing an Oregon MSO-PC structure under SB 951 requires attention to several specific elements that go beyond standard national MSO-PC practice:

Physician Independence Is Non-Negotiable

The Oregon PC must be owned by a physician who is genuinely independent of the MSO. The physician-owner should not be an employee of the MSO, should not hold any economic interest in the MSO, and should not be in a position where the MSO's financial expectations functionally dictate the physician's clinical or business decisions as PC owner. The independence requirement is substantive, not just formal — it should be documented through the absence of any financial entanglement between the physician and the MSO.

Redraft Your STRA for Oregon-Specific Triggers Only

Your Oregon-specific STRA should contain only the five permitted triggers enumerated in SB 951. Review your current STRA carefully for any provisions that could be characterized as financial performance triggers, default-on-notice provisions tied to business metrics, or catch-all "for cause" definitions that include commercial criteria. All such provisions must be removed from the Oregon STRA. The STRA can still contain robust remedies for the permitted triggers — including the call option mechanism — but the trigger list must be limited to license revocation/suspension, federal exclusion, death/disability, felony indictment, and PC material breach of the MSA.

MSA Drafting Under SB 951

The Management Services Agreement governing the Oregon MSO-PC relationship should be specifically drafted or reviewed for SB 951 compliance. Key points to confirm: management fees are structured as fair market value compensation for enumerated services, not as a percentage of clinical revenue; the MSA does not contain provisions that give the MSO de facto control over clinical decisions; termination provisions do not create coercive dependencies that would allow the MSO to force clinical decisions by threatening to withdraw administrative support; and the term structure does not create long-duration lock-ins that functionally prevent the physician-owner from exercising independent judgment.

Clinical Governance Documentation

The physician-owner's actual exercise of clinical authority must be documented rigorously in Oregon. Under SB 951, the expectation is not just that the structure nominally places clinical authority with the physician — it is that the physician actually exercises that authority in practice. Maintain records of clinical committee meetings, protocol review and approval processes, credentialing decisions, quality assurance reviews, and any occasion on which the physician exercised independent judgment that overrode or modified an MSO recommendation.

Oregon's Health Tech Ecosystem: Portland and Bend

Despite the new regulatory intensity, Oregon remains an important digital health market. Portland is the state's major metropolitan health-tech hub, home to Oregon Health & Science University (OHSU) — one of the West's most significant academic medical centers and a national leader in clinical research and biomedical informatics. OHSU's proximity to Portland's startup culture has generated a cluster of digital health and health-data companies. The Providence Health & Services and Legacy Health systems are active clinical partners for digital health pilots and enterprise deployments.

Bend is an emerging secondary market with a health-conscious, tech-forward population and a growing provider community that has been early to adopt telehealth and digital health tools. Bend's distance from OHSU and Portland's health system infrastructure creates opportunity for independent digital health platforms to provide services that would otherwise require patients to travel.

For companies already operating in California, Washington, or other West Coast markets, Oregon patient populations are a natural expansion target. SB 951 adds compliance overhead, but it does not change the market opportunity — it just requires that you invest in getting the structure right before you start serving Oregon patients.

Telehealth in Oregon Under SB 951

Oregon's telehealth framework is generally favorable and has expanded since the COVID-19 public health emergency. Oregon participates in the Interstate Medical Licensure Compact (IMLC) and the Nurse Licensure Compact (NLC), enabling multi-state platforms to efficiently credential providers for Oregon patient care. Oregon's telehealth parity requirements cover many service categories, and the state has been relatively progressive on store-and-forward and asynchronous telehealth modalities.

SB 951 does not contain telehealth-specific provisions, but its structural requirements apply to any MSO-PC arrangement regardless of whether the clinical services are delivered in person or via telehealth. A telehealth company serving Oregon patients through an MSO-PC structure must comply with SB 951's physician independence and STRA restrictions just as a bricks-and-mortar practice would.

Oregon SB 951 Compliance Checklist