Introduction
Over the past decade, private equity firms and other well-funded corporate entities including hospitals and insurers have expanded their presence in physician practices across the country. In 2024, hospitals and corporate entities employed almost 80% of physicians. A growing body of evidence suggests that corporate ownership structures prioritize financial gains over patient care, undermine physician autonomy, and increase health care spending. Policymakers are increasingly grappling with how to regulate the growing corporate investment in physician practices.
Oregon has emerged as an early example of how states can confront this challenge. In recent years, the state has enacted reforms targeting both the corporate practice of medicine and oversight of health care transactions. Together, these policies form a multi-pronged strategy to limit corporate influence over physician practices and protect patients from the potential harms of consolidation.
Strengthening Corporate Practice of Medicine Laws
Corporate practice of medicine (CPOM) is a legal doctrine primarily codified in statute, requiring that licensed physicians and other clinicians own for-profit medical practices. Its purpose is to ensure that licensed clinicians—not corporate actors—retain ultimate authority over clinical and operational decisions affecting patient care. The doctrine reflects concerns that corporate profit motives may conflict with clinicians’ ethical duty to prioritize patient care.
More recently, corporations have developed workarounds that enable de facto control over physician practices, most notably through the “friendly physician model.” Under this approach, a lay corporation—such as a private equity-owned company—creates a separate entity known as a management services organization (MSO) that gains control over the physician practice’s assets and installs an affiliated physician as the nominal owner of the practice. The MSO-affiliated physician may have no active clinical role at the practice or live out of state. The MSO then enters management services arrangements with the practice to effectively gain complete operational and administrative control.
These arrangements invert CPOM’s intended relationship between the practice and the MSO. Rather than functioning as a vendor supporting a physician-owned practice, the MSO has complete control over the practice. This dynamic risks undermining physician autonomy and limiting physicians’ ability to raise concerns about management decisions affecting patient care. As a result, researchers have increasingly scrutinized the friendly physician model as a mechanism for indirect corporate control, and state interest around amending CPOM laws to regulate the friendly physician model have also grown.
In 2025, Oregon passed one of the most comprehensive CPOM laws in the country by prohibiting the “friendly physician” model. The law bans MSOs or anyone they contract with from having majority control or ownership over a practice or exercising ultimate control in the physician practice. The statute also bars stock restriction agreements and renders many noncompete, nondisclosure, and nondisparagement clauses unenforceable. By combining these ownership and contractual restrictions, Oregon’s law restrains MSOs and aims to restore the spirit of CPOM. However, the law did not create an enforcement authority within state agencies and can only be enforced through private right of action.
Transaction Oversight
Transaction oversight allows states to monitor and review mergers, acquisitions, and other ownership changes among health care entities. States range from having no oversight authority or pre-transaction review authority to having comprehensive oversight frameworks that include transaction approval and post-transaction monitoring to protect patients and communities. Recently, states have expanded their oversight authority. A 2024 publication found that 13 states had transaction approval authority. By late 2025, that number had grown to 32. These mechanisms are intended to ensure that consolidation and investment do not undermine affordability, quality, or access to care.
In 2021, Oregon passed one of the most comprehensive transaction oversight frameworks in the country. Unlike most states, Oregon requires pre-transaction notification and approval for certain transactions involving physician practices that exceed a specified revenue threshold. Regulators review the potential impact of these proposed transactions on consumer costs, quality, access, and equity. The law also gives regulators post-transaction oversight authority, allowing the state to monitor transactions after they close and enforce conditions designed to protect affordability, access, quality, and equity. If the entities are found to be out of compliance with any conditions of approval, regulators can pursue legal remedies.
Oregon’s CPOM reforms work together with the state’s transaction oversight authority, forming a multi-pronged strategy to limit corporate influence in the delivery of health care services. Under the state’s transaction oversight framework, the Health Care Market Oversight (HCMO) program may deny a material change transaction subject to review if there is a substantial likelihood it would violate the law. Accordingly, if a transaction involves a friendly physician arrangement that violates the strengthened CPOM law, HCMO has the authority to deny approval.
Looking Forward
Oregon’s strengthened CPOM provisions take effect on a staggered timeline. The law became effective in January 2026 for MSOs and physician practices formed after June 2025. Existing MSOs and physician practices formed before June 2025 must comply beginning in 2029.
Early industry actions are testing how the new law is interpreted. For example, PeaceHealth recently decided to replace its long-standing emergency department physician group, Eugene Emergency Physicians, with Lane Emergency Physicians. The new practice is solely owned by an Illinois physician affiliated with ApolloMD, a Georgia-based MSO that also serves as Lane Emergency Physician’s MSO. Legislative and gubernatorial scrutiny have followed. Oregon lawmakers have asked for information to determine whether the arrangement complies with the strengthened CPOM law and requested the parties submit the transaction for review. At the same time, Eugene Emergency Physicians filed a lawsuit against PeaceHealth, ApolloMD, and Lane Emergency Physicians, alleging the new arrangement relies on the friendly physician model that the updated CPOM law prohibits.
Oregon’s experience could provide important insights for other states seeking to curb corporate influence in health care. In particular, monitoring how the CPOM reforms interact with the state’s transaction oversight framework will help assess whether these policies safeguard physician autonomy, restrain costs, and protect patients.
