Three states have now legislated the same underlying worry, and they did it with three different instruments. Reading them as a single trend is useful. Treating them as a single requirement is not, because what each one asks of you is different in kind.
This post sits on top of our three statute analyses rather than repeating them. Oregon is at SB 951, Vermont at the March 2027 filing, and California at SB 351 and MSO agreements.
What the three have in common
They target control, not ownership. None of them turns on who holds the equity. They turn on what the management company may decide, what the agreement may contain, and what has to be disclosed. A structure that satisfies the ownership rules can fail these.
They reach agreements already signed. This is the part operators keep missing. These are not rules for new deals. Existing management agreements fall inside them on stated dates, which means the compliance task is a re-reading exercise across your whole portfolio rather than a drafting note for the next transaction.
They are written in general terms and catch everyone. The legislative impetus was private equity consolidation. The statutory text mostly does not say so. A single-clinic operator with a two-entity structure is inside the same language as a fifty-site platform.
How they differ in kind
| Instrument | What it does to you | |
|---|---|---|
| Oregon | Restriction on conduct | Bars specified arrangements and control mechanisms outright |
| Vermont | Reporting regime | Creates a filing obligation with deadlines, whether or not anything is wrong |
| California | Constraint on agreement terms | Limits what a management agreement may provide about clinical matters |
The practical consequence is that you can be fully compliant in one and exposed in another for reasons that have nothing to do with each other. A Vermont filing does not fix an Oregon conduct problem. A California-compliant agreement does not discharge a Vermont filing.
Why this matters if you never touch those three states
Two reasons, and the second is the one that costs money.
First, these statutes are a template. Legislatures copy. The provisions that appear here are the provisions that will appear elsewhere, which means the conduct they bar is the conduct worth designing out now.
Second, the provisions they attack are the ones most commonly found in standard MSO templates: control over clinical decisions, restrictions on the physician’s ability to leave or transfer, and fee structures that function as a share of clinical revenue. If your template contains those because it was drafted from a national form, the exposure travels with the template into every state you operate in, not just the three.
Our positions on the two most commonly affected terms are at the stock transfer restriction agreement and fixed fee vs percentage.
What a national operator actually does
- Build to the strictest, once. Maintaining three template variants is how divergence creeps in. Draft to the most restrictive requirement you are subject to and use it everywhere, accepting that you are giving up some latitude in permissive states.
- Track filing obligations separately from drafting. A filing regime is a calendar problem, and calendar problems fail quietly. Name an owner and a date.
- Re-read rather than renew. Existing agreements are the exposure. Auto-renewal on a pre-statute template is the specific failure mode these laws were built to catch.
- Separate the clinical decision rights explicitly. Where the agreement is silent about who decides a clinical question, a regulator will read the surrounding behavior. Say it in the document.
- Keep the structure honest, not just compliant. Every one of these statutes is ultimately asking whether the physician entity makes the clinical decisions. That is answerable by evidence or it is not. See friendly PC and MSO structure.
What this means for you
Pull every management agreement you have and read it against the strictest of the three, regardless of where the entity sits, because the template is the thing that carries risk across state lines. Put the Vermont-style filing obligations on a calendar with a named owner, since a reporting regime punishes inattention rather than intent. Stop auto-renewing anything drafted before these statutes and treat each renewal as a re-execution. And expect more of this: three states in two years is a direction, not a coincidence, and the provisions being legislated are already visible. The operators who get hurt will not be the ones who were doing something wrong. They will be the ones renewing a template that was fine when it was written.
Related reading
Frequently asked questions
Do these MSO laws only apply to private equity?
No. Private equity consolidation drove the legislative interest, but the statutory language is generally written in terms of management arrangements and control rather than the identity of the investor. A single-clinic two-entity structure can fall inside the same provisions as a large platform.
Do they apply to agreements signed before they passed?
Largely yes, on stated dates. That is what makes them different from ordinary drafting guidance: the compliance task is re-reading existing agreements across your portfolio rather than adjusting the next one.
How do Oregon, Vermont and California differ?
They differ in kind. Oregon restricts conduct and bars specified arrangements. Vermont creates a reporting obligation with deadlines. California constrains what a management agreement may provide about clinical matters. Compliance with one does not produce compliance with another.
Should I maintain different agreements for different states?
Usually not. Maintaining multiple template variants is where divergence and error enter. Drafting to the strictest standard you are subject to and using it everywhere costs some latitude in permissive states and removes a category of mistake.
What if I do not operate in any of those three states?
The provisions are a template other legislatures copy, and they target terms that appear in standard national MSO forms: control over clinical decisions, transfer restrictions on the physician, and fees that function as a share of clinical revenue. If your template carries those, the exposure travels with it.
This is general information, not legal advice. Rules vary by state and change. Confirm your own facts with counsel.