Oregon lawmakers move to rein in corporate influence of medicine

The Oregon House voted Wednesday to pass a bill aimed at slowing corporate influence in health care.

Senate Bill 951

, which passed the chamber 41-16, would impose some of the country’s toughest rules on corporate ownership of doctor’s offices and medical clinics. It now goes to Gov. Tina Kotek’s desk to await her signature.

State law already requires that licensed physicians hold at least 51% ownership in medical practices. But lawmakers say corporations are increasingly getting around this rule .

Supporters of SB 951 argue that these for-profit companies have created “management service organizations,” or MSOs, to manage clinics behind the scenes. While MSOs are supposed to provide administrative support, proponents of the bill say these third-party companies install a physician as a figurehead while retaining authority over staffing, scheduling and even medical decisions.

The legislation wouldn’t ban MSOs outright from partnering with independent medical practices, but it would limit those third-party management companies from influencing final decisions that directly affect how care is delivered.

The bill also takes aim at restrictive employment contracts that bind doctors to corporate clinics with noncompete and nondisclosure clauses.

SB 951 follows

a similar effort

last year, but that bill died in the Senate. Lawmakers renewed that push amid growing concerns over rapid consolidation in the health care sector.

Supporters of the bill have accused health care behemoths like UnitedHealth Group, for example, of

driving physicians away in pursuit of profits

after acquiring clinics in cities like Eugene and Corvallis. Some lawmakers from those communities are among the backers of SB 951.

Academic research by Oregon Health & Science University scholars found that clinics purchased by private equity firms tend to charge more and see more patients. But the study didn’t determine whether patients’ health outcomes improved or suffered.

Critics of SB 951 warned that it could scare off investment in smaller, independent practices already struggling to survive against large hospital systems that receive higher reimbursements.

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Ryan Grimm, president of the Oregon Ambulatory Surgery Center Association, had testified that the bill would discourage management companies and investors from working with surgical centers in the state that rely on outside help to purchase expensive medical equipment. He added that the bill could result in more hospital-owned clinics.

“We universally agree that the way to protect clinics from closure and maintain the broadest patient access to outpatient care is to keep the existing, and multi-ownership, models alive and well,” Grimm testified. “And in some communities, there is no hospital to swoop in to the rescue, or no hospital in a financial position to save a clinic. In those cases, our communities need a way to ensure that their important local clinic survives.”

Still, lawmakers say the stakes are too high to ignore.

Rep. Lisa Fragala, D-Eugene, said that SB 951 is meant to stop

what happened at Oregon Medical Group in Eugene

— which dropped thousands of patients because doctors left the operation after UnitedHealth Group’s subsidiary Optum took over — from happening elsewhere.

“When we see consolidation in the healthcare market, we see three things happen: higher prices, negative effects on the quality of care, and decreased access to care,” Fragala said. “Today the Oregon Legislature took steps to address this crisis of cost, access and quality of care.”