Oregon and California put corporate medicine to the test

Enforcing bans on corporate medicine in Oregon and California

Oregon’s new corporate practice of medicine law faced a direct test this spring when not-for-profit healthcare system PeaceHealth proposed replacing a long-standing local emergency physician group with a new emergency medicine staffing arrangement involving ApolloMD and an Oregon professional entity.

One concern around corporate practice of medicine law is whether a physician may own the professional entity while management contracts, staffing authority, billing terms, compensation rules, governance rights, and other contract provisions allow a management services organization to determine how the practice actually operates.

PeaceHealth’s proposal to replace EEP with ApolloMD

In February 2026, PeaceHealth proposed replacing Eugene Emergency Physicians, a local physician-owned group that had staffed Lane County emergency departments for decades, with a new emergency medicine arrangement involving ApolloMD and Lane Emergency Physicians. PeaceHealth’s proposal covered three hospitals: PeaceHealth Sacred Heart Medical Center at RiverBend in Springfield, PeaceHealth Peace Harbor Medical Center in Florence, and PeaceHealth Cottage Grove Community Medical Center.

PeaceHealth framed the change as a response to emergency department strain, including RiverBend volume increasing from roughly 55,000 visits in fiscal year 2024 to more than 80,000 projected visits in the current year.

Oregon’s SB 951 allowed opponents to challenge the proposal and ask whether the new structure gave the Oregon professional entity real authority, or whether the structure allowed the corporation to control the medical decisions.

Enacted in 2025, the law restricts management services organizations (MSOs) and related actors from exercising de facto control over professional medical entities. It identifies concrete examples showing where corporate control is prohibited: hiring and firing, staffing levels, compensation, schedules, clinical standards, coding and billing, rates, and payer contracts.

Lane Emergency Physicians was the newly formed Oregon professional entity tied to the proposed ApolloMD arrangement. Lawmakers asked ApolloMD for Lane Emergency Physicians’ ownership structure, governance structure, the identity and role of any MSO involved in Oregon operations, and any agreements concerning operations, authority, or reserved powers.

Lawmakers also asked ApolloMD for information about ownership, governance, management services agreements, decision-making authority, staffing, scheduling, compensation, billing and coding, payer contracting, and whether physician owners or managers would receive compensation from an ApolloMD-affiliated MSO. Those requests tracked the powers SB 951 identifies as evidence of de facto control, including staffing, compensation, scheduling, coding and billing, rates, payer contracts, and other operational decisions that can affect clinical decision-making.

ApolloMD’s ownership status became part of the Oregon debate because SB 951 was understood as a response to private equity and corporate control in healthcare. Records show a related investment vehicle connected to ApolloMD’s leadership: ValorBridge Partners, an Atlanta-based private company founded and owned by ApolloMD’s leadership team and physicians.

According to the WSJ, ApolloMD described ValorBridge as the entity through which its founders and active physician leaders originally invested in ApolloMD, as well as unrelated business opportunities. ApolloMD claimed that ValorBridge is not an investor in ApolloMD.

The dispute also carried immediate staffing implications. Eugene Emergency Physicians had staffed PeaceHealth emergency departments in Lane County for 35 years. KLCC reported that all 41 EEP doctors and physician assistants signed an agreement refusing to work for ApolloMD for at least 90 days after the EEP contract ended. Local nurses delivered a petition to PeaceHealth’s board signed by more than 6,800 supporters of EEP urging PeaceHealth to renew the EEP contract.

The question of who would control the proposed emergency medicine practice was also pressed in court. KLCC reported that the lawsuit was filed by EEP against PeaceHealth, ApolloMD, ApolloMD Business Services, and Lane Emergency Physicians over the planned emergency medicine staffing changes. During preliminary injunction hearings, Judge Mustafa Kasubhai addressed whether the arrangement complied with Oregon’s corporate medicine law.

According to KLCC, testimony showed that ApolloMD and Lane Emergency Physicians had no written contracts governing the proposed arrangement. Judge Kasubhai said the absence of written contracts allowed ApolloMD to conceal control over the physicians’ group involved in the proposed arrangement. He said ApolloMD CEO Dr. Yogin Patel and Lane Emergency Physicians owner Dr. Johne Chapman were “being dishonest with the court,” and described the arrangement as “a handshake and a wink” that did not meet Oregon’s corporate medicine law.

In early May, PeaceHealth announced that it and EEP had agreed to “reset the approach” to emergency department physician services in Oregon. PeaceHealth and EEP later finalized a three-year agreement for RiverBend and Cottage Grove.

California’s parallel focus on control rights

California’s recent legislation and Attorney General actions focus on similar control mechanisms: staffing authority, coding and billing, payer contracting, replacement rights, and MSO influence over professional practices.

SB 351, enacted in 2025 and effective January 1, 2026, applies to private equity groups and hedge funds involved with physician or dental practices doing business in California. It prohibits those entities from interfering with professional judgment and from controlling specified operational decisions, including hiring and firing, clinical staffing, coding and billing, payer contracting, and selection of medical equipment and supplies. Those operational powers are the same kinds of levers that can shift authority away from licensed professionals.

AB 1415, also enacted in 2025 and effective January 1, 2026, expands California’s Office of Health Care Affordability transaction notice framework. The law adds private equity groups, hedge funds, newly created business entities formed to transact with healthcare entities, MSOs, and entities that own, operate, or control providers to the list of parties required to file notices of material change transactions.

In late March, the California Attorney General filed an amicus brief in Art Center Holdings v. WCE CA Art, a case involving a physician-owned medical practice and a private equity-backed MSO. The AG’s office identified two contract mechanisms at issue: the MSO’s power to replace the physician-owner, and the physician-owner’s inability to replace the MSO without risking ownership of the practice. Those rights can give the MSO leverage over the person who formally owns the professional entity.

In May, the California Attorney General announced a settlement with Aspen Dental Management that applied the same control-rights framework in dentistry. California alleged that Aspen Dental Management went beyond administrative support by interfering with and directing the practice, ownership, and management of dentistry in California. The settlement restricted contract terms that gave the support organization leverage over affiliated dental practices, including replacement rights, ownership-transfer requirements, control of practice property, service fees based on revenue or profit, and incentives tied to practice sales, revenue, or profit. The settlement will be subject to court approval.

Other states should draft around control rights

Other states are considering legal tools that address ownership, governance, professional autonomy, and private equity control.

• Washington has considered SB 5387, a corporate practice of medicine proposal focused on ownership, governance, and MSO-PC structures.
• New Mexico’s SB 16, the Health Professional Autonomy Act, proposed to prohibit healthcare entities from interfering with providers’ professional judgment or clinical decision-making.
• Connecticut has targeted private equity control and sale-leaseback arrangements after the Prospect Medical Holdings crisis.

Proposals should require disclosure of the documents that allocate power: MSO agreements, governance documents, succession rights, compensation formulas, payer contracting authority, billing and coding authority, staffing rights, real estate arrangements, debt terms, and management fee arrangements. The ApolloMD-PeaceHealth dispute shows why those materials need to be made available before clinical operations change hands.