Bill Name: Senate Bill 2459 (SB 2459)

Primary Sponsor: Senators Ujifusa, Mack, DiMario, Lauria, Valverde, Kallman, Acosta,
Murray, and Quezada

Status: 2/06/2026 Referred to Senate Health and Human Services Committee

AmSpa’s Take: Many states restrict non-physician ownership of medical practices. Management services organizations are businesses that specialize in providing business support services to medical practices. This has the benefit of freeing up the physician and other providers’ time to focus on treating patients rather than paperwork.

Analysis: Currently, Rhode Island, as in several other states, restricts the ownership of medical practices to licensed providers. This is commonly known as the “corporate practice of medicine” doctrine (CPOM). A common and well-established way for non-physicians to work with medical practices is using a management services organization (MSO). MSOs are general business entities that specialize in providing the majority of business services to a medical practice. These services can include accounting, payroll, HR, managing inventory, placing advertising, and other administrative functions. SB 2459 would place substantial restrictions on how medical licensees and MSOs may interact regarding medical practices.     

SB 2459 would add a new section of law which explicitly lays out the ban on CPOM. In this section, except as described later, only properly licensed individuals or entities could own a medical practice, employ healthcare licensees, or engage in the practice of medicine. Entities may employ physicians only if Rhode Island licensed persons are the majority of shareholders and directors and make up all officers except for treasurer and secretary. Public hospitals and school, tribal or safety net clinics may also employ physicians. In all cases, entities that are permitted to employ licensees may not directly or indirectly interfere with or control their professional judgment or clinical decision-making.

SB 2459 also contains substantial restrictions on contracts between medical practices and MSOs. The bill bans straw ownership of medical practice. This means that the owners of medical practices must show meaningful ownership of the medical practice and be present in the state and substantially engaged in delivering medical care at the practice or managing the practice. The bill also bans dual ownership or interests. This prohibits a shareholder, director, or officer of a medical practice from:

• Owning or controlling any shares of the MSO;
• Serving as a director, officer, independent contractor, or employee of an MSO; or
• Receiving substantial compensation or renumeration from the MSO in return for owning a medical practice. 

Under this section, an MSO that is majority owned by medical practice could have a shareholder, director, or officer with dual interests. 

SB 2459 would also ban stock transfer restriction agreements. These prohibit a medical practice from transferring control over the sale, or restriction on sale, or encumbrance of the medical practice’s shares or assets. Medical practices may also not transfer or relinquish control over the issuing of shares or the paying of dividends.

SB 2459 also provides protections for employed licensees by banning employers from enforcing restrictive covenants or interfering in the professional judgment or clinical decision-making of the licensee. In this case, restrictive covenants include non-compete, non-disclosure, and non-disparagement; these would all be void and unenforceable. This bill will also require that businesses file an annual reporting requiring disclosure of information on control and ownership interests, including if they are an MSO.

Many states, including Washington, Oregon and California, attempt to pass laws regarding the scope of MSO practices. Often, they have the goal of limiting avenues for abuse or exercising undue control over the medical practices. However, these restrictions can often make it more difficult or impossible for compliant MSOs to function effectively. If you would like additional information, to read the language of the bill or to contact the sponsors or committee, you can find the information you need through this link: SB 2459.