Bill Name: Senate Bill 5387 (SB 5387)

Primary Sponsors: Senators Robinson, Hasegawa, Liias, Nobles, Riccelli, Stanford, and Valdez

Status: 2/09/2026 Senate Committee on Ways & Means recommends to pass, referred to Rules 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, Washington, 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 5387 would place substantial restrictions on how medical licensees and MSOs may interact regarding medical practices.    

Under SB 5387, only medical licensees may own medical practices and employ health care providers. If forming a professional service corporation, the medical licensees must own all voting shares and hold all director and officer positions except for secretary and treasurer. They must show meaningful ownership of the medical practice and be substantially engaged in managing or delivering care at the practice. 

Anyone who is an owner, director, or officer of a medical practice would be prohibited from:

• Owning or controlling any shares of the MSO;
• Serving as a director, officer, independent contractor, or employee of an MSO;
• Receiving substantial compensation or renumeration from the MSO in return for owning a medical practice;
• Transferring voting rights or control over the sale of shares or sale or encumbrance of assets of a medical practice to anyone who is not another medical licensee;
• Transferring control over the issuing of shares or paying dividends to anyone who is not another medical licensee; or
• Entering any financial relationship that violates Washington’s anti-rebating statute.

Under this section, an MSO that is completely owned by medical licensees would be exempt from these restrictions. 

SB 5387 would also prohibit medical licensees from relinquishing control over the administrative, business or clinical operations that may affect clinical decision making or the nature or quality of medical care they provide to anyone other than another medical license. Medical licensees may still consult and collaborate with anyone in developing policies or making decisions that affect clinical decision making or the quality of care, provided the ultimate decision still rests with the medical licensee.

These provisions do not apply to:

• Hospitals;
• Entities controlled by hospitals;
• Licensed private establishments;
• Nursing homes;
• Ambulatory surgical facilities;
• Birthing centers;
• In-home service agencies;
• Federally qualified health centers;
• Telemedicine only medical practices;
• Health maintenance organizations; or
• Health care service contractors who are organized in integrated care delivery systems.

The bill goes on to include a number of provisions that apply to the above list of entities. They are prohibited from controlling or influencing patient care decisions, including the amount of time spent with a patient or decisions on discharge, or clinical terms, codes, or orders. 

Many states, including 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 5387.