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SB 5387

Concerning property tax relief for homeowners and renters.

2023-2024 Regular Session Introduced by Perry Dozier and 1 co-sponsor

SB 5387 limits non-licensed ownership of medical practices, requires licensed providers to hold majority ownership and board seats, with MSO caps to safeguard clinical decisions.

By resolution, reintroduced and retained in present status.
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Bill Summary · SB 5387

Summary — SB 5387 (2025): Concerning the corporate practice of medicine / health care

Status: Senate Rules "X" file (3/17/2025)
Introduced: 01/21/2025
Primary sponsors: Sens. Robinson, Hasegawa, Liias, Nobles, Riccelli, Stanford, Valdez

Purpose

SB 5387 is intended to restrict non‑licensed ownership and outside control of medical and other health care practices. The bill seeks to preserve clinical autonomy by requiring that licensed health care providers (particularly physicians in the base bill) retain majority ownership and decision‑making authority in professional service corporations that deliver patient care, and by limiting the role and influence of management services organizations (MSOs), private investors, and other non‑licensed entities.

Key provisions

  • Prohibits any person or entity without an appropriate license from:
    • Practicing a licensed health care profession;
    • Owning or operating a health/medical practice; or
    • Employing licensed health care providers to provide care (except as permitted by chapters cited).
  • Corporate ownership and governance requirements for professional service corporations (PSC):
    • Licensed health care providers must hold the majority of each class of voting shares;
    • Licensed providers must constitute a majority of the board of directors;
    • Licensed providers must hold all officer positions except secretary and treasurer.
  • "Meaningful ownership" requirement: provider shareholders must be substantially engaged in delivering care or managing the practice (second substitute adds presence in state).
  • Prohibitions on financial and managerial arrangements with MSOs:
    • Shareholders/officers/directors of a practice may not simultaneously own/control or otherwise participate in managing both the practice and an MSO contracting with it;
    • May not receive substantial compensation from an MSO tied to ownership/management;
    • May not transfer or relinquish control over sale/issuance of shares, dividends, or encumbering of assets;
    • May not enter into financial arrangements that violate chapter 19.68 RCW.
  • Limits on relinquishing control: practices may not transfer de facto control over administrative, business, or clinical operations that affect clinical decision‑making. The bill lists specific prohibited decision areas (examples: hiring/termination and compensation of licensed providers; revenue disbursement; scheduling and discipline; staffing levels; diagnostic coding; clinical standards; billing/pricing; negotiation of third‑party payor contracts).
  • Drafted to apply across many health profession chapters (multiple "new sections" added to RCW chapters governing various licensed professions) — later substitute versions expand scope from "medicine" to broader "health care" and add related statutory chapters (including certain insurance and facility licensure chapters).

Exemptions

The bill carved out a number of institutional exemptions, including (depending on draft):
- Licensed hospitals and entities under common control with a licensed hospital;
- Private establishments licensed under certain behavioral health statutes;
- Nursing homes, ambulatory surgical facilities, birthing centers, hospice care centers, in‑home service agencies;
- Federally qualified health centers;
- Telemedicine‑exclusive medical groups (appears in one substitute);
- Other facility types statutorily listed in the bill.

Who is affected

  • Directly: physicians and other licensed health care providers, professional service corporations, and MSOs.
  • Indirectly: private equity and investor‑owned health entities, hospital systems, clinics, practice management companies, payors/insurers, and patients (through potential changes to ownership structure, contracting, and operations).
  • Regulatory impact across many licensing boards given additions to numerous RCW chapters.

Potential impacts and considerations

  • Reinforces clinician ownership and control of clinical decisions; intended to limit non‑clinical actors from influencing quality or scope of care.
  • May require restructuring of ownership/management arrangements, renegotiation/termination of MSO contracts, and compliance reviews; potential transaction, financing, and integration implications for investor‑backed or management‑led consolidations.
  • Could increase administrative and legal costs for practices and MSOs to comply; possible effects on access/consolidation dynamics depending on market responses.
  • Enforcement mechanisms are embedded through licensing and corporate statutes (bill amends RCW chapters governing professional corporations and licensing); exact penalty/remedy language is in the bill text.

Legislative progress / next steps

  • Referred to Health & Long‑Term Care (01/21/2025); public hearings and executive action in HLTC; 1st substitute adopted (02/21/2025) and referred to Ways & Means.
  • Ways & Means public hearing and executive action; 2nd substitute adopted and WM reported majority do pass (02/28/2025).
  • Placed on Senate Rules "X" file (03/17/2025) — awaiting further scheduling for floor action.

Note: The bill text evolved through substitutes: the original bill focused on the corporate practice of medicine; later substitutes broadened scope to "health care" and added or modified exemptions and cross‑references. The enacted effective date is referenced in the bill but not specified in the excerpt provided.

Compiled from official sources — confirm details with the bill’s official record.

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