3SSB 5387
In CommitteeSenate
Corp. practice of medicine
Concerning the corporate practice of medicine.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill strengthens Washington’s ban on the corporate practice of medicine by prohibiting unlicensed entities from owning or controlling medical practices and interfering with clinical decisions. It sets strict ownership and governance rules for professional service corporations and bars management companies from influencing patient care—even indirectly—while requiring providers to confirm awareness of these rules during license renewal.
- Prohibits unlicensed individuals or entities (e.g., corporations, investors, management companies) from owning, controlling, or managing medical practices or interfering with clinical decisions of licensed providers.
- Requires that in professional service corporations, licensed providers must hold majority voting shares, majority of board seats, and all officer positions (except secretary and treasurer), and must be actively engaged in delivering care and managing the practice.
- Bars non-licensed owners or managers from influencing clinical decisions—including time with patients, diagnoses, coding, treatment plans, staffing, billing, pricing, and contracts with insurers—through contracts, policies, or operational control.
- Adds prohibitions against interference with clinical judgment at hospitals, nursing homes, birthing centers, hospices, ambulatory surgical centers, and other licensed facilities—specifically banning control over admission/discharge decisions, diagnostic coding, and provider schedules.
- Requires all licensed health care providers (including physicians, nurses, therapists, etc.) to attest during license renewal that they understand the new corporate practice of medicine rules.
- Expands the definition of 'unprofessional conduct' to include violations of the new corporate practice restrictions, making such violations subject to disciplinary action by licensing boards.
Who is affected
- Licensed health care providers — Health care providers (e.g., physicians, nurses) must now ensure that their employers or affiliated entities do not interfere with clinical decisions, and must attest awareness of new corporate practice rules during license renewal.
- Medical practice owners and operators — Medical practices structured as professional service corporations must ensure licensed providers hold majority ownership, control leadership roles, and maintain direct oversight of clinical and business operations—prohibiting non-licensed entities from managing or influencing care delivery.
- Management services organizations (MSOs) and corporate investors — Corporate entities or individuals seeking to provide management services to medical practices must operate within strict boundaries: they cannot influence clinical decisions, control hiring/firing of licensed providers, or dictate patient care standards.
- Patients receiving medical care — Patients may benefit from reduced risk of compromised care due to business-driven decisions, as providers retain full authority over diagnosis, treatment, and clinical judgment.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Strengthens protection of clinical autonomy by prohibiting unlicensed entities—including corporate investors and MSOs—from interfering with clinical decisions (e.g., staffing, coding, billing, time with patients), reducing the risk that business incentives override patient-centered care, especially in vulnerable settings like nursing homes and hospices.
HealthcarePeopleRef: Sec. 1(1), Sec. 2–7 (facility-specific prohibitions), Sec. 1(5)(a)–(ix)Requires licensed providers to hold majority voting shares, majority of board seats, and all key officer roles (except secretary/treasurer), ensuring that ownership and governance remain with those directly delivering care—this strengthens provider-led decision-making and reduces corporate influence over practice priorities.
HealthcarePeopleRef: Sec. 1(2)(a)–(c), Sec. 1(3), Sec. 1(5)(a)Explicitly prohibits interference with clinical judgment—including through EHR configuration, scheduling mandates, or coding pressure—which can lead to unsafe conditions (e.g., rushed visits, inappropriate discharges, misdiagnosis); this enhances patient safety by insulating clinical decisions from financial or operational pressure.
Public SafetyPeopleRef: Sec. 1(5)(a)–(ix), Sec. 2–7Makes violations of corporate practice restrictions a standalone ground for disciplinary action, reinforcing provider autonomy as a professional standard—this strengthens the ethical foundation of clinical practice and protects providers from coercion by corporate employers.
Rights & LibertiesPeopleRef: Sec. 8(27), Sec. 1(1)Requires all licensed providers to affirm awareness of corporate practice rules during renewal, promoting broader understanding of legal boundaries and potentially deterring future encroachments—though administrative, it reinforces professional accountability.
HealthcareLean peopleRef: Sec. 9–31 (attestation requirement)
Potential Concerns (5)
Requires licensed providers to hold all officer positions (except secretary/treasurer) and prohibits de facto control over clinical operations—even indirectly—through contracts with management services organizations (MSOs), which may force many providers to restructure or terminate existing arrangements, potentially disrupting employment relationships and reducing operational flexibility for small practices.
Business & EmploymentPeopleRef: Sec. 1(2)(c), Sec. 1(5)(a), Sec. 8(27), Sec. 9–31Prohibits providers from holding overlapping roles in both medical practices and MSOs, and bans compensation arrangements with MSOs tied to ownership or management—this could eliminate income streams for providers who currently supplement clinical income through MSO contracts, especially in rural or underserved areas where such arrangements help sustain practices.
Business & EmploymentPeopleRef: Sec. 1(4)(a)–(e), Sec. 1(5)(a)–(ix)Expands definition of unprofessional conduct to include violations of corporate practice rules, exposing providers to disciplinary action—including license suspension—for structural or contractual noncompliance, even if no patient harm occurred; this creates legal risk for providers who may lack legal expertise to navigate complex ownership arrangements.
Business & EmploymentLean peopleRef: Sec. 8(27), Sec. 1(1), Sec. 1(2)Mandates attestation of awareness of corporate practice rules during license renewal for all licensed providers (including nurses, therapists, etc.), increasing administrative burden on providers already facing high caseloads and documentation demands, with minimal offsetting benefit to patient care.
HealthcareLean peopleRef: Sec. 9–31 (attestation requirement)Minimal fiscal impact expected, but licensing boards may incur modest administrative costs to update forms and provide guidance—costs likely absorbed within existing budgets and unlikely to trigger cuts to other services.
Local GovernmentRef: Fiscal Impact section
Who Is Most Affected
Providers in independent or small-group practices that do not currently rely on corporate structures may see minimal disruption and benefit from stronger protection against corporate coercion. However, providers in integrated systems (e.g., hospital-employed or MSO-supported practices) may face costly restructuring or loss of ancillary income.
Medical practices structured as professional service corporations must reconfigure ownership and governance to ensure licensed providers hold majority control and officer roles—this may require legal restructuring and could limit access to non-physician capital, but strengthens provider-led governance.
MSOs and corporate investors will be barred from influencing clinical decisions—even indirectly—through management contracts, eliminating a common revenue model. This may reduce investment in health care infrastructure but aligns with long-standing ethical norms about clinical autonomy.
Patients may benefit from reduced risk of compromised care due to business-driven decisions (e.g., shortened visits, inappropriate coding, staffing cuts), especially in high-risk settings like nursing homes and hospices. However, some patients in rural areas may face reduced access if practices close or consolidate due to restructuring costs.
Hospitals, nursing homes, and other facilities must ensure non-licensed managers or corporate affiliates do not interfere with clinical judgment—this reinforces provider autonomy in institutional settings but may require policy updates and staff training.