The MSO Model provides the go-to legal structure through which a businessperson or business entity (such as, for example, a telemedicine app, health center, medical spa, or another enterprise that delivers health and wellness services) can profitably venture with licensed healthcare clinicians (for example: physicians, psychologists, chiropractors, behavioral healthcare providers).
The reason we deploy the MSO Model is because healthcare businesses must carefully navigate the regulatory hurdles of prohibitions against corporate practice of medicine and fee-splitting/kickback. Even in States that supposedly have a looser or “weak” prohibition against “corporate” practice of medicine (CPM or CPOM), enforcement can focus on the extent to which the business venture unduly has control over clinical practice.
Our law firm has helped hundreds and hundreds of healthcare startups as well as established health and wellness companies sculpt the MSO Model to accomplish their business goals, while mitigating legal and regulatory risk. We love helping companies like you navigate these waters so you can launch or grow and scale your healthcare venture.
What is an MSO?
The Management Services Organization (MSO) Model is one that many healthcare businesses use in order to help mitigate the risk of enforcement for corporate practice of medicine (CPM) and fee-splitting (kickbacks).
The key concept behind the MSO Model is that the physician, chiropractor, acupuncturist, nutritionist or dietitian, physical therapist, psychologist, or other clinical healthcare provider is busily engaged with the clinical side of practice, while the MSO runs the business.
What is a PC or “PLLC”?
What makes your entity a Professional Corporation (PC) (or in some states, Professional Limited Liability Company (PLLC)?
Typically, in the Articles of Incorporation, you must state that the purpose of the corporation is a professional purpose—for example, the practice of “medicine,” “psychology,” “chiropractic,” nursing,” or “dentistry.”
The general rule, is that only a Professional Corporation can offer professional services, and that a general corporation or LLC cannot offer professional services. So, if you want to practice medicine or another licensed healthcare profession, organize as a Professional Corporation—or PLLC in states such as New York that allow such an entity.
Who Benefits from the MSO Model?
The MSO Model can be especially useful if you’re creating:
- Chiropractor working with MD
- Functional medicine practice or center
- Integrative medicine practice or center
- IV hydration clinic
- Medical spa
- Multi-disciplinary health and wellness center
- Nurse Practitioner
- Stem cell or regenerative medicine center
- Telemedicine or telehealth center
- Urgent care center
Who Can Own an MSO?
The good news is that anyone can own an MSO. This is part of the beauty and flexibility of the MSO Model. Generally, the businesspeople (who are not licensed clinicians) can be owners in the MSO. Sometimes, the MSO can offer equity to the clinicians, although this can raise conflict of interest issues. The fact that the MSO need not be physician-owned makes it easier for the MSO owners to sell and exit the venture.
MSO Attorney Services
The first crucial step to advance your future*.
What You Get
- Legal review of your business model and recommendations on venture structure.**
- Analysis of key potential regulatory blocks and recommendations for mitigating enforcement risk (e.g., corporate practice of medicine, fee-splitting, etc.).
- Draft key legal documents that control the legal relationship between MSO and clinicians and/or venture owners.***
- Legal consultation/advice by phone and email (up to X Attorney hours).****
* Representation is subject to a conflicts check and to mutual execution of our Legal Services Agreement.
** For example, in California, the Moscone-Knox Professional Corporations Act allows “mix-and-match” ownership for professional medical corporations (PMCs) where physicians own at least 51% and other providers (for example, nurses) can own up to 49%.
*** Including the MSO Agreement (MSA), employment and contractor agreements with key personnel, shareholder agreements, and initial drafts of other critical documents between venture and/or clinician owners and hires (as recommended by your MSO Attorney).
**** Includes legal consultation on key issues such as termination arrangements, indemnification, and other critical terms.
Additional services may be provided a la carte on request.
Let us introduce you to the Team it will work along with you while setting up your venture.
We work in a collaborative space where our Attorneys combine their knowledge and expertise to create the best strategies for our clients while setting up their MSO structures.
Our healthcare attorneys know how to deploy the MSO model in a flexible way that adapts this separation of the overall venture into the clinical and business components, to the particular niche venture at hand.
The MSO model can be deployed in many ways for the healthcare practice or venture that seeks to make a profit from the actual business side of health and wellness.
Matthew M. Stokke
Senior Associate Attorney
Matthew is a Senior Associate attorney at Cohen Healthcare Law Group where he practices all aspects of healthcare law, FDA and FTC regulations, business law, and general corporate law. Matthew focuses his practice on developing legal risk mitigation strategies for health and wellness companies of all sizes in the ever-evolving regulatory environment of the healthcare industry.
Of Counsel Attorney