Health and Wellness Ventures Can Profit by Using MSOs as their Business Structure

Our next business model would be someone that provide specialized medical care, let’s say it’s addiction, sleep, brain care, geriatric care, pediatric care, and everything in-between. So, if this is your model of care, let’s say you’re going to roll out a software, or an app for a particular population or using a particular therapy. We’ve heard a lot of idiosyncratic niche therapies and people want to organize their whole business model around this, say it’s bioidentical hormones. So, let’s says again, you’re the businessperson, the MSO vehicle is really great for you. Why?

Because you’re unlicensed, you don’t have a medical license. Even if you have a different kind of healthcare license, it’s not a medical license. There’s still the other question of how you’re going to get these doctors in your business. And the best way to it is by having this arms-length transaction/contract with them called the MSO agreement where you set the terms by which you are going to supply all the business things that surround the clinical practice, and they’ll supply the clinical practice, and they’ll charge the patients, and you’ll charge them. And that’s a very clean arrangement because you’re not splitting the professional fees. You’re taking a fee for the business services that you provide – management and marketing services, and you get fair market value for your share of work. So, it’s equitable.

And if you do that, you’ve got the MSO model and that’s why you need to consult an MSO attorney. Now, there’s one other thing you could add to the mix here, which is that physicians might want to have other healthcare professionals that they “partner” with. But remember, that there’s two vehicles: there’s the professional medical corporation, there’s the MSO. Between them, there’s an MSO agreement.

Whether you have clinicians buying into the MSO (that’s a whole other story, there’s some conflict-of-interest issues – our attorneys can talk to you and walk you through some of those), but typically the other clinicians and brought through on the professional medical corporation side. In California, there a statute known as the Moscone-Knox Professional Corporations Act, and that’s where you get this idea about doctors have to own collectively 51% or more, the other clinicians can own up to 49%.

So, don’t be confused, let’s be clear. The Moscone-Knox Professional Corporations Act 51% – 49%, that’s for the professional medical corporation. The MSO doesn’t have those rules, anyone can own an MSO including a businessperson. That’s why it’s such a powerful vehicle.

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