Can I Own a Medical Practice if I am Not a Doctor? An Overview of Corporate Practice of Medicine

Can I Own a Medical Practice if I am Not a Doctor? An Overview of Corporate Practice of Medicine

Contact Us

    Did we answer your questions?

    We appreciate all your questions during the Webinar and responded to as many as we were able during the Webinar. If you have further questions, you may benefit from a Legal Strategy Session with one of our attorneys.


    Clara Salvai:

    Hello. Good afternoon. My name is Clara Salvai. I’m the current Healthcare Law Group COO, and we are delighted to welcome you to our webinar. Today, we have selected one of the most requested topics, which is, can I own a medical practice if I’m not a doctor?

    And we will talk a little bit about an overview on corporate practice of medicine. So without further ado, I want to introduce the two attorneys that are accompanying me today, which are Mr. Chris Esseltine and Mr. Matthew Stokke. So please, guys, introduce yourself for those who don’t know you yet. And for those who are coming back after our latest webinar, welcome back. We are happy to see you here again with us. So Matt, Chris, please.

    Matthew Stokke:

    Hello everyone. Thank you for coming today. My name is Matt Stokke. I’ve been with the firm now for close to two years, and I have been involved in healthcare law since I started out practicing. I’m based in the Southern California area. I look forward to providing some more information and some more guidance to y’all today.

    Clara Salvai:


    Chris Esseltine:

    My name is Chris Esseltine. I’ve been a practicing healthcare attorney for the last 16 years. I’ve started out my career in Washington, DC, and I represent clients large and small, in nearly every type of healthcare business across the country. And very glad that all of you joined us and looking forward to this webinar.

    Clara Salvai:

    Perfect. So today, we have prepared four questions. The idea is that we are going to discuss these four questions first, and then we are going to have an open Q&A. So you are invited to post your questions on the Q&A section when we are open on that portion of the webinar. And then towards the end, we are going to offer you some ways of getting contact with us and tell you a little bit about our resources, and what we are working on towards this last six months of the year. It’s crazy how time fly.

    So I’m going to start with the first question so that we can get it started. The first question says, what services can an MSO provide? And what services can it not provide? How can you divide the clinical versus the management services? So, Matt, do you want to start with that one?

    Matthew Stokke:

    Sure. Thank you for the question, Clara. This is an important part of the corporate practice of medicine that Clara was mentioning. The idea behind corporate practice of medicine, which you may have heard of, and you may have seen doing Google searches online, is basically that an MSO, which is the non-professional company, managing a professional practice, which is a completely separate company in itself. The MSO cannot essentially have too much control or influence in the clinical operations of the practice.

    There’s specific law out there that defines what exactly it is, but that’s the essence of what the corporate practice of medicine is designed to prevent, essentially preventing business-minded people, entrepreneurial people from dictating or controlling how medical services should be rendered for what the legislators say is a business reason, business purpose, not exactly what’s in the best interest of the patient. So that’s the rationale behind this.

    And it’s important to really distinguish what services the MSO provides from the clinical side of the operations. Examples of services that an MSO provides include the operational management of the practice. That could include administrative staff at the practice, the front office staff, patient scheduling services and other backend administrative duties that’s common for any kind of company, any kind of professional practice, for that matter.

    Other common services an MSO provides is quality assurance, making sure that patients are happy, getting feedback from patients, risk management services. It can provide consultation in that regard and make sure that every clinical personnel is doing their job and maintaining good patient relations. Other common services, IT services, providing that important technology assistance when it’s needed, the equipment and other services. Sometimes the MSO will be the one responsible for furnishing a medical office, for example.

    A note there on the equipment is that if it’s a prescriptive medical device, that would usually be in the domain of the professional practice, requiring a medical doctor to purchase that directly, as opposed to the MSO. Other types of services an MSO can provide, again, this is all on a consultative basis, providing suggestions to the practice. The practice rates, that may be something an MSO can do, some market research about what the usual and customary rates are in the local area, and suggest different pricing structures. Important again not to dictate that, but to suggest it for the medical practice to be the one to actually make that final decision.

    And it’s also common service to provide the billing services for the medical practice. That includes both insurance, billing and cash-based billing, where there might be invoices or fees collected from the patients themselves. Financial records is another common service an MSO provides, providing profit-loss statements, preparing statements like that, that will help the practice see how they’re doing financially with everything.

    Other common services that… Well, this one isn’t so common, but we have seen it before where an MSO will provide translation services, depending on the type of patient base that the practice is going after. That may be a necessary service for that. MSOs also often obtain supplier numbers, accreditations, help with licensing in different way. All of the administrative paperwork that goes into that.

    And part of the question that Clara mentioned is what MSOs do not provide. In California, the medical board has published a pretty handy publication. It’s available online in the Q&A section, and they give some examples of what an MSO should not be involved with. And I can just list off some of those here. Yeah. One of them is determining what diagnostic tests are appropriate for a particular condition, determining the need for referrals to or consultation with another physician, responsibility for the ultimate overall care of the patient, determining how many patients a physician or another practitioner must see in a given period of time, and determining how many hours a practitioner needs to work at the practice per week.

    So those are just a few examples that the medical board wanted to make sure people knew. There’s others as well that are variations of that. But the end of the day, it’s important MSO does not get involved in the clinical work, the professional decision making that a doctor should make.

    Clara Salvai:

    Got it. That is super helpful. And keep in mind, for those who are watching this webinar live, and for those who are going to be watching the webinar as a recording, all of those questions and everything that we bring to the webinars are part of everything that we see on a week to week basis.

    So, all the feedback and all the information that the attorneys are sharing with you is based on things that we are actually not only seeing, but we are working on actively every week. So that’s why it’s always good to find your consult, if you have any particular matters.

    But now let me ask you, Chris, you’re working in so many MSOs as well. So let me ask you, is there anything that you want to share. Because thank you, Matt, your answer was so wide that I feel like you responded the majority of the cases. But Chris, is there anything else that you wish to add too?

    Chris Esseltine:

    Yeah, I’ll just say that there are really two different scenarios where you can have an MSO or where the MSO can provide services to a particular practice. One is where there’s already an existing practice. Let’s say it’s a med spa. Let’s say it’s a dermatology clinic, whatever it is. And the practice needs the existing clinic and practice needs management services. And so a person can start an MSO and make an agreement with that practice and provide those services.

    The other scenario is where someone wants to be a part of a practice, wants to open their own med spa. They’re not a doctor. They don’t have a doctor partner they can work with. Maybe they’re just a lay person without any medical training at all. So obviously, in states that prohibit the corporate practice of medicine, they can’t actually own their own med spa practice, whatever it is.

    And in those particular cases, there isn’t an existing practice ready to go to perform services for. So that person who wants to open it will find a doctor, find a practice that wants to set up a new clinic, let’s say, and the MSO can provide all of the consulting services for that to happen, and even can open the, quote unquote, clinic. So an MSO can register… Let’s say they want to open a med spa and you can call it, whatever, California Med Spa, Iowa Med Spa, whatever you want the name to be. And the MSO can own the signage. It can own, or lease the space. It can own all of that intellectual property, and the actual medical practice, which is owned by the doctor, or whatever other medical providers, that is a separate entity. It’s a separate professional corporation or however it’s structured.

    And so if you’re thinking that, “Okay, I’d like to be involved. I’d like to start a medical practice, but I can’t under the current law of my state,” you can even go so far as to open the actual physical space with signage and name and everything. But the practice itself, the professional corporation that does all the medical services has to be separate and can then enter into an agreement with you, the MSO, to perform all those business and administrative functions. And that’s sort of a phase two or a separate type of MSO provider relationship.

    Clara Salvai:

    Got it. That is super helpful as well. I know that many out there who are thinking about how they can enter the MSO venture, always bring these questions. So I hope that you, on the other side, find that helpful.

    Okay. So we are moving towards question number two. And this is one question that we see all the time. The question that our clients bring is, is there a limit to the number of members that an MSO can have for the state, right? And in relation to this question, actually, we have added, who should the PC hire and who should the MSO hire? And Chris, if you want to take this and start the answer, I think that is really helpful. So if you state to the persons, like what PC stands for. I know that is a common question that we also have all the time, so please take over.

    Chris Esseltine:

    Absolutely. Thank you. So is there a limit to the number of members? In a lot of states that prohibit the corporate practice of medicine, there are limits to the number of medical providers that can own a professional corporation, but an MSO is just a regular, old company. You can file it as an LLC. You can do it as a C Corp, however you want to do it, whatever makes sense. And so there are no restrictions on the number of people who can be part of that, just like there’s no restriction on the number of members of any company you start, if you want to start an LLC, no restrictions on that. If you want to start a regular corporation, I mean, you could have a hundred people, you could have one person.

    So there really are no restrictions because remember, an MSO isn’t even… it’s not a special type of company or corporation. Under the laws of your particular state, you would just register it as whatever you want to do, an LLC, a C Corp, an S Corp, whatever you want to do. And you would designate yourself as a medical services organization… I’m sorry, a management services organization, but there’s no particular designation under state law for filing an MSO. So it’s just a regular company that you can have as many or as few members as you would like.

    Now, a PC, that stands for professional corporation. In some states, you get a PLLC, which is a professional limited liability company, or there’re different variations. But for example, in the state of California, medical practices have to be filed as PCs, as professional corporations. Law firms have to be filed as professional corporations. And if you’re an accountant, same thing.

    So that’s what PC stands for. And so who should the PC, in other words, the practice we’re talking about now, who should the professional corporation, the medical practice hire? Any medical staff, right? So they can hire whoever they want to. If they want to hire a receptionist, they may. If they want to hire the janitorial services, sure, you can do that. But by law, only the medical practice can hire medical staff, a nurse, a nurse practitioner, a physician’s assistant, another doctor, anyone who’s performing medical services and has some kind of license or certification to perform them needs to be hired by the PC.

    Usually, the MSO takes care of all the other positions. So usually, the MSO hires the receptionist and the janitorial staff, and can hire an accountant, can hire whoever it is that needs to take care of business and administrative functions only. But it is impermissible in states that prohibit the corporate practice of medicine for the MSO to hire any medical staff. In other words, I’ve heard a lot of people say, “Well, I need to hire a medical director.” “Oh, are you a doctor?” “Well, no. I’m just going to start the MSO.” “Okay, well then you can’t hire a medical director. The doctor has to own that medical practice. You own the MSO, and that doctor pays you, not the other way around.” So remember that, that an MSO does not hire a doctor, does not pay a doctor for services, the doctor, or the medical practice, hires the MSO to perform services.

    Now the MSO can collect money, can bill and collect money as one of its services. But again, it’s not like the MSO collects the money for itself, and then, “Okay, I’m going to give you, Doctor, this much a month because you’re working for me.” No, no, no. The doctor has to give, or the medical practice has to give the MSO the money, has to pay the MSO for its services. So just remember, the MSO may not hire or pay or supervise in any way, any medical staff, but all the other staff that does business and any kind of administrative functions, that’s fine for the MSO to hire.

    Clara Salvai:

    Perfect. Super, super clear. Matt, is there anything that you wish to add to this question?

    Matthew Stokke:

    No. Chris covered everything. I think if I were to add anything, it would just be to emphasize that the flow of money, of professional money involved in this whole arrangement, if you think of it on a patient coming in to receive professional services, patient will first pay the practice. That money’s deposited in the practice bank account first, because it’s professional fees. Then on a, typically on a monthly basis, the practice will pay the MSO for its management services at the agreed upon fee. So that’s a simple, easy way to think about it.

    Clara Salvai:

    Perfect. That is actually the last portion that you added, along with the whole explanation of Chris, is super helpful. I think for the persons seeing this, one of the main questions that we have all the time is like, how do I manage the fees? And I think that moving forward to the next webinar, it’s worthy to have an overview of how the MSO manages the fees so that all the persons can really understand that. So thank you so much for your answer, guys.

    So we are moving towards the next question. And the next question says, can an MSO provide marketing services? And this is one of the main ones as well, because everybody wants to understand if this is doable or not. So, Matt?

    Matthew Stokke:

    Yeah, thanks for the question. And this has been a hot topic with MSOs and what they can and cannot do. There, I would say the most… the issue with marketing, the legal issue is at what point does that turn in… do those services turn into patient referrals from the MSO to the practice? It will depend on the state law and how they define referral. And in California, for example, one of the strictest states when it comes to just about everything, I’d say years ago, it was very common for the medical practices for, professional practices… doesn’t just have to be medical, to be the ones to provide those marketing services for itself in-house, where a separate third party like a marketing company or an MSO would not have provided those marketing services just to be on the safe side, in terms of mitigating any interpretation that there is a patient referral from MSO to the practice.

    And the problem or the issue with referrals is that we all know that there’s in the background hanging all the time something called the Anti-Kickback Law, which most of you may have heard of. And that generally prohibits a doctor, a professional licensee from paying another person for a patient referral or receiving money for a patient referral to another practitioner.

    So that’s what we’re trying to mitigate when we talk about marketing, when an MSO is involved. The perception or the actual payment of money for patient referrals. And so the safest way, again, would be to do those marketing services in-house, through the practice. However, it has become more common for the MSO to provide these marketing services. And there’s a couple ways to mitigate there being a kickback risk when it comes to these marketing services. One of those ways is you want to make sure that if the MSO provides the marketing services, any flyers, any marketing materials always is on the letterhead of the actual practice.

    It does not come from MSO that has a completely separate name that is essentially connecting that patient to the practice. So we always recommend, it’s always done on the practice letterhead. And in terms of the fees involved with marketing, we always recommend our MSO clients charge an additional fee, separated out for their marketing services provided. And that fee would be a flat fee. And that, again, would be to mitigate any risk of there being a kickback or a perception of a kickback. When you have a flat fee that’s being paid by the practice to the MSO for those services, the fee doesn’t go up or down every month, depending on how many patients may have been generated through those marketing activities.

    And so that helps mitigate against there being any sort of additional payment, lesser payment based on patient that have been acquired through those marketing activities. Nothing’s a bulletproof solution in healthcare where it’s an uncertain landscape a lot of the times when it comes to these kinds of laws, but that is one way to help mitigate. And Chris, if you have anything to add to that, by all means.

    Chris Esseltine:

    Yeah. And I would just say that the law is different when you are accepting federal healthcare dollars, like Medicare, Medicaid versus commercial pay. And then when you get into commercial pay, you’ve got to analyze each state law and what it allows. And then if you’re just doing a cash pay model, like say a lot of med spas are, or a lot of functional medicine practices or that kind of thing, then the law is completely different.

    So give us a call depending on what your needs are, because the analysis will be different and we can guide you through whatever that analysis needs to be.

    Clara Salvai:

    Perfect. That is super helpful. And actually, this is really tied to the last question. And the last question that we have for this afternoon is what kind of fees can an MSO charge? So I think that is pretty related to the conversation that you were just kind of starting. So, Chris, do you want to start with that one?

    Chris Esseltine:

    Sure. So it has to be, according to the law, fair market value. Okay. What does that mean? Well, I mean, the term fair market value is exactly what it sounds like. It has to be fair for the given services for the particular market you’re in.

    So, there are some cities, some regions around the country that would pay less for a particular service, or the market isn’t… you would charge more for more services, for example, right? So if an MSO were doing 20 different things, they could charge more. It’s justifiable, it’s a fair market value for everything they’re doing to charge a higher rate. Whereas if the MSO were just maybe leasing the space and paying a receptionist to bring patients in, that’s not a whole lot. So you couldn’t charge as much for that.

    So, what does fair market value mean? Unfortunately, there is no specific legal definition of it. That’s more of an economic and business decision. There are companies out there that calculate fair market value for certain services in a given area, region, city, et cetera. But it’s a good thing, in some ways, that there’s no exact amount for fair market value or percentage, but then it’s bad because we don’t know if we’re in the fair market value range. Are we violating the law?

    And so it gives you… It’s a double edged sword, but it does give you a lot of leeway to decide what a fair market value is. The issue that we have to be very careful about is, are you, as the MSO owner, essentially owning, not on paper, but essentially owning the practice, running the practice? Do you have a doctor who says, “Okay, fine. I’ll start a professional medical corporation, and I don’t ever want to show up or do anything, or be responsible. Just on paper, I’ll own the practice. And then you, MSO owner, you do whatever you want and run the thing.”

    That is patently legal. Don’t do that. Never get involved with a doctor who’s willing to do that, because whatever state you’re in, the state will find out eventually. And I’ve talked to clients who said, “Well, I know this practice over here. This clinic is doing that because they haven’t gotten caught yet,” but it is just a matter of time.

    So what the states don’t want to see is that kind of scenario that I’ve just explained. And if, let’s say, the MSO is charging 90% of whatever the practice is making, and the doctor’s getting 10%, what’s the state going to conclude? It’s going to conclude the MSO really essentially owns this practice, runs this practice. No medical practice would start and hire an MSO only to give them, say, 90% or 95% of everything they make. That doesn’t make any sense. Right?

    So we’re talking about this little pass through arrangement. We’re talking about a scheme. So the percentage or whatever the fee is that the MSO is getting can’t be so high that it looks to the state as though, it’s just the MSO essentially owning this whole thing. But at the same time, it doesn’t have to be a very low fee. It has to be something commensurate with all of the functions that the MSO is doing. There haven’t been many cases come to court over this particular issue. There was one case in Texas where they said taking two thirds of the medical practice’s money as the MSO fee is excessive and illegal. But in most states, there haven’t been any cases brought to court to establish any kind of precedent.

    So it just has to be something fair market value for the number of services and everything that the MSO is actually doing. And we can help guide you through that. We can give you an idea based on what you want to do for a practice and what the arrangements are. We can guide you and give you an idea of what’s fair market value, what is not.

    Clara Salvai:

    Perfect. That is super helpful. Matt, is there anything that you want to add?

    Matthew Stokke:

    No, I think Chris had some really good information in there. I would just add, to keep it simple, I always say there’s two major ways in terms of structuring that fee, the fee methodology. The safest way from a legal perspective is a monthly flat fee, for obvious reasons. That doesn’t make much sense from a business standpoint.

    The other way that we typically see these fees structured is as a percentage of the gross practice revenues. Again, as Chris said, everything has to be fair market value. And in a state like California, which is heavily regulated in the law, it does specifically allow a percentage of the gross practice revenues. And that term gross is important and often trips people up from a financial standpoint, but there is some good, clear guidance here in California. A lot of the states elsewhere won’t have an explicit allowance like that for a percentage. And it may just be silent on that topic.

    Other states, it may be even more strict. New York is one state I’m thinking of where a flat fee is required for an MSO to be paid. A percentage still has not been… It’s prohibited in New York. And California, as Chris said, there’s some case law out there, minimal case law. There was a case a few years ago in California, where the court did not take issue with a cost plus model that an MSO wanted to charge. So whatever the MSO’s costs were for that month, they add a percentage to that based on those costs. And that’s what they received.

    It’s still not a common fee methodology we see, and probably not something I necessarily recommend just because the only authority for it is in one lone case. So people are getting creative out there. Typically, the more creative you get, the risk level just goes up just because there’s likely not going to be any precedent for that type of methodology.

    Clara Salvai:

    Thank you. Yeah, that’s really helpful. And I think that for everybody on the other side, it is so important to understand no matter where you are located, laws does change from a state to a state. And so it’s really important to have an attorney guiding you so that they can research the specific state guidelines for your venture when it comes to the laws in that state.

    So when Matt and Chris refers to California and other states, Matt just mentioned New York, it’s really important to know like the laws and the regulations for these MSO structure are not the same throughout the whole USA. So it’s worth to mention that because I know that some of you know, and some of you may not know. So here it is, a little bit of information.

    So thank you so much, guys. I think that your answers have been really wide, and I hope that you, on the other side, are able to learn a little bit about how the MSOs function and what is permissible, what’s not, and how you can navigate this.

    Now, we are going to open the Q&A portion. So please, if you have any questions that you want us to answer, I know that some of you already started typing your questions. Thank you so much for that. For those of you who are thinking, “Well, do I have a question that I want to answer or something,” just go there to the Q&A, post your question. We are going to briefly review in a minute or two so that we can start dragging some questions live and we can answer them. Hopefully, they will also help other people who are in a similar situation than you, and they can find this really useful.

    So Matt, Chris, do you want to open your Q&A and start selecting some of the questions that you want to answer? And when you have the…

    Chris Esseltine:


    Clara Salvai:

    Perfect. So go ahead, Chris, if you have found one that you like.

    Chris Esseltine:

    Yes. So there’s a question here. How will things change in, I’m assuming this is California, next year when nurse practitioners have full authority? So there is a law that’s been passed in the state of California that, like many other states, it’s becoming the trend. Not all states in the United States are allowing this, but California’s jumped on the bandwagon and allowed nurse practitioners to become independent practitioners. So they don’t need a physician to supervise. They can open a practice. They can register a professional corporation and they don’t need a doctor.

    So, for example, if someone wanted to open a med spa, well, “I can’t do that. I’m a nurse practitioner. I need a doctor to run the practice and I’ll run the MSO.” Well, now nurse practitioners can. In terms of, yeah, the corporate practice of medicine, they’re free and clear to practice, with full authority as if they were doctors.

    When will that happen? There have been rumblings that… I mean, it’s 2023, for sure. There have been a few rumblings suggesting it’ll be right away in January 1st, 2023, but there has been no official date set for when that law goes into operation. So can we guarantee it’s January 1st? No, we’re really hoping though, for all our nurse practitioner friends and clients. So that’s sort of a standby, wait and see until it’s officially announced. But in terms of the corporate practice of medicine, and in terms of starting an MSO, you might not need an MSO if you’re a nurse practitioner and just want to open your own practice.

    Clara Salvai:

    And I just want to add to that question. Thank you so much, Chris, for your answer. We are constantly monitoring to see when it becomes law so that we can hopefully provide you with the resources and everything that you need.

    In the meantime, you can actually go and check out on our blog. I know that we have been working on some articles that are in relation to this topic. So if you want to know more about that, you can visit our webpage and you can see on the blog portion of it, and seek for this question in particular. And you’re going to see that we have some articles that we have been working on the last, I would say, six to four weeks, because we are aware that this is a topic that is really important for our clients and for all of you who are not clients yet, but you are waiting for this. So thank you, Chris. Matt, is there any question that you want to tackle?

    Matthew Stokke:

    Yeah. I see a question here about marketing fees. The question is, can you adjust the marketing fees annually or quarterly?

    And the answer here is going to be the same as if they were asking about the just general management fees as well. And again, whenever we answer questions about fees, it’s going to depend on whether the practice has paid any federal monies from the Medicare program and any other federal program out there. So if federal law does apply, the practice and the MSO is going to want to adopt a fee that fits within the safe harbor of the federal laws. And one of the common requirements to be in the safe harbor of those federal laws and what is recommended as a best practice, even where federal law does not apply, is the fees really should not be amended or changed during the one year term.

    So in other words, if you choose 40% as the management fee, that 40% should remain the same for one year periods. So on an annual basis, you can amend that fee depending on if there’s additional services being provided by the MSO, for example, or fewer services. The amendment should never be based on volume or value of any patient referrals that might be coming from the MSO to the practice. That’s never a legitimate explanation from the regulator’s standpoint. And that answer goes especially for the case of marketing fees. If you have a flat marketing fee per month, you should not be… I highly recommend against changing that fee during the one year term, because then it starts to look like if you change it every month, it looks like there is consideration for referrals, the number of referrals coming from MSO to the practice.

    Clara Salvai:

    Perfect. Thank you so much, Matt. That’s really helpful.

    Chris Esseltine:

    For those who don’t understand that, Medicare has put this rule in place because they have seen abuse happen due to inducement or motivation to get more referrals. So a marketing company or any other third party company, if they’re paid based on the number of people they get for the practice, then they’ll try to get them… I’m not saying everyone will, but I’m saying oftentimes, these companies will try to get patients in any way they can. They’ll lie. They’ll twist the truth a little bit. They’ll say, “Oh, this is part of a great clinical trial.” Well, there’s no clinical trial. But they’ll find creative ways to get the patient to come into the doctor’s office so that they can get more money. And that wastes federal taxpayer dollars, in other words, Medicare, Medicaid, that kind of thing.

    And so they want to avoid waste and abuse and fraud, honestly, when the patient shouldn’t be there in the first place. So that’s why inducement based on the value or volume of referrals is prohibited under the Medicare and other federal healthcare programs.

    Clara Salvai:

    Perfect. Thank you so much. I’m seeing that we have many questions. Chris, do you want to take another one?

    Chris Esseltine:

    Sure. Yeah. There’s a question… excuse me… about if I am a nurse and want to start an MSO working with a medical practice, but I also want to work in the practice and perform services, can I do that?

    And the answer is absolutely yes, but you have to wear two different hats, and you have to keep those hats very, very separate. For example, if you start an MSO, you’re a nurse, you’re not allowed to own the medical practice. So you can start an MSO and you can perform, not as a nurse, but just as a private citizen, you can perform all the business and administrative functions for that medical practice. And as a nurse, you can put on a separate hat and you can go in and work in that clinic or practice as well. But remember, the MSO, your MSO, does not employ you as a nurse. It cannot employ you.

    So you are a business person when you’re running the MSO, you are a nurse when you’re performing medical procedures, and the practice has to employ you, not the MSO. So you have to make a separate agreement, an employment agreement, with the practice. So if it’s Dr. Jones, Dr. Jones will hire you to perform medical procedures as a nurse. And Dr. Jones will also pay you as the MSO separately for performing all those management services. So long as you’ve got two separate agreements and you’re being paid by two separate or on a separate basis, and they don’t have anything to do with one another, then you’re totally fine to also perform those procedures in the clinic.

    And by the way, you can set up that employment agreement however you want to. You can be a 1099 contracted nurse. You can be a W2 full employed nurse. You can do it on a per procedure basis. You can get paid on an hourly basis. However you and the medical practice set that up is fine. It just has to be separate from the MSO.

    Clara Salvai:

    Perfect. That was really helpful. Matt, do you want to select another question?

    Matthew Stokke:

    Yeah, there was a question earlier, we may have addressed it since, asking if the MSO needs to be structured as a professional LLC, and have at least one member of that entity be a licensed person. And no, MSOs do not have the same rules as practice entities, professional entities. So purely non-licensed people, business people, can own the MSO. There may not be involvement by any licensed person in the MSO, and they can be filed as regular LLCs, like Chris was saying, corporations. So no rules for the MSO set up there.

    Clara Salvai:

    Perfect. Chris?

    Chris Esseltine:

    Okay. So there’s one here. Does an MSO hire dieticians, or do they have to be hired by the PC? Any profession that needs to be licensed or supervised to perform services, the MSO really can’t hire or supervise that person because the MSO is not licensed in that particular field. Right?

    So a health coach, health coaches are not licensed. Dietician and nutritionists are licensed. So a health coach, for example, you could hire a health coach. MSOs can hire anybody who isn’t professionally licensed. Now, that’s the general rule. Some states do allow a private company to hire people and supervise them, who are not necessarily medical professionals. In other words, a doctor, a nurse, a nurse practitioner, a physician’s assistant. So, dieticians, in some states, nutritionists, et cetera, may be supervised and hired by the particular MSO or whatever private company. So you just have to check state by state, what states allow what.

    Clara Salvai:

    Perfect. Matt, we are nearing to the end. So, Matt, do you want to select another one?

    Matthew Stokke:

    Yeah, sure. I see one here. Can our MSO have an MD-PhD as chief scientific officer or similar paid position?

    It’s a good question. We’ve been seeing more MSOs who are involved more in the… maybe the product side of health-related products, where they may actually hire on an MD not to provide medical services in the MSO, but to provide their professional background and their experience in patient care matters to the MSO.

    We also do see MSOs that are owned by doctors. And so, there’s not a direct prohibition against that in itself, where a doctor is an employee or an officer of an MSO. There are some pitfalls if that MSO also manages that doctor’s practice, where you’d want to be careful about if there’s any marketing services done by that MSO. However, no, there’s nothing prohibiting a doctor from being involved in an MSO. And like everything in the healthcare industry, there should be… whatever compensation that doctor receives in the MSO for non-medical services should be fair market value. There should be no sort of ulterior motive or reason for putting them on paper in the MSO where they receive money that may not be rightfully earned for bonafide services.

    Clara Salvai:

    Perfect. Thank you so much, Matt. So Chris, do you want to do the honor to choose the last question of the evening today?

    Chris Esseltine:

    Sure. So there’s in conjunction with Matt’s last question, there is a question that asked about any kind of medical professional required to be a part of an MSO. So not only may you have a medical professional as an owner of the MSO, it’s not required to do that. Because remember, an MSO is just a private organization. It’s a private corporate entity that is there doing business and administrative services. So anybody can own it or be a part of it. There is no requirement to have a licensed medical professional, because remember, it’s not doing any licensed medical professional services.

    Clara Salvai:

    Perfect. Thank you so much. So with this question, we actually end the webinar for today. I want to thank everybody who has been with us today. We appreciate you so much. We are looking forward to see you on our next webinar.

    In the meantime, you’re more than welcome to contact our law firm for any questions that you may have. We are looking forward to help you with your ventures as well. And remember that we have a very wide library of blog posts. We have also a YouTube channel, so you can always go there and research what we have in store for you. We work really hard to provide you with the latest news when it comes to healthcare law. So thank you so much. It has been a pleasure. And I wish you a beautiful end of the week, because we are almost on Friday. So thank you so much. Bye.

    MSO Attorney Banner


    • I would definitely recommend. I needed direction regarding the FDA and how the rules would affect my business. Responsive, accessible, and knowledgeable.

      Richard Freedland
      Richard Freedland GRAMedical, CEO
    • Impressive credentials are only overshadowed by their clear awareness of practical strategies to help Physicians navigate modern healthcare and achieve successful outcomes.

      James Riviezzo
      James Riviezzo Practice On Your Terms

    Join our Mailing List

    * indicates required
    Book your Legal Strategy Session now

    Start typing and press Enter to search