To be or NOT to be a Medical Director. That is the question.

I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry just like you clients navigate healthcare and FDA legal issues so you can launch, or continue to scale, your health and wellness product or service.

Recently we advised a physician who had received a terrific offer to become a medical director.  The clinic itself was owned by a non-physician in California.

Our quick answer: warning, danger Will Robinson.

Please see the post on our Blog, If Someone Asks You to Be Medical Director, Run!

Basically, the physician should own a professional medical corporation and have at least 51% percent of the shares, pursuant to the Moscone-Knox Professional Corporations Act.

The physician must have Operational Control of the professional medical corporation.  This means the MD must make final decisions regarding not only patient care, but also hiring and firing, equipment purchases, hours of operation, advertising, and a myriad of details for the business.

A general corporation or LLC cannot hire an MD.  In California, that would still, likely be considered unlicensed practice of medicine.

The cleanest business model, from the perspective of legal and regulatory risk, is to have the business arm be an MSO, which provides strictly administrative and marketing services to the physician’s professional medical corporation.  The MSO then can charge fair market value for its services to the professional medical corporation.

The MSO can bill on behalf of the physician or physician’s PMC (Professional Medical Corporation), as the case may be.  We can provide for that for you in the MSO Agreement.  We aren’t billing and coding experts, though, so we don’t tell our clients what to put on the third-party reimbursement form, but that is a function the MSO can provide. The MSO can hire a billing expert to get the billing right.

Basically, the professional medical corporation hires the clinical staff.  This will include the nurses who will work in collaboration with the MD, if they are Nurse Practitioners, or under the physician’s supervision if they are RNs.

Because California is currently so strict about enforcing its prohibition against the corporate practice of medicine (or can be strict), the physician should formally own the medical records.  Although there are some ways for the MSO to retain copies, but that is something we would address in a formal legal consult with our client.

We’ve represented dozens if not hundreds of MSOs and physician practices grappling with these issues.  We typically begin with a Legal Strategy Session, so the Client can get the lay of the land and make some critical key foundational decisions.

Thanks for watching. If you still have questions, click on the link below, cohenhealthcarelaw.com/contact, to send us a message or book an appointment. Here’s to the success of your healthcare venture, we look forward to speaking with you soon.