Many medical spa, IV hydration, and health and wellness center clients call us with this question: can you help us with “entity formation”?  Which entity should I use?

Let me clarify a couple of things. First of all, an “entity” is not something flying through the air like you see in Ghostbusters. We’re talking about a business entity.

Second, when we talk about “owning” a healthcare venture, typically we have at least two different entities: the company that owns the clinical arm, typically it’s a PC (Professional Corporation) or PLLC (Professional Limited Liability Corporation), and the company that owns the management and marketing arm.  Typically, that second company, the MSO, is either an S-corporation (meaning a corporation with a small number of owners) or an LLC.

Third, forming an entity is not in itself a big deal.  Typically, you can get a vendor to form an entity at relatively modest cost.  The key is to understand whether you’re forming the professional corporation or the general corporation (or the LLC).

Physicians, physician assistant, and nurses are housed within the professional medical corporation, and sometimes you got the psychologist within a professional psychological corporation. Accountants, bookkeepers, front desk schedulers, phone staff, and marketing people, they’re within the MSO.

Between these two, there is an MSO agreement which specifies what services the MSO will provide at fair market value to the healthcare entity.

Hi, I’m Michael H Cohen founding attorney of Cohen Healthcare Law Group.  We provide legal strategy and regulatory advice to businesses that accelerate health and wellness just like you everyday.

Thanks for watching, if you have questions please contact us, we look forward to working with you soon.