Can the MSO Legally Brand the Healthcare Venture?

Can the MSO Legally Brand the Healthcare Venture?

In today’s video, we return to the puzzle of how the MSO brands its enterprise, given that the licensed medical doctor calls the shots for the professional medical corporation in the venture.  This venture could be a wellness clinic, integrative medicine or functional medicine center, medical spa, telemedicine company, mobile medical app, or another healthcare startup.

We often handle this relationship between the MSO and the professional corporation—or in the case of mental health, it might be a psychological or behavioral health corporation.

Hi, I’m Michael H. Cohen, founding attorney of Cohen Healthcare Law Group and we help companies just like you, navigate the legal and regulatory terrain for the health and wellness industry.

The relationship between the MSO and the professional corporation is governed by the MSO Agreement, or MSA.

Among many other deal points, there’s an open question as to who can control the branding.  Typically, it’s the MSO that wants to hold the branding, because remember, the MSO can be owned or majority owned by anyone, whether or not they are a licensed health care professional. It’s often the businesspeople that are putting this thing together.

So, that means the MSO can hold a lot of value and intellectual property and can be sold to anyone.

There are questions about who should be the shareholder in the MSO.  For example, giving the physician shares could be considered a conflict of interest on the medical side, though then again it is commonly done.  But does the venture really want to give the medical clinician or clinicians a permanent stake in the business, or would they prefer to get new business partners by being able to dissolve and enter into one on more favorable terms with other people in the MSO?

As you can see, there’s a lot of strategy involved in the legal advice required for a health center,  wellness center, medical spa, integrative care center, functional medicine group, telemedicine venture, healthcare software app, or any enterprise where you need to figure out how the businesspeople are going to do what they need to do in a compliant way, and prosper, while the medical people run the clinical end.

Now in the case of our client Dr. Bob, there are all sort of additional hurdles.  For example, he wanted to privately brand dietary supplements.  And he wanted to have on his staff two registered nurses, a nurse practitioner, a chiropractor, an acupuncturist, an herbalist, and a health coach, and an exercise physiologist.  He wanted to know who could be in which entity, the professional corporation or the MSO; whether they could be kept as independent contractors or needed to be employees, or as a third option, might contract separately with the MSO; and who could or should share in the revenue stream as a shareholder and what.

These are all questions that we deal with a lot.  In this case Dr. Bob also wanted to have the MSO hold the name of the venture and then license that name with the professional medical corporation. So, that’s a question that also comes up frequently and has some nuances.  Even though, for example, a State like California has very strict written rules about issuing a fictitious name permit, branding questions require a lot of strategic care because not everyone is clear about who does what in extent to which these rules actually get enforced in practice.

Thanks for watching. Please contact us with your questions. We helped lots and lots of healthcare industry clients build their dream, and we look forward to working with you on your journey to success. We hope it’s a great path (we know it is), and we’re there with you every step of the way.

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