Seeking Help: Corporate Practice of Medicine and Management Service Organizations (MSOs)

March 05, 2018

by a searcher from Northwestern University - Kellogg School of Management in Austin, TX, USA

Hey Yall,

I'm doing industry research in the medical practice industry and I have a question regarding the legality of corporate-owned (non-physician-owned) medical practices. There are certain States in the US that prohibit the corporate practice of medicine, States that allow the corporate practice of medicine, and States that do not address or regulate the CPOM. Does anyone have experience here? I know searchers have historically purchased these types of businesses and I even know some have made acquisitions in the designated "no-go" States, but I'm wondering how they got around the CPOM laws. One thought is perhaps through some sort of Management Service Organization. Research is tough due to the State-by-State regulations. It would be a huge help if someone had some insight or experience there. Any help?

Thanks, Nick

Reply by an investor
from Georgetown University in New York, NY, United States

It's a standard structure where you have an MSO that has full control over a professional company (PC) that is owned by the doctor. The MSO sweeps 100% of the cash flow/economics of the PC. Physicians become employees and are typically compensated on a % of collections. I wouldn't worry about this, as there will always be a way to structure it.

Reply by a searcher
from Harvard University in Los Angeles, CA, USA

I've looked into it pretty extensively for dental companies in California. Happy to help as well- redacted

+1 more reply.

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