Helped Clients Recover Over $25 Billion. Since 1979.
Helped Clients Recover Over $25 Billion. Since 1979.
In California, a management services organization can run the business side of a medical practice, but it can’t control medical care or take its pay in a way the law treats as sharing the physician’s fees. The Schenk Law Firm helps physicians and founders set up the MSO, price its services, and document the relationship.
Corporate Practice Analysis
We review a proposed structure under California’s corporate practice of medicine rules and give you the analysis in writing.
Management Fee Structures
We rebuild fees that are based on a share of the practice’s revenue into fees tied to the services actually provided, such as documented costs plus a fixed markup.
MSO Formation and Governance
We form the management company and prepare its bylaws and ownership records. We also prepare the approvals its board and shareholders sign.
Investor Documents
When outside investors put money into the MSO, we prepare the subscription documents and the related approvals.
Reviewing Management Agreements
If you’re a physician asked to sign a management company’s agreement, we review the terms and negotiate changes. See our physician contract review page.
Ownership Limits
We advise on who may own a medical corporation, including the limits on shares held by licensed professionals who aren’t physicians.
Can the MSO take a percentage of the practice’s revenue?
A percentage fee deserves a careful look, since it can look like sharing the physician’s fees. A fee tied to documented services and costs is easier to defend.
Who controls the medical decisions?
The physicians must. The MSO can handle billing, staff, space, equipment, and marketing.
Can investors put money into the MSO?
Yes. Investors who aren’t physicians usually invest in the management company rather than the medical corporation, and the subscription documents should reflect that.
The physician owner wants separate advice.
That’s often wise. When we represent the MSO or its founders, we confirm in writing which parties we represent so the physician can retain separate counsel.
Our MSO documents are years old.
Outdated bylaws and approvals can create problems when the company brings in investors or changes owners. We can bring them current.
Experience
David Lizerbram has practiced business law for more than two decades. Benjamin Schenk founded and runs a commercial real estate investment and asset management firm.
Fee Structures That Hold Up
We price the MSO’s services in a way that fits California’s rules and the business plan.
Both Sides of the Agreement
We set up MSOs for founders and review management agreements for the physicians asked to sign them.
Case Study
A management services company was formed to run the business side of an aesthetic medical practice owned by a physician. The founders’ plan paid the company 70 percent of the practice’s gross revenue, which raised problems under California’s corporate practice of medicine rules. We explained the issue in a written memo and rebuilt the fee as documented costs plus a fixed markup, with a cap so the practice keeps a real share of its revenue. We also replaced the company’s outdated governing documents with new bylaws and new approvals by the board and shareholders, which the owners signed.
Client names and identifying details are withheld. Results depend on the facts of each matter, and past results don’t guarantee a similar outcome.
The Schenk Law Firm is based in North Park, San Diego. We advise on MSO structures for medical practices throughout California.
Our full healthcare business practice.
Professional medical corporations and their state filings.
Agreements physicians are asked to sign.
Structure, agreements, and transactions for medical practices.
Ownership structure and agreements for med spas.
Investment rounds and equity for growing companies.
Fixing an MSO structure is easier before the practice opens and investors come in. We can review your plan and put the analysis in writing.
Contact us today to discuss your MSO.
Request a ConsultationIt’s a common arrangement in which a physician owns the medical corporation and a separate management company provides the business services under a management agreement.
Certain licensed professionals may own shares, but physicians must own the majority, and the other licensed professionals together are limited to a minority interest.
It should list the services, the fee, and the fee formula. It should also say who controls the bank accounts, how long the agreement lasts, how it can end, and that medical decisions stay with the physicians.
Usually, yes, since an MSO that handles billing or records works with patients’ health information.