PC/MSO Formation & Counsel
PC/MSO Formation & Counsel
Any clinical business operating in California must navigate the Corporate Practice of Medicine doctrine. We guide founders through every step of building a compliant PC/MSO structure, from entity formation to day-to-day operational compliance.
Structure, contracts, and operations. All three have to work.
California's Corporate Practice of Medicine doctrine prohibits corporations and unlicensed individuals from controlling medical decision-making. The PC/MSO model is the legally recognized framework that allows non-physician business partners and investors to benefit from and participate in clinical entities, but only when structured correctly. Getting it right means more than filing the right paperwork or signing a boilerplate Medical Director Agreement. The operational reality must match what is on paper, because what is at stake is the license of every clinician involved and the financial liability of everyone in the structure. That is why our approach addresses all three layers: the entities, the agreements that connect them, and the operational compliance that makes the structure real.
Entity Formation & Ownership Structure
Before anything else can happen, the right entities need to exist and be owned correctly. The Professional Corporation must be formed, owned, and governed in a way that satisfies California's Corporate Practice of Medicine doctrine. The MSO must be structured to provide legitimate management services without crossing into clinical control. Getting this right is not just a legal formality. It determines who can be hired, how the business can contract, what licenses can be applied for, how revenue flows, and whether the entire structure holds up when it is scrutinized.
- The Professional Corporation must be formed with the correct ownership percentages before the business can employ licensed providers, enter clinical contracts, or apply for the licenses and permits it needs to operate.
- Physician ownership is structured to satisfy the 51% requirement while preserving the flexibility the business actually needs, including how decisions get made and how ownership can evolve over time.
- Where allied professionals or non-physician partners are involved, their participation is structured to be legally defensible and clearly documented from the start.
- The Management Services Organization is formed as a separate entity with the authority to employ non-clinical staff, hold business assets, and provide administrative and operational services to the PC without crossing into clinical control.
- For investors or non-physician business partners, participation frameworks are built to allow meaningful economic involvement without creating CPOM exposure.
- For businesses operating across multiple locations or clinical models, multi-entity structures are designed to keep each component clean and compliant as the business scales.
Agreements & Clinical Contracts
Once the entities exist and are properly owned, the contracts are what tie them together. The MSA defines the relationship between the PC and the MSO, how services are provided, and how the MSO is compensated. The clinical agreements define who is responsible for what, what oversight looks like, and what happens when things change. These documents are not boilerplate. They need to reflect the actual structure of the business, hold up to regulatory review, and give every party clear expectations from day one.
- The Management Services Agreement establishes a legitimate, fair-market-value fee structure between the PC and MSO, with clear scope, exclusivity provisions, and fee-splitting compliance built in.
- Medical Director Agreements define the physician's clinical oversight role, protect against liability exposure, and satisfy California Medical Board requirements for physician supervision.
- Where NPs or PAs are providing services, Collaboration Agreements establish the supervisory relationship, define scope, and address geographic and ratio requirements under California law.
- Medical Supervision Agreements document delegated services, standing orders, and the supervision protocols that support compliant clinical operations.
- Clinical Services Agreements define scope of services, scheduling arrangements, compensation, and how the relationship ends if it needs to.
- Employment and independent contractor agreements for clinical staff are drafted to be consistent with the overall structure and avoid unintended liability or misclassification exposure.
- Term, transition, and exit provisions are built into every clinical contract so the business is protected if a provider relationship changes.
Operational Compliance & Launch Readiness
With the structure in place and the contracts signed, the business still has to open its doors and operate in a way that is licensed, insured, and compliant on an ongoing basis. This is where most clinical businesses run into problems, not because the structure was wrong, but because the day-to-day operations were not set up to match it. We work through every layer of operational compliance so the business is ready to see patients, bill for services, and grow without creating regulatory exposure.
- Revenue flow between the PC and MSO is structured from the start, including bank account setup and financial handling practices that reflect the contractual relationship and do not create fee-splitting exposure.
- Marketing materials and advertising practices are reviewed for compliance with California Business and Professions Code restrictions on fee-splitting, false advertising, and unlicensed practice.
- Insurance coverage is identified and allocated across the PC and MSO, including professional liability, general liability, and cyber coverage appropriate to the clinical model.
- EMR and EHR platform selection and configuration is reviewed to ensure the system meets HIPAA requirements and supports compliant clinical documentation.
- PHI handling policies are built to address access controls, workforce training, breach response procedures, and Business Associate Agreements with vendors.
- Patient consent forms and informed consent protocols are drafted or reviewed to satisfy California requirements and reflect the services actually being provided.
- Clinical protocols and standing orders are reviewed so the supervision structure documented in the contracts is reflected in how the practice actually operates.
- Medical Board fictitious name permit applications are prepared and filed so the practice can operate and market under its chosen brand name in compliance with California Business and Professions Code.
- Following Medical Board approval, the required county fictitious business name filing is completed to bring the registration into full legal effect at the local level.
- Local licensing and permitting requirements are identified and worked through for the specific business location, including city business licenses and health department permits.
- Zoning and facility compliance requirements are reviewed, including use permits, signage restrictions, and any build-out approvals needed before the business can open.
- Corporate governance documents are put in place and an ongoing compliance program is designed so the business stays current as regulations change.
Let's build your structure.
Schedule a consultation and we will walk through the right PC/MSO framework for your clinical model, from entity formation through operational launch.