Our healthcare and business law firm often represents medical practices, including primary care practices, specialty practices, med spas, and IV hydration clinics, in the initial set up phase of the business. Related to questions about the Corporate Practice of Medicine (“CPOM”), a common question we are asked is: “Do I need an MSO”? This is not always an easy question to answer. There are many reasons why an MSO may be a useful tool for your practice. For instance, it may reduce the risk of violating your state’s CPOM doctrine, it may increase regulatory compliance, or it may assist you in exit planning. This post specifically focuses on how MSOs may be useful in the context of the CPOM doctrine. If you have medical practice set up or CPOM/MSO questions or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, email@example.com. You may also learn more about our law firm by visiting www.hamillittle.com.
Two facts about MSOs and Med Spas:
Fact 1: Most med spas and IV hydration clinics offer services defined as the practice of medicine and, thus if there’s a CPOM doctrine in your state, it’s likely triggered.
If you own a med spa or IV hydration clinic, I can almost guarantee you are offering services that are considered the practice of medicine. We all are probably aware that treatments like Botox and fillers are considered the practice of medicine, but other services are not so clear and determining the answer differs state to state. Some states define medicine to include anything that penetrates the dermis layer of healthy skin, which covers esthetic services like dermaplaning (hello, Georgia!). Some states include cryotherapy and other non-ablative lasers (Hi, Alabama!). Some states leave the definition ambiguous and hope you guess right (very kind of you!) And many states include IV hydration therapy in their definition of medicine (looking at you, South Carolina!). Some states are public about these stances, publishing advisory opinions on the matter. With other states, our firm has gained a better understanding of the scope of medicine through private correspondence with medical board attorneys. At any rate, it’s not always easy to know what falls under the practice of medicine, but most med spas and IV hydration clinics we have worked with offer medical procedures. As such, most med spas and IV hydration clinics must consider CPOM implications on the ownership of the business.
Fact 2: If you are a non-physician owner of a med spa, MSOs may be helpful if your state’s CPOM doctrine places restriction on non-physician ownership.
For more about the CPOM doctrine, please review our previous blog post (3 Initial Questions to Determine if the Corporate Practice of Medicine (CPOM) Doctrine is Relevant to Your Medical Practice). If you understand the CPOM doctrine, then your next question may be: “So I can’t own a med spa if I am not a physician and I live in a strict CPOM doctrine state?” The answer is yes and no. The MSO model may help you, as a non-physician, own a business that is separate from and provides services to the medical practice. It can be a complicated arrangement, and I will only provide a high-level introduction into the topic in this blog post. A forthcoming blog post will dive deeper into MSOs. For now, though, here’s a general overview of the MSO model.
Essentially, each medical practice includes many components, including the actual practice of medicine, administrative functions, human resources, asset ownership, financial management, billing and collecting, etc. In the MSO model, you break the medical practice into two discrete businesses: The Physician Entity and the Management Services Organization. The Physician Entity provides medical care and is in charge of all the medical decisions, including hiring and firing other medical providers and allied health professionals. The MSO can engage in any number of the non-medical tasks. An easy way to understand the concept is to think of the MSO as doing everything else—performing all administrative functions, billing and collecting, marketing, providing office staff, etc. The arrangement between the Physician Entity and MSO is carefully crafted through a Management Services Agreement (MSA), which is simply a contract that says who does what and how each business is paid. A forthcoming blog post will dive into the MSO model further, but I hope this overview is useful to understand the purpose of the MSO in the CPOM context.
If you have medical practice set up or CPOM questions or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, firstname.lastname@example.org. You may also learn more about our law firm by visiting www.hamillittle.com.
*Disclaimer: Thoughts shared here do not constitute legal advice.