Many states have legislation which prohibits the provision of services like those offered in a med spa by people other than doctors (or a corporation owned by the doctor). But even if you live in a state with legislation mandating physician ownership, you can still be a principal in the daily operations of a medical spa by setting up an MSO (Management Service Organization).
The corporate doctrine of medicine is observed by many states. In sum, it sets out the principle that only doctors or doctor-owned businesses may be paid for the provision of medical services. And since med spas typically provide services deemed medical in nature, they’re governed by the corporate doctrine of medicine.
Check here to see where you stand in your state.
What an MSO Does
The MSO provides a way around the corporate doctrine of medicine, while still honoring its intent. Exactly what it sounds like, the MSO option allows entrepreneurs to participate in the day-to-day operations of a medical spa. That’s everything from marketing to payroll to the books. Essentially, an MSO acts as an administrative partner to the medical spa’s operations.
It’s rather like a lease agreement in which the doctor rents space from the MSO, receiving in kind the benefit of administrative support. But there’s no fixed monthly amount to be paid.
Rather, funds collected by the MOS from the doctor in the relationship hinge on the amount of business the doctor is doing. More clients mean a stronger relationship between the MSO and the doctor, as both benefit from the arrangement in equal measure.
It’s kind of a win/win.
Because the MSO owns the facility (in principle leasing the premises, equipment and contractual services to the doctor), there’s very little risk on the doctor’s side.
The risk of liability is limited in this arrangement on both sides, as the MSO is in charge of managing that end of the practice also. While this may sound as though the doctor’s getting the sweet end of the stick, the fact is that the MSO has been paid handsomely for the deal to be in place.
Eyes Wide Open
Before entering into an MSO arrangement to operate as a med spa with a doctor, it’s incumbent upon the entrepreneur to become thoroughly acquainted with laws governing MSOs in the state they’re in.
Retaining legal counsel is also indispensable and foundational to the arrangement to prevent conditions which may damage one or both parties. A well-structured agreement, prepared under the auspices of an attorney, will prevent this. Counting on information gleaned from the internet may seem like a good way to get around hiring a lawyer with knowledge of the sector. In the end, though, it could be your undoing.
Key to an MSO’s success is the full separation of the doctor’s and entrepreneur’s roles. A wall of separation protects the interests of both parties.
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