So, You Want to Open a Med Spa. Here’s What You Need to Know about MSOs

med spa

You’re keen to get in on one of the fastest growing retail sectors in the USA – medical spas.  The med spa space is growing rapidly and attracting entrepreneurs hoping to find their way in what is essentially a combination of medical services and retail.

But that can get complicated if you’re not a doctor.  The corporate practice of medicine doctrine, adopted by many US states, stipulates that a non-physician may not employ a doctor or offer medical services.  Only a doctor can do that.  And med spas, due to their unique nature are deemed to be medical facilities.  But the MSO (Management Service Organization) is a legal vehicle which allows you to participate in the sector, doctor or not.

With the support of an MSO, non-physicians can not only own the operating structure of a med spa but play a leading role in its daily operations and resulting profits.

The MSO

Entrepreneurs seeking to enter the med spa as owners need to know if their state upholds the corporate practice of medicine doctrine.  If that’s the case, the MSO is your answer.

The MSO becomes the administrative structure of the med spa, managing operations aspects like payroll, infrastructure (building, equipment), marketing and the books.  Partnering with a doctor, a Management Services Agreement is created with the doctor, for whom an entirely different corporate entity is created.  This establishes a wall of separation between the medical services rendered and your role as owner, protecting both parties to the MSA.

The MSA establishes the material nature of the interplay between the two parties, of which the doctor is the medical service provider.  Compensation is set according to the guests which receive medical services, with the doctor paying the MSO for its administration of the facility and the medical services offered.

Landlord/Tenant Framework

It’s helpful to think of the MSO as a type of landlord, with the doctor acting as tenant in the relationship.  The doctor uses the space provided to perform medical services, while the MSO provides the space, its contents, marketing, branding, billing, payroll and other administrative services, as required.

The MSO charges the doctor for all the services provided, but unlike a landlord/tenant agreement, the “rent” can change from month to month according to the conduct and success of the med spa.

Advantageous to both parties is the wall of separation between their respective services.  This protects them both with a clear delineation between the doctor’s services and the MSO’s.

Liability is thus limited on both sides of the agreement, with both parties served with material benefits they wouldn’t otherwise enjoy.

It should be remembered that setting up a medical practice is an arduous process.  The MSO makes that easier for the doctor.  In turn, the doctor’s presence in the agreement makes it possible for non-physician entrepreneurs to enter the med spa space while honoring the doctrine of the corporate practice of medicine.

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