Who Can Legally Own a Medical Practice in Texas?
What Is the Corporate Practice of Medicine in Texas?
The CPOM doctrine stops unlicensed individuals and corporations from controlling medical decisions. Only physicians may own entities delivering medical care in Texas.
Where Does Texas CPOM Law Come From?
It comes from the Texas Occupations Code, Texas Medical Board rules, and AG opinions:
- Occupations Code Chapter 155
- Business Organizations Code
- Texas Medical Board regulations
- Attorney General opinions
See our Texas CPOM resource.
How Does CPOM Affect Real Business Decisions?
It shapes ownership, hiring, contracts, and management, and decides whether a non-clinician can own anything.
Who Can Legally Own a Medical Practice in Texas?
Practices must be physician-owned, and entity form matters.
Licensed Physicians (MDs and DOs)
A Board-licensed physician can own a practice outright:
- Professional Association (PA)
- Professional Limited Liability Company (PLLC)
- General or Limited Partnership for groups
- Solo Proprietorship, rarely advisable
See LLC vs. PLLC.
Can Two Physicians Co-Own a Practice?
Yes. Have counsel review the partnership agreements covering profit sharing, decisions, and exits.
Can a Hospital or Health System Own a Medical Practice in Texas?
Not in a way that gives it clinical control. Hospitals can contract with physician groups, but carefully.
What About Physician Assistants and Nurse Practitioners?
Neither is a physician under Texas law, so neither can own the entity. See NP scope of practice and independent NP practice.
Who Cannot Own a Medical Practice in Texas?
Non-Physicians and General Businesses
| Entity or Individual | Can Own Medical Practice? | Alternative Legal Option |
|---|---|---|
| Registered Nurse (RN) | No | MSO structure |
| Nurse Practitioner (NP) | No | MSO structure |
| Physician Assistant (PA) | No | MSO structure |
| Entrepreneur | No | MSO structure |
| Private Equity Firm | No | MSO or contract |
| Non-physician LLC | No | Management company |
Non-physicians are not locked out; the structure must comply.
What Happens If You Violate CPOM?
- License suspension or revocation
- Voided contracts
- Texas Medical Board action
- Civil and criminal liability
- Loss of federal billing privileges
Under scrutiny? See fraud defense and licensing defense.
“Many entrepreneurs believe that if a physician signs off, they are protected. The structure matters just as much as who is involved.” – Dike Law Group PLLC
How Do Non-Physicians Legally Participate Through an MSO?
What Is an MSO and How Does It Work?
A Management Services Organization provides non-clinical services to the practice:
- Administration and staffing
- Billing and collections
- Marketing
- Technology
- Facilities, HR, payroll
The physician entity keeps clinical control, joined by a Management Services Agreement. See Texas MSOs and our MSA guide.
Is the MSO Model Legal in Texas?
Yes, when structured correctly. The physician must keep authority over patient care, clinical hiring, protocols, and treatment.
Who Typically Uses the MSO Model?
- Healthcare entrepreneurs
- Private equity acquirers
- RNs and estheticians
- Dental service organizations
- Multi-site operators
See the role of MSOs and what MSO means.
What Makes an MSO Agreement Compliant?
- Clear clinical separation
- Fair market value fees
- Termination terms protecting independence
- No unlawful fee-splitting
- Compliance with the Anti-Kickback Statute and Stark Law
See how Stark and Anti-Kickback rules apply.
What Business Structures Are Used for Texas Medical Practices?
Professional Limited Liability Company (PLLC)
The most common structure: all members must be physicians, with liability protection and pass-through taxation.
Professional Association (PA)
A physician-specific entity that works like a corporation, suiting group practices.
Comparing Common Medical Practice Structures in Texas
| Structure | Liability Protection | Tax Flexibility | Best For |
|---|---|---|---|
| PLLC | Yes | Pass-through | Solo or small groups |
| Professional Association | Yes | S or C-Corp | Multi-physician groups |
| General Partnership | No | Pass-through | Rarely advisable |
| Solo Proprietorship | No | Pass-through | Not recommended |
| MSO + Physician Entity | Varies | Flexible | Lay involvement |
See practice setup and formation.
Does a Medical Practice Need a Separate Compliance Program?
Yes, covering HIPAA, billing, and conduct. HHS guidance sets the floor. See our compliance services.
What Are the Ownership Rules for Medical Spas in Texas?
Is a Medical Spa Considered a Medical Practice?
Yes, if the services constitute medicine, as Botox, lasers, and IV therapy do. See what counts as a med spa.
Who Can Own a Medical Spa in Texas?
A physician owns the medical entity; a non-physician owns the MSO. See who can own a med spa, the MSO model, and how to open one.
Can a Nurse Own a Medical Spa in Texas?
A nurse can own the business entity, not the physician entity. See can a nurse open a med spa.
What Is the Role of a Medical Director in a Med Spa?
Real oversight: protocols, supervision, safety. A “phantom” director is a violation. See the director’s role and the agreement.
What Are the Most Common Ownership Mistakes to Avoid?
Mistake 1: Assuming a Physician Signature Makes the Structure Legal
If a non-physician actually controls clinical decisions, the arrangement violates CPOM.
Mistake 2: Using a Generic LLC Instead of a PLLC
A general LLC cannot operate a Texas medical practice.
Mistake 3: Not Having a Written Management Services Agreement
Every MSO relationship needs a written management services agreement.
Mistake 4: Paying Management Fees Based on Clinical Revenue
Fees tied to volume or clinical revenue can be illegal fee-splitting.
Mistake 5: Skipping Due Diligence When Buying a Practice
See buying a practice and how to evaluate acquisition risk.
Mistake 6: Relying on a Non-Healthcare Attorney for Formation
A general attorney may form the entity and miss the CPOM landmines. We focus only on Texas healthcare business law.
Mistake 7: Failing to Register Properly With State Agencies
Register with the Texas Medical Board, the Department of State Health Services, and others. See licensing requirements.
What Options Do Non-Physicians Have for Owning a Healthcare Business in Texas?
Option 1: The MSO Model
Own the management company; a physician owns the clinical entity.
Option 2: Non-Clinical Healthcare Businesses
Billing companies, staffing agencies, and health tech avoid CPOM.
Option 3: Nonprofit Healthcare Organizations
Certain nonprofits follow different rules. See forming a Texas nonprofit healthcare organization.
Option 4: Telemedicine Platforms
You can own the platform; the clinical layer needs a physician owner. See telemedicine requirements.
Option 5: Buying Into a Practice as a Business Partner
Some structures allow financial interest without clinical ownership. See our MSO guide for non-physicians.
Frequently Asked Questions About Medical Practice Ownership in Texas
Can a non-physician own a medical practice in Texas?
No. Only physicians can own the clinical entity, though non-physicians can own an MSO. See non-physician ownership.
Can a nurse practitioner own a clinic in Texas?
Not the physician entity, but an NP can own the MSO. See NP independent practice rules.
What is the difference between a PLLC and a PA for a medical practice in Texas?
Both are physician-restricted. A PLLC gives flexible management and pass-through tax; a PA works like a corporation. See the LLC vs. PLLC breakdown.
Can a private equity firm own a medical practice in Texas?
Not directly. Firms invest through an MSO while a physician entity keeps clinical control. See private equity clinic deals.
What happens if a medical practice is structured incorrectly in Texas?
A physician may lose their license, contracts may be voided, and billing privileges can end. Contact our investigations attorneys.
Do I need a separate entity for my medical spa in Texas?
Usually yes. Injectables, lasers, and IV therapy need a physician-owned entity, typically alongside an MSO. See med spa requirements.
Can a physician own a medical practice in multiple Texas cities?
What is a management services agreement and do I need one?
It defines services, fees, and governance between the clinical entity and the MSO. See what an MSA covers.
Is it legal for a physician to sell their practice to a non-physician in Texas?
A physician can sell assets, but the buyer must restructure around an MSO and a physician owner. See our guide to selling a practice.
Does Texas CPOM apply to telemedicine practices?
Yes. The entity delivering care to Texas patients must be physician-owned. See Texas telemedicine regulations.
Ready to Build a Legally Sound Medical Practice in Texas?
Getting ownership right separates a compliant practice from one that collapses under scrutiny.
At Dike Law Group PLLC, healthcare law is all we do. Entering from outside medicine? Start with our guide to CPOM for non-physician buyers in Texas.
Schedule a consultation. Call (972) 290-1031 or visit 6160 Warren Parkway, Suite 100, Frisco, TX 75034 (map).
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