Buying a Medical Practice as a Non-Physician: The MSO Route
If you already know the MSO is your path, our step-by-step guide to setting up an MSO in Texas covers formation. Dike Law Group works only in healthcare law, across Texas.
What Is a Professional Corporation (PC) in Texas?
Under the Texas Occupations Code, a medical practice must be physician-owned. A PLLC works similarly; we call both “PC.”
Who Can Own a PC in Texas?
The Corporate Practice of Medicine (CPOM) doctrine bars non-physicians from owning entities that practice medicine, an active enforcement area for the Texas Medical Board.
What Does a PC Actually Do?
- Employs or contracts physicians and clinical staff
- Bills under the physician’s or group’s NPI
- Holds the clinical licenses
- Makes clinical decisions
- Signs payor contracts
See our practice setup page.
What Is a Management Services Organization (MSO) in Texas?
An MSO provides non-clinical support and can be owned by anyone. See our Texas MSO page.
What Services Does an MSO Provide?
Under a Management Services Agreement (MSA), typically:
- HR and payroll
- Non-clinical billing and revenue cycle
- Marketing and patient acquisition
- IT infrastructure and EHR
- Facilities, leases, and equipment
- Accounting and administrative staffing
- Vendor management
The PC pays a fee set at fair market value to avoid Anti-Kickback or Stark Law problems.
Who Can Own an MSO?
Because it does not practice medicine, CPOM does not apply. See our MSO guide for non-physicians.
How Does the MSO vs. PC Distinction Actually Work in Practice?
Two businesses under contract.
| Feature | Professional Corporation (PC) | Management Services Organization (MSO) |
|---|---|---|
| Who can own it? | Licensed physicians only | Anyone, including investors |
| What does it do? | Delivers clinical services | Provides business support |
| Who employs physicians? | Yes | No, administrative staff only |
| Who holds the license? | Yes | No |
| Revenue source | Patient billing and reimbursements | Management fees |
| Subject to CPOM? | Yes | No |
| Common entity type | PLLC or PC | LLC |
The MSA governs scope, fees, term, and termination. See our breakdown of these agreements.
Why Does Texas Enforce the Separation Between Clinical and Business Ownership?
Clinical decisions belong to physicians, not business interests. The Texas Medical Board investigates practices that blur that line. Consequences can include:
- Discipline against the physician’s license
- Civil and criminal penalties under Texas law
- Exclusion from Medicare and Medicaid
- Dissolution or restructuring orders
Our licensing defense team can help.
When Do You Need Both an MSO and a PC?
Scenario 1: Non-Physician Wants to Invest in a Medical Practice
You own the MSO and earn through the management fee, the model behind most medical spas and many telemedicine companies.
Scenario 2: Physician Wants to Protect Business Assets Separately
A claim against the PC does not directly reach MSO assets.
Scenario 3: Building a Multi-Location or Scalable Practice
One MSO can serve several PCs, centralizing operations while each keeps its own licensure. See the growing role of MSOs.
Scenario 4: Preparing for Private Equity or Investor Involvement
Investors buy into the MSO without touching the PC. See how private equity approaches Texas practices.
What Are the Most Common MSO and PC Structuring Mistakes?
Mistake 1: Treating the MSO as the De Facto Practice Owner
Setting care protocols or holding the MSO out as the practice crosses into CPOM territory.
Mistake 2: Setting Management Fees Without Fair Market Value Analysis
Inflated fees that route clinical revenue to non-physician owners raise Anti-Kickback Statute exposure.
Mistake 3: Using a Generic MSA Template
Templates omit IP ownership, governance, and compliance terms, and auditors read the MSA first.
Mistake 4: Combining Finances Between MSO and PC
Commingled funds destroy the separation the structure needs.
Mistake 5: Skipping the Legal Review Before Launching
Fixing a structure after an inquiry costs more than building it right. Our Dallas compliance attorneys can help.
How Does the MSO-PC Model Apply to Medical Spas in Texas?
Injectables, lasers, and prescription treatments are the practice of medicine in Texas. The non-physician owner runs the MSO; a physician-owned PC handles treating providers.
“The MSO model lets entrepreneurs join the business of healthcare without crossing into the practice of medicine.”
How Does the MSO-PC Structure Apply to Telemedicine Practices?
The MSO owns the platform and runs operations; physicians deliver care through a separate PC. See our Texas telemedicine guide.
What Is the Role of the Management Services Agreement in the MSO-PC Relationship?
The MSA makes the structure work. It should address:
- Scope of services and exclusions
- Fee structure and payment
- Term and termination
- Governance: MSO decisions versus PC decisions
- Intellectual property: branding, systems, tools
- Compliance obligations
- Dispute resolution
An MSA giving the MSO too much clinical control can itself evidence a CPOM problem. See what an MSA includes.
Choosing Between MSO and PC: What Should Drive Your Decision?
If You Are a Licensed Physician Opening a Solo or Group Practice
You own the PC. Add an MSO for non-physician partners, outside investment, or operational separation.
If You Are a Non-Physician Healthcare Entrepreneur
Ownership runs through the MSO. Find a physician to own the PC, then structure the MSA for involvement without prohibited control. See how non-physicians operate healthcare businesses.
If You Are Acquiring an Existing Practice
Diligence both entities. See our guides to buying a medical practice in Texas and acquisition compliance risks.
If You Are Restructuring for Scale or Investment
Formalize the MSO before growth makes it harder to unwind.
What Are the Tax and Financial Benefits of the MSO-PC Structure?
Set up with counsel and a healthcare CPA, the model can offer:
- Income allocation flexibility
- Asset protection in the MSO
- Depreciation on MSO-owned property
- Investment returns outside clinical revenue
The IRS and HHS Office of Inspector General scrutinize arrangements built mainly to shift income, so documentation matters.
How Can a Healthcare Attorney Help You Structure Your Practice?
At Dike Law Group, healthcare law is the only thing we do:
- PC and MSO entity formation
- Drafting and reviewing management services agreements
- CPOM compliance and clinical governance
- Mergers, acquisitions, and restructuring
- Ongoing compliance counsel
We serve Dallas, Houston, Austin, San Antonio, Frisco, and all Texas from 6160 Warren Parkway, Ste. #100, Frisco, TX 75034.
What Are the Key Texas Regulations You Should Know About the MSO-PC Model?
| Regulation | Governing Body | Relevance |
|---|---|---|
| Corporate Practice of Medicine | Texas Medical Board | Bars non-physician ownership of the PC |
| Occupations Code, Chapter 162 | State of Texas | Governs physician practice entities |
| Anti-Kickback Statute | HHS OIG / DOJ | Regulates MSO-PC fee arrangements |
| Stark Law | CMS | Restricts certain referral arrangements |
| HIPAA | HHS / OCR | Governs data handling under BAAs |
Our investigations lawyers see gaps after the fact; the CMS Stark Law center covers federal rules.
Frequently Asked Questions About MSO vs. PC in Texas
Can a non-physician own both the MSO and the PC in Texas?
No. CPOM limits PC ownership to licensed physicians. You can own the MSO and serve the PC by contract.
Can a physician own both the PC and the MSO?
Often yes, but the MSO must genuinely deliver services at fair market value. Have counsel review it.
Does every medical practice in Texas need an MSO?
No. A solo physician with no outside partners may not need one. Added locations or investment change that.
What happens if my MSO-PC structure violates the CPOM doctrine?
Exposure includes Board discipline, penalties, program exclusion, and civil liability. See our licensing defense page.
How is the management fee between the MSO and PC determined?
It must reflect fair market value of services provided, with documented valuation.
Can an MSO employ physicians directly in Texas?
Generally no. Treating physicians belong in the PC; an MSO employing them risks practicing medicine unlicensed.
What is the difference between an MSO and a DSO in Texas?
A Dental Service Organization serves a dentist-owned entity under similar restrictions. See the DSO shift.
Do I need a Business Associate Agreement between my MSO and PC?
Yes, if the MSO touches Protected Health Information. Missing BAAs are a common oversight under HHS HIPAA rules.
Can I use the MSO-PC model for a medical spa in Texas?
Yes, and it is the usual recommendation for non-physician owners. See our medical spa resources.
How long does it take to set up an MSO-PC structure in Texas?
Formation is quick; the MSA, valuation, and governance documents take longer. Rushing causes defects.
Ready to Structure Your Texas Healthcare Practice the Right Way?
Built correctly, the structure delivers compliance and asset protection. If the MSO is your next step, our Texas MSO formation playbook lays out the sequence.
Call Dike Law Group at (972) 290-1031 or visit dklawg.com.