Professional Corporation (PC)
The PC is the clinical entity. In California, one or more physicians must own at least 51% of a medical corporation. The remaining 49% may be owned only by specified, licensed allied professionals—for example, podiatrists, psychologists, registered nurses (including nurse practitioners), optometrists, physician assistants, marriage and family therapists, clinical social workers, chiropractors, acupuncturists, pharmacists, physical therapists, licensed midwives, and naturopathic doctors. Non-licensed lay investors cannot own the PC.
In addition, non-physician owners cannot outnumber the physician owners, and the same ratio rule applies to officers and directors.
Management Services Organization (MSO)
The MSO (often an LLC or corporation) is the business side—leasing space, hiring non-clinical staff, billing, marketing, equipment, and day-to-day administration. It can be owned by non-physicians, including business partners or investors.
The MSA (Management Services Agreement)
The PC and MSO are tied together by an MSA that spells out services and fair-market-value compensation. To avoid unlawful fee-splitting, the compensation should not vary with patient volume or practice revenue. Flat or cost-plus fees set in advance are the safest approach.
