What is an MSO-PC Structure — and Why Does Your Digital Health Startup Need One?
- MedPath Compliance Group
- Apr 17
- 2 min read
As digital health and telemedicine startups expand into multiple states, they often encounter a complex legal landscape. One of the most effective—and widely used—structures to navigate this is the MSO-PC model. But what exactly is it, and why is it so essential for healthcare companies aiming to scale?
This article breaks down the basics of the MSO-PC structure and explains why it's become the go-to model for startups operating in states with Corporate Practice of Medicine (CPOM) restrictions.
What is an MSO-PC Structure?
The MSO-PC model separates clinical and non-clinical functions between two entities:
Professional Corporation (PC): This physician-owned entity delivers clinical care. In CPOM states, only licensed physicians can own and control clinical decisions.
Management Services Organization (MSO): This entity (typically owned by entrepreneurs, investors, or a parent company) provides non-clinical support—admin, tech, HR, billing, marketing, and more.
The MSO contracts with the PC through a Management Services Agreement (MSA) that defines the roles, responsibilities, and boundaries of each party.
Why Startups Use the MSO-PC Model
✅ CPOM Compliance: In many states, laws prohibit corporations from practicing medicine or employing physicians. The MSO-PC model enables compliance while preserving business viability.
✅ Operational Flexibility: The MSO handles day-to-day operations, allowing the PC to focus on care delivery and regulatory oversight.
✅ Investor Participation: Investors can participate in the business side (MSO) without violating laws that restrict non-physician ownership of clinical entities.
✅ Scalable Expansion: MSOs can support multiple PCs in different states, each structured to comply with local laws. This makes the model ideal for national digital health growth.
Best Practices for MSO-PC Structuring
Draft clear, state-compliant Management Services Agreements that outline the division of responsibilities.
Ensure PC owners are licensed physicians with real authority over clinical matters.
Establish financial separation between clinical revenue and MSO fees.
Regularly review your structure to remain aligned with evolving state laws.
Conclusion: The MSO-PC model has emerged as a powerful framework for digital health companies operating across state lines. When designed correctly, it enables startups to grow compliantly, preserve physician-led care, and unlock scale with operational efficiency.
If your startup is exploring expansion, understanding how to properly implement this structure is key to long-term success.
If you are a healthcare startup or know a digital health founder who needs guidance, reach out to schedule a complementary MSO-PC model Strategy Call. We’ll discuss your MSO-PC structure strategy and explore ways to align operational growth with evolving state regulations.
📞 Need MSO-PC Structure Guidance?
Disclaimer: The information in this article is intended for general informational purposes related to MSO-PC structure and compliance. While MedPath offers guidance and insights to support healthcare startups, this content should not be interpreted as legal advice. For legal questions specific to your circumstances, consult a licensed attorney.
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