Summary
- In Part 1 of this series, we covered the legal line between wellness businesses and clinical care. Once a business crosses it, ownership structures change. Under CPOM, non-physicians cannot own or control entities delivering medical services through a traditional structure, regardless of intention or branding.
- In Part 2 of this series, we will cover split structures for healthcare businesses: a clinical entity governed by CPOM, and a separate management entity that can be owned by non-physicians and investors. The clinical entity delivers care. The management entity owns the brand, systems, and infrastructure. They are connected through a Management Services Agreement.
- The Management Services Agreement (MSA) is where economic participation happens, but also where structural risk concentrates. The management fee must reflect fair market value, cannot create pressure on clinical decision-making, and must comply with fee-splitting restrictions. How that fee is structured determines whether the model holds under scrutiny.
- The split structure works only if the separation between business operations and clinical decision-making is real, and does not just exist on paper. Scheduling controls, revenue models tied to volume, and standardized protocols can all become evidence of operational control over clinical care regardless of what documents say.
Structuring Ownership When Wellness and Healthcare Converge
In Part 1 of this series on structural legal considerations for healthcare and wellness businesses, we covered the line between wellness and clinical care. Once a business crosses that line, ownership and control are no longer flexible.
Under Corporate Practice of Medicine (CPOM) frameworks, non‑physicians cannot practice medicine, own or control entities delivering medical services in a traditional structure, or direct clinical decision-making. That is not a technical rule. It is a structural constraint.
At the same time, the market is moving in the opposite direction. Wellness businesses are adding clinical services. Clinical platforms are scaling like consumer brands. Non‑physician founders and investors are building in this space.
The result is not avoidance of the rule, but structuring around it.
The Split Structure: Clinical and Non-Clinical Legal Frameworks for Healthcare Businesses
Most clinical businesses with non‑physician involvement are built on a split model that separates clinical care from business operations.
The clinical entity, typically a PLLC or PC, delivers the medical services. It employs or contracts with licensed providers, controls diagnosis and treatment, maintains patient records, and bills for professional services. Ownership and control are limited to licensed physicians or other permitted providers, depending on the service line. This is the entity governed by CPOM.
The management entity, often structured as an LLC or corporation, operates the business. It owns the brand, systems and infrastructure, employs non‑clinical staff, and manages marketing, operations, and growth. This entity can be owned by non‑physicians, founders, and investors.
This structure is not uniform. In some models, the management entity is centralized across multiple locations or entities. In others, the management function sits at the location level, with each operating entity contracting with its own clinical counterpart. In some cases, elements of clinical care, such as intake, supervision, or telehealth services, may be coordinated across locations through a separate clinical layer.
The structure can vary, but the constraint does not: clinical decision-making must remain with licensed providers.
How Non‑Physicians Participate Economically in a Medical Business
If non‑physicians cannot own the clinical practice, participation happens through contracts.
The clinical entity and the management entity enter into a Management Services Agreement (MSA). The management entity provides services such as marketing, billing, facilities, staffing for non-clinical roles, and administrative infrastructure. In return, it receives a management fee.
That fee is where structure becomes critical. It must be consistent with fair market value, structured in a way that does not influence clinical judgment, and compliant with fee-splitting restrictions.
The Legal Boundary That Cannot Be Crossed: Control
This structure works only if the separation is real.
The clinical entity must retain control over diagnosis, treatment, prescribing, supervision of licensed providers, and the plan of care. The management entity cannot dictate clinical protocols, influence treatment decisions, or control how medicine is practiced.
The issue is not involvement. The issue is control.
Where This Breaks Down in Practice
In practice, this is where medical businesses need to be most intentional. The same operational functions described in Part 1 take on different significance once clinical services are involved.
Scheduling, standardizing service offerings, performance tracking, and scaling protocols are appropriate operational functions. The focus is ensuring that they support care delivery without shaping clinical judgment. Revenue models tied closely to collections, specific services, or volume can also influence how care is delivered if not structured carefully.
Because of this, alignment between structure and operations becomes critical. While documents may clearly assign clinical authority to licensed providers, regulators and courts evaluate how decisions are made in practice.
These issues often emerge over time. As businesses grow and systems become more standardized, structure and operations are examined together—whether in diligence, disputes, or regulatory review—to ensure they remain aligned.
Licensing Works Both Ways
The convergence described in Part 1 runs in both directions.
Wellness businesses adding clinical services must comply with healthcare regulation. Clinical providers expanding into “wellness” must also comply with non-medical licensing frameworks. Services such as massage therapy, cosmetology, and aesthetics remain regulated at the state level. Those services must still be delivered by appropriately licensed professionals. Ignoring those requirements creates exposure on the non-clinical side just as quickly.
Structure Is Not Optional
Once clinical services are introduced, entity structure, ownership, contracts, and operations must align with regulatory requirements. What was once a single-entity service business becomes a coordinated structure tied together through agreements and separated by function.
This model exists because of the convergence itself. Consumers engage through wellness platforms. Businesses scale through operational infrastructure. Clinical services require licensed oversight. The split structure allows those realities to coexist.
It works—but only if the boundaries hold.
The structure separates the business from the medicine. The risk arises when the business starts to control the medicine.
FAQs
Q: Can a non-physician own a business that provides medical services?
A: Not directly. The Corporate Practice of Medicine doctrine prohibits non-physicians from owning or controlling entities that deliver medical services. Non-physicians participate through a split structure; owning the management entity while the clinical entity remains under physician ownership. A medical practice business lawyer can advise on how to structure that correctly for your specific service line.
Q: What is a Management Services Agreement, and why does it matter?
A: A Management Services Agreement (MSA) is the contract between the clinical entity and the management entity of a healthcare business or clinical practice that defines what operational services are provided, how they’re compensated, and where the boundaries of control sit. It’s the document regulators and investors often scrutinize most closely. A poorly drafted MSA, or one where actual operations don’t reflect what the agreement says, is one of the most common structural vulnerabilities in this space.
Q: What does “operational control over clinical decision-making” mean in practice?
A: It refers to how operational systems and incentives are structured around clinical care. Scheduling, performance metrics, service protocols, and revenue arrangements can all be designed to support care delivery. The key is ensuring they do not direct or shape clinical judgment. In practice, when business operations begin to influence treatment decisions, even indirectly, the separation required under CPOM no longer reflects how the business is functioning. The focus is maintaining clear alignment so that clinical decisions remain with licensed providers, while operations support the business effectively.
Disclaimer: The information provided in this blog/article is for general informational purposes only and does not constitute legal advice. While we strive to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog/article or the information for any purpose. The content of this blog is intended to convey general information and may not reflect current legal developments, verdicts, or settlements. Any reliance you place on such information is therefore strictly at your own risk. The content is not intended to be a substitute for legal advice from a qualified attorney licensed in your state.
Your use of the information in this blog/article does not create an attorney-client relationship between you and Elena Villasenor Sullivan or Endereza Law, PLLC. Contacting us through this blog does not establish an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established. Unless otherwise stated, the attorneys listed on this blog are not certified by the Texas Board of Legal Specialization.
