When navigating the complexities of starting a healthcare startup, the Managed Services Organization / Professional Corporation (MSO/PC) model offers a strategic solution that allows founders to focus on patient care while adhering to regulatory requirements. This model is particularly beneficial for healthcare startups looking to scale efficiently while ensuring compliance with the Corporate Practice of Medicine (CPOM) doctrine.
The MSO/PC model is designed to separate the business and clinical aspects of a healthcare practice. The MSO provides management, administrative, and non-clinical services, enabling the PC to concentrate on delivering medical services. Under this arrangement, tasks like accounting, billing, HR, regulatory compliance, and office management, fall under the MSO, while the PC remains solely responsible for patient care. This separation ensures that medical decisions are not influenced by corporate interests, which is a critical requirement under CPOM regulations.
The MSO/PC model is designed to separate the business and clinical aspects of a healthcare practice.
For founders, the MSO/PC model not only simplifies operations but also mitigates risk. By adhering to CPOM regulations, startups can avoid legal pitfalls that might arise from the unauthorized practice of medicine. The model also allows for more efficient scaling, as the MSO can offer services to multiple PCs, providing the necessary support for growth in different states without compromising the quality of care.
For founders, the MSO/PC model not only simplifies operations but also mitigates risk.
One of the key components of this model is the Master Services Agreement (MSA), which outlines the relationship between the MSO and the PC. This document is crucial as it defines the services provided by the MSO, the fee structure, and other operational details. Ensuring that the fees charged are at fair market value and reviewed annually is essential for compliance with state and federal laws. Proper documentation and regular reviews can help avoid scrutiny from regulators and maintain the integrity of the MSO/PC arrangement.
Another important aspect is the financial relationship between the MSO and the PC. Separate bank accounts must be maintained to prevent the commingling of funds, and clear records should be kept to track reimbursements, management fees, and any loans or advances. Additionally, separate payrolls must be maintained, as all individuals providing patient care must be hired and paid directly by the PC. These financial controls are not just good practice but are necessary to maintain the arm’s length relationship required by law.
In summary, the MSO/PC model offers a smart, scalable approach for healthcare startups, allowing them to grow rapidly while ensuring compliance with complex legal requirements. By outsourcing administrative tasks to an MSO, founders can focus on what matters most—providing high-quality care to patients. However, careful planning and strict adherence to legal and financial guidelines are crucial to the success of this model. With the right structure in place, the MSO/PC model can be a powerful tool for healthcare startups aiming to scale efficiently and responsibly.
By outsourcing administrative tasks to an MSO, founders can focus on what matters most—providing high-quality care to patients.
Incorporating the MSO/PC model into your healthcare startup offers a powerful path to scaling efficiently while maintaining compliance with regulatory requirements. With the right support, you can focus on providing top-quality patient care while leaving the complexities of finance, accounting, tax, and HR to the experts. Burkland specializes in working with MSOs to provide the strategic financial and operational services your startup needs to thrive. Ready to streamline your growth? Contact Burkland today to learn how we can help.