What is the legal requirement for physician ownership in a medical spa and why is it necessary?
In Texas, the corporate practice of medicine doctrine requires a physician to maintain 51% ownership of a medical spa. This requirement exists to prevent corporations from making medical decisions for patients, ensuring these crucial choices remain with qualified medical professionals. The minimum physician ownership must be 51%, though higher percentages like 70-30 or 60-40 splits are permissible. The remaining 49% can be divided among non-physician partners.
How does ownership percentage relate to revenue distribution?
Ownership percentage does not dictate revenue distribution. The 51% physician ownership requirement is primarily for legal compliance with Texas state regulations. Partners can negotiate revenue splits independently of ownership stakes. For example, a physician might own 51% for compliance purposes but receive a different percentage of revenue based on the partnership agreement. This flexibility allows for various compensation arrangements while maintaining legal compliance.
What are the essential contracts needed for a compliant medical spa structure?
Multiple contracts are necessary for proper medical spa operation. These include:
- The initial medical spa formation with 51% physician ownership
- A contract for the physician to perform good faith exams
- A medical director agreement with the physician
- Independent contractor agreements for nurses and other practitioners
Each physician role requires a separate contract with specific rate structures to avoid anti-kickback violations.
What are common misconceptions about physician ownership?
The biggest misconception is that 51% ownership automatically entitles the physician to 51% of the revenue. In reality, the ownership structure primarily ensures legal compliance while revenue distribution can be negotiated separately. Additionally, many don’t realize that good faith exams can be conducted virtually, not just in person, though phone-only consultations are not recommended for new patients.
What should be considered when structuring the financial aspects?
The financial structure typically involves two sides: clinical and administrative. The administrative side often operates through a Management Services Organization (MSO), which can be owned entirely by non-physicians and typically receives 40-60% of revenue for providing administrative services. The clinical side involves physician compensation for medical director duties and clinical services, with each role requiring separate contracts and compensation structures.
What advice is crucial for physicians considering medical spa partnerships?
Physicians should:
- Engage a healthcare attorney for proper setup
- Understand their required involvement level
- View it as a potential side business rather than primary income
- Carefully negotiate compensation based on contributions
- Ensure clear documentation of all agreements and responsibilities
