Key Takeaways
Structuring a Concierge Medicine or DPC Practice
A concierge medicine or direct primary care (DPC) practice can use a variety of structures, but the starting point is the same: clearly separate the clinical practice from any administrative entity involved in operating it.
The clinical practice is responsible for providing medical care, maintaining patient relationships, and making clinical decisions. An MSO, or management services organization, can provide non-clinical services such as staffing, scheduling, technology, marketing, accounting, facilities, and other administrative support.
Keeping those roles separate can be particularly important when the MSO is owned by someone who is not a licensed physician. State corporate practice of medicine laws may restrict who can own or control a medical practice, so the structure should address those requirements before the practice begins operating.
The appropriate structure can vary by state. A physician establishing a DPC practice in Illinois, for example, may face different entity and ownership considerations than a practice operating in California, New York, Texas, or Wisconsin.
When Does a Concierge or DPC Practice Need an MSO?
A concierge or DPC practice does not necessarily need an MSO. A physician may operate the clinical practice and handle its administrative functions directly.
An MSO can become useful when a practice wants to separate clinical operations from administrative management or centralize services across multiple practices. For example, an MSO might provide a shared technology platform, administrative staff, marketing, accounting, office space, or other infrastructure.
The fact that an MSO provides these services does not mean it should control the clinical practice. The parties should identify the administrative functions the MSO will perform and preserve the clinical practice’s authority over professional decisions.
This distinction is especially important when an MSO supports multiple practices or operates in multiple states. The structure should reflect the actual relationship rather than treating the MSO as the owner or operator of the medical practice.
Keeping Clinical and Administrative Control Separate
One of the central considerations in an MSO arrangement is determining which decisions fall within clinical practice and which can be delegated to the MSO.
The clinical practice should retain appropriate authority over matters such as:
- Diagnosis and treatment
- Prescribing
- Referrals
- Patient care protocols
- Medical records
- Clinical staffing and professional qualifications
- Professional judgment
- Patient relationships
The MSO can manage agreed-upon administrative functions without controlling these clinical decisions. The distinction should appear in both the organizational structure and the parties’ written agreements. A provision stating that the MSO does not control clinical decisions may not be sufficient if other provisions effectively give the MSO that authority.
What Should an MSO Agreement Cover?
The management services agreement is a key document in the relationship between the clinical practice and the MSO. It should describe what each entity will do and establish clear boundaries between them.
Depending on the arrangement, the agreement may address:
- Administrative and management services
- Staffing and personnel
- Office space and equipment
- Technology and software
- Billing and payment processing
- Marketing
- Accounting
- Administrative support
- Insurance
- Intellectual property
- Expenses
- Management fees
- Term and termination
The compensation structure deserves particular attention. Management fees should be evaluated based on applicable healthcare laws, including restrictions involving fee-splitting and the Anti-Kickback Statute.
The agreement should also reflect how the relationship will work in practice. A structure that looks appropriate on paper can still create problems if the parties operate differently once the practice is up and running.
How Patient Agreements Fit Into the Structure
The agreement between the practice and its patients is separate from the agreement between the practice and the MSO.
A concierge or DPC practice should have a patient-facing membership or direct-pay agreement that explains what the patient pays and which services the practice will provide. The agreement should be with the appropriate clinical entity and should be consistent with the overall practice structure.
This is particularly important for DPC practices not accepting insurance. The practice should clearly establish its direct-pay model and make sure its patient agreements accurately describe the services included in the membership.
Medicare also requires separate consideration for DPC practices. Issues involving DPC and Medicare should be addressed when designing the model, rather than after the practice begins accepting members. Similarly, changes involving HSA eligibility may affect how certain DPC arrangements are structured and communicated to patients.
Structuring Multi-State Concierge and DPC Practices
An MSO supporting practices in multiple states may need a structure that accounts for different state laws.
Corporate practice of medicine restrictions, professional entity requirements, fee arrangements, and other healthcare laws can vary significantly. A management structure that works in one state may need modifications before being used in another.
This does not necessarily mean that every state requires an entirely separate MSO. Instead, the parties should determine which parts of the structure can remain consistent and where state-specific provisions or agreements are necessary.
Patient agreements may also need to account for the states in which the practice operates. Multi-state membership agreements can address some of these issues while maintaining consistency across the practice’s patient relationships.
Using an MSO When Transitioning an Existing Practice
An MSO structure can also be part of a physician’s transition from a traditional practice to concierge medicine or DPC.
An existing practice may already have employees, payor contracts, leases, equipment, technology, patient relationships, and other obligations. Physicians transitioning an existing practice should determine whether those assets and relationships will remain with the clinical practice, transfer to another entity, or be addressed through the new MSO arrangement.
The transition should be planned before the new model takes effect. The MSO agreement should then reflect the post-transition arrangement rather than using a generic agreement that does not match how the entities will operate.
Building the Right Practice and MSO Structure
There is no single structure that works for every concierge or DPC practice. The appropriate approach depends on ownership, state law, the services the MSO will provide, and how the practice will interact with its patients.
The key is to establish the relationship between the clinical practice and MSO before operations begin. Ownership, clinical control, management services, compensation, and patient agreements should all fit together as part of one structure.
Jackson LLP works with physicians and healthcare organizations on the legal structures and agreements underlying concierge medicine, DPC, and MSO arrangements in Illinois, California, New York, Texas, and Wisconsin. Our attorneys can assess the proposed structure and draft the agreements needed to establish the relationship.
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Frequently Asked Questions About Concierge Medicine, DPC, and MSOs
Can an MSO own a concierge or DPC medical practice?
Generally, no. It depends on state law and the specific structure. In many arrangements, the clinical practice remains owned by a physician or other permitted professional owner while the MSO provides administrative services.
Does a DPC practice need an MSO?
No. A DPC practice can operate without an MSO. An MSO may be useful when a practice wants to outsource or centralize certain administrative functions.
What does an MSO do for a DPC practice?
An MSO can provide non-clinical services such as staffing, scheduling, technology, marketing, accounting, facilities, and administrative support. The specific services should be defined in the management services agreement.
What should a DPC management services agreement include?
The agreement should define the services provided, compensation, expenses, staffing, administrative responsibilities, term and termination, and the division between administrative management and clinical decision-making.
Can one MSO support practices in multiple states?
Yes. The structure should account for differences in state healthcare laws and may require state-specific provisions or separate agreements.
Can an MSO control how a physician practices medicine?
No. An MSO can manage agreed-upon administrative functions, but the clinical practice should retain appropriate control over clinical decisions and professional judgment.
