Who can own a professional entity

Ownership of a professional entity is restricted to individuals licensed in the profession the entity practices, in most states, the same profession, in the same state. The MSO has no such restriction, which is the entire reason it exists.

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The general rule

To own shares or membership interests in a professional entity, a person must generally:

1. Hold a current, active license in the profession the entity is organized to practice
2. Hold it in that state — an out-of-state license usually does not qualify
3. Be a natural person, not an entity, in most states

That third point is why an MSO cannot hold even a single share, and why holding-company structures that work in other industries don’t work here.

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The variations

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Same profession only

This is the default. A medical PC’s owners must be physicians. A dental PC’s owners must be dentists. A physician generally cannot own a dental practice and vice versa, even though both are licensed healthcare professionals. This has real consequences for integrated care models: a group offering medicine, dentistry, and physical therapy usually needs three professional entities, one per profession, each with its own appropriately licensed owner and its own MSA. See Multi-specialty considerations.

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Multi-disciplinary allowances

Some states permit specified combinations of related professions in one entity. Common permitted groupings include physicians with podiatrists, physicians with psychologists, or broader healthcare-professional groupings under a state’s professional entity statute. These are statutory lists. If your state’s statute doesn’t name the combination, assume it isn’t allowed.

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Percentage allowances

A few states permit minority non-licensee ownership. Arizona is a commonly cited example, where non-licensed ownership up to a minority stake has been permitted under its professional corporation framework. Even where minority lay ownership is permitted, it may not solve your problem. Investors typically need control or a clear path to economics, and a capped minority stake in the PC delivers neither. Most groups in these states still use the standard MSO-PC architecture. And CPOM’s control prong operates independently of the ownership percentage.

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Out-of-state licensees

Some states permit a licensee of another state to own an interest in a professional entity, provided at least one owner, sometimes a majority, is licensed in-state. This varies enough that it must be checked directly, and it is one of the levers multi-state groups use to reduce the number of distinct friendly owners they maintain. Oregon’s SB 951 moved in the opposite direction, restricting dual ownership by shareholders of professional medical entities as part of its MSO control provisions.¹

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Officers and directors, not just owners

A frequently missed requirement: several states restrict who may serve as a director or officer of a professional entity, not merely who may own shares. Where that rule applies:

• Your MSO’s CEO cannot be the PC’s president
• Your MSO’s CFO cannot be the PC’s treasurer
• The PC’s board cannot include non-licensee investors or executives

In those states, the governance pattern founders often propose, where the clinician owns the entity and MSO executives sit on its board, is not permitted.

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Why the MSO has no restrictions

The MSO is an ordinary business entity that does not practice a licensed profession. It can be owned by:

• Non-clinician founders
• Venture capital and private equity funds
• Holding companies and other entities
• Employees, through options or profits interests
• Foreign persons and entities

This is the core of the architecture: the ownership flexibility sits in the MSO and the licensure requirements sit in the PC. Ownership flexibility does not extend to control. California’s SB 351 and Vermont’s Act 133 both target private equity groups and hedge funds specifically, restricting what they may control regardless of the entity through which they hold their interest.² Who owns the MSO is now legally relevant in some states in a way it was not five years ago.

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Exclusion and eligibility

Beyond licensure, an owner must not be excluded from federal healthcare programs. An owner on the OIG List of Excluded Individuals/Entities or debarred via SAM.gov compromises the entity’s ability to bill federal programs and creates civil monetary penalty exposure. Screen at onboarding and monthly thereafter, for owners and all staff. Document each check. See Vet and select a friendly clinician-owner.

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Practical questions to answer

For every professional entity you form:

• Which profession is this entity organized to practice?
• Who may own it, same profession only, or a permitted combination?
• Must owners be licensed in this state?
• May an entity hold shares, or natural persons only?
• Is minority non-licensee ownership permitted, and would it help?
• Must directors be licensees?
• Must officers be licensees?
• Are there restrictions on owning interests in multiple professional entities?
• Is the proposed owner clear on OIG LEIE and SAM.gov?

Answer these from your state’s statute and page, CPOM by state, and confirm with counsel.

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Sources

1. Or. S.B. 951 (2025 Reg. Sess.). Enrolled bill.
2. Cal. S.B. 351 (2025); Vt. Act 133 (2026). See the legislation tracker.