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.
The general rule
To own shares or membership interests in a professional entity, a person must generally:
- Hold a current, active license in the profession the entity is organized to practice
- Hold it in that state — an out-of-state license usually does not qualify
- 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.
The variations
Same profession only
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.
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, not general principles. If your state’s statute doesn’t name the combination, assume it isn’t allowed.
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.
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.
Note that 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
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
This forecloses a governance pattern founders often propose: “the clinician owns it, but we sit on the board.” In those states, you cannot.
Check three separate things in your state’s statute, because they can differ: who may own, who may serve as a director, and who may serve as an officer. A state can restrict all three, or only ownership.
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 whole architecture: all the ownership flexibility lives in the MSO, all the licensure requirements live in the PC.
But ownership freedom is not control freedom. 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.
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 taints 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.
Practical questions to answer
For every professional entity you form:
Answer these from your state’s statute and page, CPOM by state, and confirm with counsel.
Sources
- Or. S.B. 951 (2025 Reg. Sess.). Enrolled bill.
- Cal. S.B. 351 (2025); Vt. Act 133 (2026). See the legislation tracker.