Alternatives to MSO-PC

The MSO-PC structure is the default for investor-backed care delivery, but it is not the only lawful architecture and it is frequently applied where something simpler would do. This page covers the alternatives and the conditions under which each one works.

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The alternatives at a glance

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Single professional entity

The clinician owns the practice. There is no MSO, no MSA, and no transfer restriction. Works when: the founder is the licensee, no outside equity is planned, and operations are in one state. Why it’s underused: founders adopt the MSO-PC structure reflexively because it’s what the industry does, then pay for two entities’ filings, two sets of books, an FMV-supportable intercompany fee, and healthcare counsel, to solve a problem they don’t have. When to add the MSO: the first outside dollar, or the second state. Be aware that re-papering later means moving assets, contracts, and payer enrollments between entities, which is real work. If a raise is plausible within three years, build the structure at formation.

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Lay-owned entity in a permissive state

In states with no meaningful CPOM doctrine, a non-clinician can in principle own an entity that delivers care. Two constraints limit this more often than founders expect. First, “no CPOM doctrine” is not the same as “no ownership restriction”: Delaware and Alaska have no meaningful CPOM doctrine but still limit professional corporation ownership to licensees. Second, this doesn’t scale: the moment you enter a CPOM state you need the full structure anyway, and now you have two incompatible architectures. State law is moving toward restriction. A model that depends on a state having no doctrine can be undone in a single legislative session. Vermont had no CPOM doctrine until Act 133 in 2026.¹

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The Florida health care clinic license

Florida’s Health Care Clinic Act, Fla. Stat. ch. 400, pt. X, lets a non-physician-owned entity bill for healthcare services if it holds a clinic license.² This is different from a friendly PC: the lay entity itself is licensed and bills. Requirements include a licensed medical director or clinic director with defined statutory responsibilities, plus the application, inspection, and ongoing compliance obligations of a licensure regime. There are exemptions from the licensure requirement for certain wholly physician-owned entities, which is its own analysis. Works when: you operate in Florida and prefer a licensure regime to a friendly PC. Doesn’t help anywhere else.

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Hospital or health system employment

Many states permit hospitals to employ physicians as an exception to CPOM. Berlin v. Sarah Bush Lincoln Health Center, 179 Ill. 2d 1, 688 N.E.2d 106 (1997), recognized such an exception in Illinois.³ Works when: you are a hospital, or you are selling to one. Doesn’t work as a structure for an independent venture, because you have to be the hospital. Related: some states permit nonprofit health organizations to employ physicians. Texas’s certified nonprofit health organizations under Occupations Code § 162.001 are the clearest statutory example. The limitation is that a nonprofit has no equity, so there is no investor return and no exit.

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Clinical franchising

The franchisor owns the brand, the systems, and the playbook, and licenses them to independently clinician-owned units in exchange for franchise fees and royalties. Works when: the model is standardizable, clinician-owners want ownership, and the economics work at royalty-level margins. Tradeoffs: far less control over quality and operations than an MSO structure; royalty economics are thinner than management fee economics; and franchising brings its own regulatory regime, FTC franchise disclosure requirements and state franchise laws, on top of healthcare law. Royalties as a percentage of revenue can also raise the same fee-splitting questions as percentage management fees. See Fee-splitting rules.

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Licensing or SaaS only

Sell software, systems, or services to practices without delivering care. No CPOM implication, because there is no practice of medicine. Works when: your actual value is the technology or the service, not the clinical delivery.

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Staffing and employer-of-record models

Provide clinical staffing to practices or facilities that employ or contract with the clinicians themselves. Works when: the client entity is the one delivering care and holds the payer relationships. Risk: the line between staffing and practicing is narrower than it appears. If your staffing company effectively controls clinical operations, CPOM analysis attaches regardless of the label. This was substantially the theory in the Envision litigation. See Enforcement and risk.

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A decision path

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Summary

For most readers of this wiki (a non-clinician founder, or a clinician taking outside capital, intending to operate in more than one state), the MSO-PC structure is the answer, and the alternatives are worth understanding mainly so you can rule them out deliberately rather than by default. For a solo or small-group clinician-owner in their own state with no outside money, it is very likely not the answer. Ask anyone recommending it to explain what problem it solves for you specifically.

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Sources

1. Vt. Act 133 (2026) (H.583). Act text.
2. Fla. Stat. ch. 400, pt. X (Health Care Clinic Act). Florida Statutes.
3. Berlin v. Sarah Bush Lincoln Health Center, 179 Ill. 2d 1, 688 N.E.2d 106 (1997).