> ## Documentation Index > Fetch the complete documentation index at: https://mso.getlemma.com/llms.txt > Use this file to discover all available pages before exploring further. # Vet and select a friendly clinician-owner > Sourcing, primary source license verification, disciplinary and exclusion checks, conflict disclosure, and the reliability factors that decide whether the arrangement lasts. The clinician who owns your professional entity holds 100% of its equity, sits on its board, and bears the licensure exposure. This guide is the diligence recipe. Run it **before** they own the entity — undoing it later means a share transfer, board consents, payer re-credentialing, and possibly a new EIN. ## Prerequisites * Your launch state and required license type identified * Counsel engaged * A written role description covering both compensation streams ## Sourcing | Source | Durability | Notes | | ---------------------------------------------------- | ---------- | ------------------------------------------------------------------------------- | | **Your clinical co-founder or clinical lead** | Highest | Incentives already aligned; the structure describes something real | | **A practicing clinician recruited into the role** | High | Practices part-time, serves as medical director, owns the PC | | **A professional nominee / physician-owner network** | Lowest | Widely used, especially for multi-state telehealth; highest regulatory scrutiny | See [The friendly PC, explained](/concepts/model/the-friendly-pc) for why this ranking matters. ## Steps Not a copy they send you. Check the **state licensing board's** own verification system. Confirm: active status, no restrictions, expiration date, and the exact name and license number. For multi-state candidates, verify in every state where they'd own an entity. The state board's public disciplinary records, plus any other state where they've held a license. Ask the candidate directly, in writing, about any past or pending action — the discrepancy between what they disclose and what you find is more informative than either alone. * [**OIG List of Excluded Individuals/Entities**](https://exclusions.oig.hhs.gov/), an excluded owner taints federal healthcare program billing for the entire entity * [**SAM.gov**](https://sam.gov/), federal debarment * **State Medicaid exclusion lists**, many states maintain their own Document each check with a date and a saved result. Re-run monthly thereafter, for the owner and every employee. See [Set up your compliance calendar](/start/first-90-days/compliance-calendar). In PECOS. A physician who has **opted out** of Medicare has private contracts with beneficiaries and cannot be enrolled as you expect, which affects group enrollment. Confirm before building a Medicare-dependent model. Request a carrier loss run and, where appropriate, ask the clinician to run an **NPDB self-query** and share the result. Malpractice history affects both insurability and payer credentialing. Ask directly: what other professional entities do you own or have an interest in? Conflicts matter — a candidate owning a competing PC, or holding MSAs with other management companies, creates problems ranging from competitive conflict to diligence complications. A nominee owning a dozen unrelated PCs has a dozen conflicts and no operational knowledge of yours. Less formal, equally important: * Do they intend to be involved, and do they have the time? * Are they geographically stable? * Are they financially stable? Their creditors could in principle reach their shares. * Immigration status, where relevant — visa-dependent clinicians may face ownership constraints. Ask counsel. * Would they accept a transfer restriction agreement? * Can they name a plausible successor? Not yours. Paying for their counsel is appropriate; selecting and directing it is not. A candidate unwilling to get their own lawyer is a candidate who has not understood the exposure. Every verification, dated, with the source. This file is what you produce in diligence and what demonstrates you exercised care. ## Red flags | Flag | Why it matters | | ------------------------------------------------------ | ---------------------------------------------------- | | Wants compensation as a percentage of practice revenue | Fee-splitting and AKS exposure | | Won't get their own counsel | The arrangement is easier to characterize as coerced | | Owns many PCs, can't describe any | The *Northfield* pattern | | Any exclusion, debarment, or Medicaid list hit | Disqualifying | | Board disciplinary history | May trigger a transfer under your own agreement | | Uninterested in clinical governance duties | You are building a straw ownership arrangement | | Won't sign a transfer restriction | No succession mechanism | | Discrepancy between disclosure and your findings | Judgment problem, independent of the underlying fact | ## Verify it worked * [ ] Primary source license verification, dated and saved * [ ] Disciplinary history reviewed in every relevant state * [ ] OIG LEIE clear, documented * [ ] SAM.gov clear, documented * [ ] State Medicaid exclusion lists clear * [ ] PECOS enrollment and opt-out status confirmed * [ ] Malpractice history reviewed * [ ] Other-PC ownership disclosed in writing * [ ] Independent counsel engaged by the clinician * [ ] A named successor candidate identified * [ ] Monthly re-screening added to the compliance calendar ## Common failure modes | Failure | Consequence | | ---------------------------------------------------------------- | -------------------------------------------------------------- | | Accepting a license copy rather than primary source verification | The license may be restricted or expired | | Skipping exclusion checks | Civil monetary penalty exposure; tainted federal billing | | Not re-screening monthly | An exclusion after onboarding goes undetected | | No written conflict disclosure | Diligence surprise; competing obligations | | Clinician unrepresented | Weakens the arrangement for both sides | | No successor identified | A single event freezes the entity holding your payer contracts | ## Related topics - [Step 2: Find your friendly clinician](/start/zero-to-paid/find-your-friendly-clinician.md) - [Structure friendly-owner compensation](/guides/formation/structure-friendly-owner-compensation.md) - [Plan for friendly-owner succession](/guides/formation/plan-for-succession.md) - [The friendly PC, explained](/concepts/model/the-friendly-pc.md) - [Who can own a professional entity](/concepts/entities/who-can-own-what.md) - [CPOM case law](/reference/legal/cpom-case-law.md)