What Meridian did
Dr. Priya Shah is not a hired figurehead. She is Meridian’s clinical leader: she will practice at the clinic, supervise the other dermatologists as they’re hired, own the medical records, and make every clinical decision. She owns 100% of Meridian Dermatology, P.C. She signed a stock transfer restriction agreement and an employment agreement, and she has her own attorney. This is the strongest version of the arrangement: the friendly owner is a real participant in the business.What the friendly owner actually does
Not ceremonial. In a defensible structure, the clinician-owner:- Owns the equity of the professional entity, with the economic rights that implies (constrained by the transfer restriction agreement).
- Serves as an officer and director, and in many states must be, because those roles are limited to licensees.
- Holds ultimate authority over clinical matters: diagnosis, treatment, clinical protocols, clinical staffing decisions, peer review, and quality.
- Owns and controls the medical records on behalf of the PC.
- Signs payer contracts and the provider agreements that bind the PC.
- Employs the clinicians, at least nominally, since they are PC employees.
- Bears fiduciary duties to the PC and its patients.
Where to find one
Three sourcing paths, in descending order of durability:- Your own clinical co-founder or clinical lead. Best case by a wide margin. Their incentives are already aligned, they’re present in the business, and the structure describes something real.
- A practicing clinician you recruit into the leadership role. Common and defensible: they practice part-time, serve as medical director, and own the PC. Compensation covers both roles.
- A professional “nominee” or physician-owner network. Vendors exist that supply licensed owners for PCs, particularly for multi-state telehealth expansion. They are widely used and not per se improper, but they are the version regulators scrutinize hardest, and they are the version where succession planning does all the work. If you go this route, know that a nominee who owns twelve unrelated PCs has twelve conflicts and no operational knowledge of yours.
What to verify before you sign anything
Do this diligence before the person owns your professional entity. Undoing it later means a share transfer, board consents, payer re-credentialing, and possibly a new EIN.
Run the OIG LEIE and SAM.gov checks on every clinician you employ, not just the owner, and re-run them monthly. Employing an excluded individual creates civil monetary penalty exposure.
How they’re paid
Two distinct income streams, and keeping them distinct matters:- Clinical compensation, for practicing medicine. Employment agreement, market-rate, structured like any other clinician’s (base, productivity, or collections-based).
- Medical director / ownership compensation, for the governance and oversight duties of owning the PC. Typically a flat stipend or an hourly rate for documented time.
Red flags, in both directions
Red flags in a candidate owner:- Wants to be paid purely as a percentage of practice revenue
- Won’t get their own lawyer, or wants you to pay for and direct theirs
- Owns many other PCs and can’t articulate what any of them do
- Any history of exclusion, board discipline, or insurance fraud allegations
- Uninterested in the clinical governance duties
- Unwilling to sign a transfer restriction agreement
- Asks you to sign a share transfer at a nominal price with no explanation of the triggers
- Wants to control hiring and firing of clinical staff, patient volume targets, or coding decisions
- Won’t let you retain your own counsel
- Structures your pay so that your practice’s clinical decisions affect your income in ways you can’t control
- Cannot tell you what happens to your personal liability if the structure is challenged
Succession: solve it now
The clinician can die, become disabled, lose their license, be excluded, or simply quit. If any of those happens and you have no mechanism, your professional entity is owned by an estate, an ex-employee, or nobody, and the entity that holds all your payer contracts is frozen. The mechanism is a stock transfer restriction agreement signed at formation, which pre-wires the triggers and the transfer to a designated successor licensee at a pre-agreed nominal price. You should also maintain a bench: at least one other licensee who could step in. Be aware that these agreements are exactly what the newest legislation targets. Oregon’s SB 951 restricts share-transfer arrangements as part of its MSO control provisions.2 Draft them with current state law in view. See Draft the stock transfer restriction agreement and Plan for friendly-owner succession.Your artifact from this step
- A named clinician who has agreed in principle, in writing
- Completed verification: license, board history, LEIE, SAM.gov, PECOS, malpractice
- Agreement on both compensation streams, in ranges
- Their own counsel engaged
- A named successor candidate
Checklist
- Primary source license verification complete
- OIG LEIE and SAM.gov clear (documented, dated)
- Disciplinary and malpractice history reviewed
- Other PC ownerships disclosed in writing
- Compensation structure agreed and FMV-defensible
- Clinician has independent counsel
- Successor licensee identified
Next
Step 3: Form the PC
Articles of incorporation for a professional entity, with all the parts that differ from a normal company.
Sources
- Allstate Insurance Co. v. Northfield Medical Center, P.C., 228 N.J. 596, 159 A.3d 412 (2017). Opinion.
- Or. S.B. 951 (2025 Reg. Sess.). Enrolled bill.