The MSO Model, Explained for Texas Med Spas
Two entities, one agreement, and a set of boundaries that decide whether the whole thing holds up.
Separate administrative services from clinical authority
Texas restricts who may own and control a medical practice. Physician–PA joint ownership is permitted only within statutory limits; physician control and management remain required. Other statutory exceptions require individual review. An MSO does not itself authorize medical practice or transfer clinical authority to an unlicensed owner.
A management services agreement describes administrative support, compensation, and responsibilities. Whether a particular structure complies depends on its ownership, contracts, and actual operations.
How the pieces fit
The medical practice
A permitted professional entity retains clinical authority and patient-care duties. Limited physician–PA joint ownership is subject to statutory restrictions.
The management company
Owned by you. It holds the lease, equipment, non-clinical staff, marketing, scheduling, billing operations and vendor contracts.
The management services agreement
The contract between them, setting scope of services, the fee, and where authority ends on each side. This is the document that succeeds or fails.
Control must be real in practice
The agreement and daily operations should preserve the medical practice’s clinical judgment, delegation, patient-care decisions, and oversight of clinical qualifications. Review fees, referral arrangements, staffing authority, and record responsibilities with qualified counsel. No fee formula or entity diagram alone establishes compliance.
Boundaries that need to hold
- Clinical decisions, protocols and delegation sit with the professional entity
- Clinical staff are hired, supervised and terminated on the clinical side
- The management fee is fair market value for services actually rendered
- Medical records and the patient relationship belong to the professional entity
Our active supervision standard
Our medical practice provides 100% chart review, with at least 10% of all good faith exams personally performed by the active supervising physician. On-site visits, over-the-shoulder training, skills certification and verification, and a documented supervision work ledger support ongoing care.
These are our service commitments, documented in the supervision plan, rather than universal legal minimums. The supervising physician remains responsible for delegated medical acts, and each clinician retains their individual license obligations.
MSO questions
Can I own the MSO and be an employee of the clinical entity?
What should the management fee be?
Base fees on documented administrative services and obtain a defensible valuation appropriate to the arrangement. Review applicable fee-splitting, referral, and clinical-control restrictions. A fixed fee or percentage formula is not automatically lawful or unlawful in every arrangement.
Can my physician partner own part of the MSO?
Potentially, subject to the arrangement’s ownership, referral, compensation, and control requirements. Clinical ownership must satisfy the applicable rules, including any limited physician–PA joint-ownership pathway.
Do we need two sets of books?
Keep separate, accurate records for each entity and document intercompany transactions. Federal income-tax filing treatment depends on entity classification and elections; a disregarded single-member LLC may report through its owner. Two entities do not automatically mean two separate federal income-tax returns.
Regulatory source
TDLR, Medspas at a GlanceMore from Texas Med Spa Directors
Who can own a med spa in Texas · How to open a med spa in Texas · Talk to us about your practice · Medical director for physician assistants
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Key takeaways
- The Texas Medical Board states that for a jointly owned entity, the organizers must be physicians and a physician or physicians must control and manage the entity.
- Physician assistants may hold no more than a minority ownership interest, and no individual PA’s interest may equal or exceed that of any individual physician owner.
- In a corporation, professional association or professional limited liability company, physician assistants cannot be officers.
- Structure decides who signs. It does not decide who may perform a treatment. That still runs through delegation.
What the Medical Board publishes about ownership
Most writing about MSO structures in Texas is inference. The Medical Board does publish requirements for jointly owned entities, and they are worth reading directly because they set hard edges that any structure has to respect.
On control, the Board states that the organizers must be physicians and that a physician or physicians must control and manage the entity. That is the sentence the rest of the structure has to accommodate.
Where physician assistants sit
The Board sets explicit limits. A physician assistant, or a combination of physician assistants, can have no more than a minority ownership interest. The ownership interest of an individual physician assistant cannot equal or exceed the ownership interest of any individual physician owner. For corporations, professional associations or professional limited liability companies, physician assistants cannot be officers. In a partnership, physician assistants cannot be a general partner and cannot participate in management.
Those are structural constraints rather than drafting preferences, and a proposed cap table either satisfies them or it does not.
What structure does not solve
Owners sometimes treat the entity design as the compliance work, as though a correct diagram settles the clinical questions. It does not, and the two failure modes are independent.
The Medical Board has determined that nonsurgical medical cosmetic procedures, including the injection of medication or substances for cosmetic purposes and the use of a prescription medical device for cosmetic purposes, are the practice of medicine, delegable by a physician to individuals with appropriate training. No entity arrangement changes that. A perfectly formed structure with no functioning delegation still has people performing medical acts without authority.
The Board of Nursing adds a limit from the other direction: a registered nurse may not delegate an activity if doing so requires professional nursing or medical judgment. Assessment, care planning and evaluating a patient’s response are not delegable regardless of who owns the entity.
Sources: Texas Medical Board FAQ 312 and Texas Board of Nursing Delegation FAQ.
The separation that has to be real
The whole point of splitting clinical from administrative is that the split describes what actually happens. Where these arrangements come apart is rarely the paperwork, it is the behavior underneath it.
Useful questions to ask about your own structure: who decides which treatments the practice offers, and is that decision documented as a clinical one? Who sets protocols, and are they written for this practice? Who hires and evaluates clinical staff on clinical grounds? Who holds the patient records? When a treatment is discontinued for safety reasons, whose decision is that and where is it recorded?
If the honest answer to most of those is the administrative entity, the diagram and the operation have drifted apart. That gap is what an examiner or a plaintiff’s lawyer looks for, and it is not fixed by a better-drafted agreement.
The facility layer sits outside all of this
One more layer is easy to lose track of. TDLR regulates the cosmetology and esthetics side and the premises, and its rules apply regardless of what the business calls itself. TDLR notes that facility requirements attach whether the business is styled a salon, a medical office, a medspa or a medispa.
That registration governs the facility and the cosmetology-side services. It grants nothing on the medical side. A structure can be correct at the entity layer, correct at the facility layer, and still be wrong at the delegation layer, because the three are assessed separately by three different regulators.
Source: TDLR, Medspas at a Glance.
Sources
- Texas Medical Board, Jointly Owned Entities — physician control, PA ownership limits, officer restrictions
- Texas Medical Board FAQ 312 — nonsurgical medical cosmetic procedures and delegation
- Texas Board of Nursing Delegation FAQ — limits on RN delegation
- TDLR, Medspas at a Glance — facility requirements regardless of business name
This page is general information for Texas practice owners and is not legal advice. Entity formation turns on statute and on your specific facts, and this page does not attempt to summarize the governing statutes. Review your structure with counsel and confirm current requirements with the applicable board before relying on it.