Advanced Practice Structuring
MSO Structure for
Texas Physicians
How to use a Management Services Organization while complying with the Corporate Practice of Medicine doctrine.
What Is an MSO?
A Management Services Organization (MSO) is a separate business entity that provides non-clinical administrative and management services to a physician-owned medical practice. The MSO handles the business side while the physician practice retains full control over clinical operations.
This structure is increasingly common in Texas as physicians seek to bring in outside capital, professional management, or private equity investment without violating the Corporate Practice of Medicine (CPOM) doctrine — which prohibits non-physicians from owning or controlling medical practices.
When structured correctly, an MSO allows physicians to focus on patient care while professionals manage billing, HR, marketing, IT, and operations. When structured incorrectly, it can violate CPOM, fee-splitting laws, and expose both the practice and MSO to regulatory action.
Typical MSO Services
- Billing and coding services
- Human resources and staffing (non-clinical)
- Marketing and patient acquisition
- IT infrastructure and EHR management
- Lease negotiation and facility management
- Accounting and financial reporting
- Compliance program administration
- Supply chain and vendor management
- Insurance credentialing support
- Revenue cycle management
Typical MSO-Practice Structure
Physician Practice
(PLLC or PA)
Owned 100% by licensed physician(s). Controls all clinical decisions, patient relationships, and medical services.
Fair market value fees
MSO Entity
(LLC or Corporation)
Can be owned by non-physicians, investors, or PE. Provides administrative and business services only.
CPOM Compliance Rules
These rules are non-negotiable. Violating any of them can void the structure and expose both parties to liability.
Physician Must Control Clinical Decisions
The MSO cannot direct, influence, or interfere with clinical decision-making. All medical judgments must remain with the licensed physician.
Fair Market Value Compensation
Management fees must reflect fair market value for services rendered — not a percentage of revenue (which could be deemed fee-splitting).
No Fee-Splitting
Texas law prohibits splitting professional fees with non-physicians. MSO compensation must be for legitimate management services, not a share of medical revenue.
Independent Contractor Relationships
Physicians must maintain independent contractor status (not employees of the MSO) to preserve the clinical independence required under CPOM.
Proper Entity Structure
The physician practice (PLLC or PA) must be a separate legal entity from the MSO (typically an LLC or corporation). No common ownership that creates control.
Written Management Services Agreement
A comprehensive MSA must clearly delineate responsibilities, compensation, term, termination, and compliance obligations.
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