Growing healthcare organizations often expand across states, raise outside capital, or scale their clinical teams. As they grow, they encounter a regulatory structure known as the Corporate Practice of Medicine doctrine, often referred to as CPOM. To comply with CPOM laws while continuing to expand, many healthcare organizations adopt a PC-MSO model.

This article explains what the PC-MSO model is, how it works, and why healthcare organizations rely on it to structure compliant, scalable operations.

Key Takeaways

• The PC-MSO model separates clinical ownership from administrative management.
• A Professional Corporation, or PC, owns and controls the delivery of medical care.
• A Management Services Organization, or MSO, provides administrative and operational support.
• CPOM laws require clear separation between clinical decision-making and business functions in certain states.
• Healthcare organizations must operationalize governance, oversight, and documentation within this structure.

What Is the Corporate Practice of Medicine?

Corporate Practice of Medicine (CPOM) laws restrict who can own or control medical practices in certain states. In CPOM states, non-physicians and corporate entities cannot directly own medical practices or employ physicians to provide medical services.

These laws exist to ensure that medical decisions remain under physician control rather than corporate influence.

Because CPOM rules vary by state, healthcare organizations operating across multiple jurisdictions need to structure their operations carefully to remain compliant.

What Is a Professional Corporation in Healthcare?

A Professional Corporation, or PC, is a legal entity owned by licensed physicians. The PC is responsible for delivering clinical services and maintaining authority over medical decision-making.

The PC typically:

• Employs or contracts with physicians and other clinicians
• Oversees clinical policies and standards of care
• Maintains responsibility for medical decision-making
• Holds certain licenses and registrations required for practice

The physician owner of the PC maintains formal control over clinical activities.

What Is a Management Services Organization?

A Management Services Organization, or MSO, handles the administrative and business functions that support care delivery.

The MSO typically provides services such as:

• Revenue cycle management
• Technology and infrastructure support
• Human resources and recruiting
• Marketing and business development
• Compliance and administrative support

The MSO does not control clinical decisions. Instead, it provides operational support to the PC under a management agreement.

How the PC-MSO Model Works

In a PC-MSO structure, the Professional Corporation and the Management Services Organization operate as two separate entities that coordinate closely. The separation creates a clear line between clinical control and business operations, which many CPOM states expect healthcare organizations to maintain in both legal structure and day-to-day practice.

1. The PC holds the clinical practice and clinical control

The PC is the clinical entity. A physician owns the PC and the PC controls the practice of medicine. In practical terms, the PC typically:

• Employs or contracts with clinicians who deliver medical services
• Sets clinical policies, clinical protocols, and standards of care
• Oversees clinical decision-making and clinical quality expectations
• Maintains authority over supervision and clinical oversight functions
• Holds responsibility for the medical services that the organization delivers

The PC owner plays an active role in clinical governance. Healthcare organizations often structure this role as a physician owner or physician leader, or physician executive who provides clinical oversight and ensures the clinical side of the organization stays under physician control.

2. The MSO runs the business operations that support care delivery

The MSO is the operational entity and does not practice medicine. It provides the nonclinical services that keep the clinical practice running. In practical terms, the MSO often manages:

• Hiring support and nonclinical workforce operations
• Scheduling infrastructure and operational workflows
• Billing support, revenue cycle services, and payer contracting support
• Technology systems and administrative tools
• Marketing, growth functions, and customer support operations
• Facilities, equipment, and supply management where relevant

The MSO typically employs the nonclinical staff, owns the nonclinical assets, and supports the operational backbone required for clinical teams to deliver care at scale.

3. The PC and MSO connect through a management agreement

The relationship between the PC and the MSO usually runs through a Management Services Agreement (MSA). This agreement defines what services the MSO provides and how the MSO gets paid.

In most models, the Management Services Agreement covers:

• The list of administrative services the MSO provides to the PC
• The operational responsibilities of each party
• The fee structure for management services
• The term, renewal, and termination provisions
• The governance boundaries that preserve clinical control with the PC

Healthcare organizations often use this agreement to formalize the separation between clinical and nonclinical decision-making. The agreement typically avoids language that suggests the MSO controls medical judgment, clinical staffing decisions, or clinical protocols.

4. Each entity controls different decisions

Healthcare organizations separate decision-making in the PC–MSO model to protect clinical independence and reduce regulatory risk.

CPOM laws focus on one central concern: corporate influence over medical judgment. Regulators want to ensure that business priorities do not override clinical decisions. By clearly separating authority, organizations demonstrate that physicians retain control over how medicine is practiced.

When the PC controls clinical hiring, standards of care, supervision, and patient care decisions, the organization reinforces that medical judgment sits with licensed physicians. When the MSO controls administrative operations, staffing logistics, and business systems, it supports efficiency without interfering in clinical authority.

This separation also creates clearer accountability. If regulators ask who sets clinical protocols, the answer points to physician leadership within the PC. If auditors review billing workflows or operational staffing models, the responsibility sits with the MSO. Clear boundaries make governance easier to explain and defend.

Operationally, these decisions often intersect. Staffing levels affect supervision capacity. Technology platforms influence documentation workflows. Revenue cycle policies interact with care delivery. Healthcare organizations manage this overlap through shared processes and defined escalation paths, while preserving final clinical authority within the PC.

5. The model gets more complex in multi-state growth

For healthcare organizations expanding across states, the PC-MSO structure often becomes a network rather than a single pair of entities.

A healthcare company may operate:

• One MSO that provides centralized administrative support
• Multiple PCs, each formed to meet the rules of a specific state
• A physician owner or physician leader assigned to each PC
• Standardized governance and oversight processes that remain consistent across the network

This approach lets healthcare organizations keep operations centralized while meeting state-specific CPOM requirements on the clinical side.

6. The structure has to show up in daily operations

Healthcare organizations sometimes treat the PC-MSO model as a legal setup that lives in documents. Regulators often expect the separation to show up in how the organization actually runs.

Operationally, that means the organization needs clear answers to questions such as:

• Who approves clinical protocols and changes to standards of care
• Who has final authority over clinical hiring and clinical supervision
• How does physician leadership document oversight and clinical governance
• How do teams manage collaboration compliance and clinical oversight activities
• How does the organization maintain documentation that supports CPOM compliance

When healthcare organizations can point to clear governance, clear workflows, and clear documentation, the PC–MSO model becomes more defensible and easier to manage as the organization scales.

Why Healthcare Organizations Use the PC-MSO Model

Healthcare organizations use the PC–MSO model for several practical reasons.

1. To Comply With CPOM Laws

In states that enforce CPOM restrictions, organizations cannot directly employ physicians or own medical practices. The PC–MSO structure creates a compliant pathway to operate within those states.

2. To Support Investment and Growth

Many healthcare companies seek outside investment. Investors typically participate through the MSO, which manages the business side of operations while leaving clinical control with the PC.

3. To Scale Across States

CPOM rules vary by state. The PC–MSO model allows healthcare organizations to establish separate professional entities in CPOM states while maintaining centralized administrative functions.

4. To Maintain Clear Governance

Clear separation between clinical and administrative roles helps organizations define accountability. It clarifies who controls medical decisions and who manages operational strategy.

Operational Considerations in the PC-MSO Model

The legal structure alone does not ensure compliance. Healthcare organizations need to operationalize the separation between clinical and administrative control.

This requires:

• Clear governance documentation
• Defined roles and responsibilities between the PC and MSO
• Proper documentation of physician oversight
• Consistent processes across states

Organizations that treat the PC–MSO structure as active infrastructure, rather than a static legal setup, maintain stronger compliance posture and operational clarity.

PC Ownership and Clinical Oversight

In CPOM states, the physician owner of the PC carries responsibility for clinical governance. That includes supervising care models, overseeing physician collaboration where required, and maintaining clinical standards.

Healthcare organizations must ensure that:

• The PC owner retains meaningful authority over medical decisions
• Clinical oversight responsibilities are documented
• Collaboration compliance aligns with state specific rules
• Administrative functions do not override clinical control

When organizations blur these lines, they increase regulatory risk.

Building Sustainable PC Governance

As healthcare organizations grow, the PC-MSO model becomes more complex. Multi-state operations introduce different ownership rules, board requirements, and collaboration laws.

Organizations benefit from centralized visibility into:

• PC ownership structures
• Collaboration agreements
• Licensing and credentialing status
• Oversight documentation
• Audit readiness across states

This visibility supports scalable growth while preserving compliance.

Zivian Helps Organizations Manage CPOM Compliance, PC-MSO Structuring, and PC Ownership

Zivian Health helps healthcare organizations connect with experienced physician PC owners and provides expert CPOM compliance and PC-MSO structuring support. In addition, Zivian supports organizations operating within PC-MSO structures by helping them manage collaboration compliance, clinical oversight, and workforce governance in one platform.

Connect with us today to get started.