The med spa industry is booming, and it’s not just physicians who want in. Entrepreneurs, nurses, estheticians, and business investors are increasingly looking to open medical spas, but here’s the catch: med spa services like Botox, fillers, and IV therapy are classified as medical procedures. That means they’re subject to healthcare laws, including restrictions on who can legally own and operate the business.
If you’re a non-physician owner, structuring your med spa legally is crucial to avoid penalties or shutdowns. Here’s what you need to know.
Why Ownership Structure Matters
Unlike salons or wellness centers, med spas offer procedures that fall under the scope of medical practice. Because of this, many states follow what’s known as the Corporate Practice of Medicine doctrine. In simple terms, this doctrine prohibits non-physicians from owning or controlling a medical practice. If you’re offering medical services but don’t structure your business properly, you could be seen as practicing medicine without a license, even if you’re just handling the marketing or finances.
That’s where models like the Management Services Organization (MSO) come in.
The MSO Model: A Legal Workaround (That Must Be Done Right)
In states with strict corporate practice laws, the MSO model is the gold standard for non-physician ownership. It works like this:
- A physician-owned professional medical corporation (PC) handles all medical aspects, hiring clinical staff, supervising treatments, maintaining patient records, and ensuring compliance.
- A non-medical MSO (often owned by the entrepreneur) manages the business side, marketing, scheduling, payroll, rent, and admin staff.
The MSO and PC enter into a Management Services Agreement (MSA) that defines their relationship. The PC pays the MSO a fee for its business services, but retains control over all medical decisions. Done correctly, this model allows non-physicians to profit from the business without illegally practicing medicine.
State-Specific Considerations for Non-Physician Ownership
Compliance requirements vary dramatically by state. Below are a few key examples:
California
California has one of the strictest corporate practices of medicine laws. Only licensed physicians (or sometimes nurse practitioners under collaborative agreements) can own medical practices. Non-physicians must use the MSO model, and the medical provider must retain full authority over clinical decisions. California regulators have aggressively shut down spas using “paper” medical directors, where the physician is uninvolved and the business owner makes all decisions. Even profit-sharing arrangements can be considered illegal fee splitting without proper structuring.
Texas
Texas also prohibits non-physicians from owning or controlling medical practices. The Texas Medical Board enforces this rule strictly. However, MSO structures are allowed when properly documented. The MSA must clearly state that the MSO cannot interfere with medical decisions or control physician compensation.
Florida
Florida is more flexible. While the corporate practice of medicine doctrine isn’t strictly enforced, licensed medical providers must still supervise all procedures. Non-physicians can own clinics, but must have clear delegation protocols and a medical director who is actively involved, not just signing off on paperwork.
New York
New York follows a rigid interpretation of the corporate practice rule. Only physicians or physician-owned entities may provide medical services. Like California, the MSO model is the only viable path for non-physician ownership and must be documented carefully to avoid legal issues.
If you’re unsure about your state’s stance, it’s worth scheduling a compliance assessment to determine the right structure for your specific location.
Two Common Mistakes to Avoid
1. Silent Medical Directors
One of the biggest mistakes we see is hiring a physician in name only. These “silent” medical directors don’t participate in oversight, don’t perform chart reviews, and may not even meet the staff. This can create major liability for both the business and the doctor, especially if there’s a patient complaint or audit.
A compliant medical director must be involved in day-to-day clinical protocols, staff supervision, and treatment approvals. If you’re paying someone to “just sign off” on things, you’re likely out of compliance.
2. Fee-Splitting and Unlicensed Revenue Sharing
In many states, sharing revenue from medical procedures with a non-licensed individual is considered illegal fee-splitting. This includes paying commissions to injectors or giving owners a cut of revenue generated from Botox, fillers, or IV drips. Compensation must be carefully structured to avoid this issue.
For example, the MSO might charge a fixed fee for management services or use a fair market value percentage, documented clearly in the MSA, to remain compliant.
What About Nurse-Led Med Spas?
In some states, nurse practitioners (NPs) and physician assistants (PAs) may open their own practices under a collaborative or supervisory agreement with a physician. However, the requirements vary. Some states allow full practice authority, while others require formal oversight or shared ownership with a physician.
This model still requires careful structuring, and it’s critical to have a compliant collaborative practice agreement in place outlining protocols, scope of services, and medical oversight expectations.
Protect Your Clinic, and Your Investment
Whether you’re a nurse launching a startup or a business partner supporting an experienced injector, a solid legal structure protects everyone involved. At Wellness MD Group, we specialize in helping non-physician owners build legally sound, scalable med spa businesses. Whether you’re launching your first clinic or expanding to multiple locations, our team ensures your medical structure aligns with your growth, and with the law.
Request a Consultation to review your ownership model and ensure your clinic is legally sound.
