By Lee A. Mangum, Partner, Cook Pearce Litchford Rector, PLLC
A management agreement can separate a healthcare practice's clinical work from its nonclinical business operations. It cannot, however, transfer professional judgment to an unlicensed owner, replace required supervision, or cure an ownership structure that state law does not permit.
That distinction matters for medical spas, wellness and weight-management clinics, IV-therapy businesses, telehealth practices, and other clinician-led operations. These businesses often combine distinct functions: licensed patient care and administrative work. A management-services organization, often called an MSO, may help allocate those functions—but the documents and the day-to-day operation must match.
What Is an MSO Structure?
In a common model, a licensed clinical entity provides medical services and maintains responsibility for patient care. A separate management company provides defined administrative services under a written management or administrative-services agreement.
Depending on applicable law, the management company may provide:
- office space, equipment, and nonclinical supplies;
- bookkeeping, payroll support, and accounts-payable administration;
- nonclinical personnel and human-resources support;
- marketing, scheduling, and call-center services;
- vendor management, technology, and billing support; and
- brand licensing and other back-office functions.
The clinical entity ordinarily retains authority over diagnosis, treatment plans, prescribing, clinical protocols, patient consent, medical records, supervision and delegation, and the selection and oversight of licensed professionals. The precise division depends on the state, the profession, the services offered, and who owns each entity.
An MSO is therefore not a paper workaround. If the management company actually controls clinical decisions, or if a nominal medical director has no meaningful involvement, regulators may evaluate the substance of the arrangement rather than its labels.
What Should a Med Spa Management Agreement Address?
A useful med spa management agreement should do more than state a monthly fee. It should create an operational map for the business.
1. A clear division between clinical and administrative authority
The agreement should identify what the manager may do and what remains exclusively under licensed clinical control. Related documents—including employment agreements, medical-director or supervision agreements, bank authorizations, leases, and policies—should use the same allocation of authority.
2. Defined services and measurable responsibilities
Broad promises to provide “all management services” create uncertainty. The agreement should identify staffing, space, equipment, technology, billing support, marketing, vendor relationships, reporting, and other services with enough detail to assign responsibility and price them sensibly.
3. A defensible management fee
Percentage-based fees may create fee-splitting or referral concerns in some circumstances. A fixed fee is not automatically compliant either. The compensation method should reflect bona fide services, applicable state restrictions, and any federal program exposure.
For arrangements involving federal healthcare program business, the HHS Office of Inspector General explains that the federal Anti-Kickback Statute can reach remuneration intended to induce or reward referrals. OIG also cautioned in an April 2026 FAQ that fair-market-value compensation is a helpful safeguard but is not, standing alone, a guarantee of legality. The arrangement must be reviewed as a whole.
4. Privacy, data access, and patient records
The parties should decide who maintains records, who may access them, how systems will be secured, and what happens at termination. U.S. Department of Health and Human Services guidance identifies practice management and billing as activities that can make a service provider a HIPAA business associate when protected health information is involved. When applicable, the parties should execute a business associate agreement and align it with their systems and vendors.
5. Exit rights and continuity of care
Termination provisions should address notice, transition services, staff and vendor relationships, brand use, data return, equipment, accounts receivable, and continued patient access to records. A management relationship can end; patient-care obligations do not simply disappear with it.
State Requirements Must Be Reviewed Before Opening
There is no single multistate “med spa law.” Ownership, scope of practice, supervision, delegation, registration, facility licensure, prescribing, advertising, and fee-splitting rules vary by state and by service.
Tennessee provides a concrete example. The Tennessee Department of Health's Medical Spa Registry states that medical spas must register and renew annually. Its official Medical Spa Registry FAQ also addresses who may serve as medical director, registration of multiple locations, and the location at which services may be performed.
Florida adds a different threshold question: whether a business requires health-care-clinic licensure or qualifies for an exemption. The Florida Agency for Health Care Administration maintains licensing and exemption materials, and licensed clinics are subject to specific medical or clinic director requirements.
Georgia businesses likewise need a service-by-service analysis of professional licensure, scope, delegation, supervision, prescribing, and facility requirements. The ownership and supervision plan should be confirmed before leases are signed, equipment is purchased, or marketing begins.
Build the Whole Business, Not Just the MSO
The management agreement is only one part of the legal foundation. A practice may also need entity documents, owner agreements, clinician employment or contractor agreements, restrictive covenants, a lease, vendor contracts, privacy policies, consent forms, insurance review, and a succession plan.
The same principle applies outside healthcare: durable businesses are built when ownership, decision-making, compensation, risk, and exit rights are documented before a dispute. Healthcare operations simply add professional-licensing and patient-care rules to that broader business-law work.
Frequently Asked Questions
Can a nonclinician own the management company?
Often, but that does not answer who may own the clinical entity or what authority the management company may exercise. Those questions require a state- and profession-specific review.
Can an NP or nurse operate a clinic under a supervising clinician?
Potentially, depending on the state, the professional's license and scope, the services offered, ownership rules, and the required supervision or collaborative arrangement. A supervision agreement must reflect real oversight; it should not be treated as merely renting a clinician's name or license.
Can the management fee be a percentage of revenue?
Sometimes a percentage methodology may be considered, but it can raise fee-splitting, referral, and federal fraud-and-abuse concerns. The safer structure depends on the payor mix, services, state law, and the parties' relationship.
Is a medical-director agreement enough?
No. A medical-director agreement does not replace entity, licensing, registration, delegation, privacy, billing, employment, and facility analysis. The written documents and actual operations must work together.
When should counsel review the structure?
Before forming the final entities, signing a lease, buying equipment, hiring clinicians, accepting payment, or advertising services. Correcting an operating structure is usually harder than designing it properly at the outset.
Planning a Med Spa or Clinician-Led Practice?
The Law Office of Lee Mangum, a trade name of Cook Pearce Litchford Rector, PLLC, advises healthcare and other business owners on entity formation, management agreements, acquisitions, contracts, employment matters, real estate, and succession planning. Lee A. Mangum is licensed in Georgia, Tennessee, and Florida.
This article is for general informational purposes only and is not legal advice. Requirements vary by jurisdiction, profession, services, ownership, and payor mix, and may change. Reading this article or contacting the firm does not create an attorney-client relationship. Representation begins only after conflicts clearance and a written engagement agreement. Do not send confidential or time-sensitive information through the website.
