Due to a legal rule called the “corporate practice of medicine doctrine,” only physicians may have majority ownership of a business that provides medical services in California. Furthermore, in California, a professional corporation is the only type of entity that physicians may use for a medical practice. Since many of the most popular services provided by medical spas are considered medical services, they can only be offered by a professional corporation at least 51% owned by a physician.

Despite the corporate practice of medicine doctrine, there are two ways in which non-physicians can collaborate with physicians to invest in medical spas.

The first way is for a non-physician medical professional to own a 49% share of a professional corporation that provides med spa services in partnership with a physician who owns a 51% share of the professional corporation. A contract called an “operating agreement” is then drafted to explain how the shared ownership of the corporation works in practice. This approach comes with drawbacks for the non-physician, however, because it allows the physician to retain majority control over the business decisions of the med spa as well as the medical decisions of the med spa. Furthermore, this option is only available to licensed medical professionals.

A second way for a non-physician to collaborate with a physician to open a med spa is to create an entity called a “Management Services Organization,” or MSO, that provides business-related services to the physician’s professional corporation in exchange for a monthly management fee. With this structure, attorneys draft a contract called a “Management Services Agreement” to delineate the services that the Professional Corporation and the MSO will perform and to ensure that the MSO receives a fair management fee for the business services performed for the med spa. The benefit of this arrangement for the non-physician is that it allows the non-physician to retain a greater degree of control over the non-medical parts of the med spa, including all of the business decisions of the med spa. Furthermore, this option allows individuals without any healthcare background and licensed medical professionals, to collaborate with a physician to run a med spa.

In addition to these structural considerations there are a number of licenses and permits that need to be obtained to open a medical spa in California, which depend on how the practice will be marketed and what services will be provided there.

If you’re interested in starting a medical spa, there is no time like now! The industry is expected to continue its dramatic growth, and you’ll only miss out the longer you wait and the later you get your foot in the door. We hope this guide helps you envision the steps necessary to start your med spa. For any questions regarding starting your medical spa – Lengea is here to help! Book your 15-minute free consultation today!