We are often asked about pairing a Professional Corporation and an MSO for San Diego medical professionals and practices. What makes a California Professional Corporation the right entity for many professional practices? What is a Management Services Organization or MSO and how does that fit into a healthcare business plan?
What is a California Professional Corporation?
California has a specific business entity for those who are licensed professionals such as doctors, healthcare professionals, lawyers, CPA’s, architects and engineers. The entity is called a “Professional Corporation” or PC. The formation of a Professional Corporation in San Diego or PC saves licensed professionals substantial sums of money. It provides specific operational advantages and the ability to deduct expenses in ways that are different from the traditional corporation or LLC, while providing additional and valuable protections from creditors for each unique shareholder.
One of the challenges associated with a company of professionals is the liability associated with malpractice. In a traditional LLC or corporation if a liability such as malpractice were to occur, all of the owners, members or shareholders may be placed at risk. In a Professional Corporation or PC, each professional is separated and protected from the actions of a single practitioner. This unique level of protection allows the business to continue normal operations, even when one of the shareholders or professionals associated with the PC faces malpractice or litigation separately.
Another important advantage of the formation of a Professional Corporation in San Diego lies in the ability to offer and deduct critical expenses such as health insurance, disability insurance, life insurance and even dependent care. The Professional Corporation or PC is also able to process heavier retirement benefit contributions such as 401(k) programs. This allows professionals to put away additional contributions to their retirement accounts while taking advantage of tax savings and peak earning cycles.
There are many important restrictions associated with Professional Corporations or PCs. The company must be owned by a licensed professional and there are limitations on voting rights and other corporate structures associated with the Board of Directors, corporate officers and shareholders.
What is a Management Services Organization or MSO?
What is a Management Services Organization or MSO and why is common to pair a Professional Corporation and an MSO for San Diego medical professionals? The business of healthcare has become much more competitive over the past several years. The delivery of exceptional healthcare and a focus upon the quality of the patient experience are the central goals of most of our medical and healthcare business clients.
What if it were possible to take all of the supportive non-medical business functions of your practice and partner with experienced business partners who excelled in supportive business services? This is one of the principle benefits of an MSO. The MSO allows unlicensed, non-medical business professionals to invest in healthcare by managing the “business” side of the practice. This allows licensed medical professionals to focus solely on delivering exceptional healthcare and a positive patient experience.
California law requires the owners of any medical practice entity, such as a Professional Corporation, to be licensed medical professionals. However, California law also allows unlicensed investors to take an ownership position in a Management Services Organization and provide many non-medical business services such as billing and claims, collections, the provision of facilities and computer hardware and software, governance and compliance, accounting and taxes, contract negotiations and personnel management.
The pairing of a pairing a Professional Corporation and an MSO for San Diego medical professionals allows medical practitioners to focus upon providing exceptional healthcare while the MSO is focused upon providing non-medical services and supporting facilities and equipment. This combination allows many practices to enhance the patient experience and raise satisfaction scores, increase profitability and ultimately expand the underlying practice.
The Pairing of A Professional Corporation and an MSO for San Diego Medical Professionals
The pairing of a Professional Corporation and an MSO for San Diego medical professionals is a proven, successful strategy that allows our medical and healthcare business clients to take things to the next level. What are your goals and objectives?
The Watkins Firm has more than 40 years of experience serving medical practices and healthcare organizations here in San Diego. If you are interested in the formation of a Professional Corporation or MSO in San Diego or Southern California we invite you to review our recent Podcast Episode 30 – Management Services Organizations or MSOs as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
