What is the difference between a Professional Corporation and a Management Services Organization in California? What works best for your firm? How can a multiple entity strategy improve not only profitability but the quality of care and patient experience of related healthcare practices?
California has a unique corporate entity for medical and healthcare applications as well as those with a professional license. The California Professional Corporation or “PC” provides distinct advantages to doctors, physicians, dentists, as well as healthcare and medical professionals. The Professional Corporation may be an option for any other professional who must be licensed by the State of California such as engineers, architects, Certified Public Accountants or CPAs and lawyers.
The unique benefits provided by a California PC include (but are not limited to):
- Increased contributions to 401(k) or retirement accounts
- Separation of liability for malpractice or other legal exposures from other professionals in the practice
- The ability of the PC to offer and receive tax deductions for costly employment benefits such as:
- Health Insurance
- Disability Insurance
- Dependent Care
- Life Insurance
A Professional Corporation (or group of PC’s) may increase their efficiency, service and profitability through a Management Services Organization or MSO. The MSO is designed to streamline the administrative functions of a medical practice or healthcare business through a separate entity focused solely on providing these support-level services.
It is common for an MSO to handle many aspects of HR, billing and payables, purchasing and contract negotiations, and even issues such as tax preparation and compliance and the provision of equipment and computer resources.
There are many restrictions on issues such as ownership and voting rights for both a Professional Corporation and a Management Services Organization in California. The entity may not be owned by or offer voting rights associated with corporate officers, directors and shareholders to anyone who is not a licensed professional in good standing.
Learn more about the strategies of a California Professional Corporation and a Management Services Organization or MSO and how the Watkins Firm can help to efficiently and effectively provide sound advice, counsel and legal services for your healthcare entity. We invite you to review the strong recommendations of our clients and the legal industry and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
