MSO for Med Spas: How Non-Physicians Can Own & Operate in Texas

Can a non-physician own a med spa in Texas?

The short answer is “no”– non-physicians cannot directly own medical spas in Texas. But don't be discouraged. Through a properly structured Management Services Organization (MSO), nurse practitioners, aestheticians, business entrepreneurs, and other non-physicians can legally participate in med spa ownership, management, and profits.

Understanding how MSOs work – and how to structure them compliantly – is critical for anyone wanting to enter Texas' booming aesthetic medicine market without a medical license.

What Is a Med Spa?

A med spa is a hybrid between a day spa and an aesthetic medical center. Licensed medical professionals may offer non-invasive medical services like Botox injections, while also providing day spa services, like skincare, body scrubs, and massages.

Why Can't Non-Physicians Own Med Spas Directly?

Texas prohibits non-physicians from owning medical practices due to the corporate practice of medicine (CPOM) doctrine. This law prevents corporations, private entities, and unlicensed individuals from:

• Owning medical practices
• Employing physicians for private gain
• Exercising control over medical decision-making

The intent is to ensure patients receive ethically driven care from licensed professionals, not profit-driven care influenced by those without medical training.

Which Med Spa Services Trigger CPOM Doctrine?

The following typical med spa services are considered the practice of medicine and require physician ownership to avoid violating Texas’s prohibition against the corporate practice of medicine:

• Botox and dermal filler injections
• Laser treatments and IPL therapy
• Chemical peels (medical-grade)
• Microneedling with prescription serums
• Elective IV therapy (subject to Jennifer's Law)
• Prescription weight-loss treatments

Because most profitable med spa services are considered the "practice of medicine," physician ownership is required.

Who Can Own a Med Spa in Texas?

• Physicians (MDs and DOs): Licensed Texas physicians can own 100 percent of a medical spa practice.
• Physician Assistants: PAs can hold minority ownership stakes only in Texas med spas. A licensed physician must maintain majority ownership and control.

These professionals cannot own med spa practices in Texas:

• Nurse practitioners (NPs) and Advanced Practice Registered Nurses (APRNs)
• Registered nurses (RNs) and Licensed Vocational Nurses (LVNs)
• Estheticians and cosmetologists
• Business entrepreneurs without medical licenses
• Out-of-state physicians (without an active Texas license)
• Corporations or private equity firms (directly)

While non-physicians cannot own the medical practice, they can own and operate a Management Services Organization (MSO) that partners with a physician-owned practice.

What Is an MSO?

A Management Services Organization is a separate business entity that provides administrative and operational support to a physician's medical practice. The MSO handles everything except the actual practice of medicine.

What Can an MSO Do?

MSOs typically provide:

• Office space, facilities management, and medical equipment procurement and maintenance
• IT systems, electronic health records, supply chain, and inventory management
• Billing, coding, collections, insurance credentialing, and contracting
• Accounts payable/receivable, financial reporting, and accounting
• Staff recruitment and hiring (non-physician), payroll processing, and benefits administration
• Employee training programs and human resources support
• Brand development, marketing, website, and social media management
• Regulatory compliance monitoring and HIPAA privacy programs
• Risk management and contract review (non-medical)

What CAN’T an MSO Do?

MSOs are strictly prohibited from:

• Making medical decisions
• Directing patient care
• Hiring or firing physicians
• Setting medical treatment protocols

The physician must maintain complete clinical autonomy.

How MSO Med Spa Structures Work: The Dual-Entity Model

MSO med spa structures rely on separating medical practice from business operations through two distinct legal entities working together under a management services agreement.

Entity 1: Physician-Owned PLLC

The physician-owned professional limited liability company maintains complete control over all medical aspects of the practice. This entity owns the medical practice itself, employs or contracts with physicians and advanced practice providers, makes all clinical decisions without interference, bills patients and insurance for medical services, and holds all required medical licenses and permits.

Entity 2: Non-Physician-Owned MSO (LLC)

The management services organization handles the business side of operations. This entity provides comprehensive management services to the medical practice, owns or leases the office space and equipment, handles all administrative and business functions, builds the med spa brand, employs non-clinical staff, including receptionists and marketing personnel, and receives management fees in exchange for these services.

The Connection: Management Services Agreement (MSA)

These two entities work together through a carefully drafted Management Services Agreement that establishes the foundation of the relationship. The MSA defines:

• Which specific services the MSO will provide to the medical practice
• How the MSO is compensated (typically through management fees based on gross revenue or fixed monthly payments)
• Clear boundaries for decision-making authority, ensuring the physician retains all clinical control
• Term length and conditions under which either party can terminate the agreement
• Separation agreements to ensure the continuity of the business
• Compliance responsibilities for both entities to maintain regulatory adherence

Who Regulates Medical Spa Services in Texas?

Depending on how the business is structured, a medical spa in Texas may face oversight from multiple state and federal agencies, each with authority over different aspects of its operations.

Texas Medical Board (TMB)

The Texas Medical Board serves as the primary regulatory authority for medical spa operations in Texas. The TMB oversees physician practice, ensures compliance with the corporate practice of medicine doctrine, regulates medical procedures and delegated services, and investigates complaints related to patient safety and scope of practice issues.

If your medical spa offers services that require physician supervision or delegation, the TMB has jurisdiction over those activities and the physicians involved.

Texas Department of Licensing and Regulation (TDLR)

TDLR regulates certain aesthetic services and facilities, particularly those that don't require physician oversight. This agency:

• Licenses estheticians and cosmetologists
• Regulates laser hair removal facilities
• Oversees certain non-medical aesthetic treatments
• Inspects facilities for health and safety compliance

A licensed esthetician may only provide professional cosmetology services at a cosmetology establishment that is licensed with the TDLR. If a medical spa wants to market and sell licensed esthetician services, it must possess the required establishment license.

Texas Department of State Health Services (DSHS)

Tanning and permanent makeup services are regulated by the Texas DSHS.

Federal Regulatory Agencies

Beyond state regulation, medical spas may face federal oversight depending on their services and business structure.

• Food and Drug Administration (FDA): The FDA regulates medical devices used in aesthetic treatments, including lasers, injectables like Botox and dermal fillers, and other equipment and products used in medical spa services. The FDA also oversees prescribed and compounded medications, including weight loss drugs like semaglutide and tirzepatide, with increasing scrutiny on compounding practices and off-label marketing of these medications.
• Drug Enforcement Administration (DEA): If your medical spa uses controlled substances, DEA registration and compliance with controlled substance regulations are required.

In summary, the physician, their med spa practice, and the MSO they hire must all adhere to a complex web of rules and regulations.

Critical MSO Compliance Requirements

Fair Market Value Compensation

One of the most important compliance requirements is ensuring that management fees reflect genuine fair market value for the services actually provided. The compensation structure must be set in advance through annual or multi-year agreements and must be commercially reasonable based on industry standards.

Why this matters: The main factor in CPOM cases is whether the non-physician entity exercises control over the physician’s practice and whether that control creates an employer/employee relationship. When the MSO fees exceed fair market value, courts have interpreted such payment structure as an indication of a prohibited employer/employee relationship.

Establishing fair market value typically requires a professional cost-based analysis – what will it cost in your market to provide these services? – and then factoring in a reasonable profit margin. Our attorneys can guide you through this process to ensure your fee structure withstands regulatory scrutiny.

Federal Healthcare Law Compliance

All participants in an MSO arrangement must be mindful that a management services agreement creates exposure to liability under the Anti-Kickback Statute (AKS), including criminal liability for knowingly and willfully receiving or soliciting remuneration for federally paid health care services.

To avoid enforcement and penalties, MSO agreements must be carefully structured to avoid problematic compensation models such as:

• Per-patient fee arrangements
• Certain percentage-based compensation without proper justification
• Bonuses or incentives tied to referral patterns
• Any payments that could be characterized as disguised kickbacks

Comprehensive Written Documentation

Every MSO relationship requires multiple written agreements covering different aspects of the business relationship. These typically include management services agreements, lease agreements, licensing agreements (the MSO usually owns the brand and licenses its use to the PLLC), employment contracts, and billing agreements.

All agreements must meet specific legal requirements:

• Executed in writing with proper signatures
• Clearly specify the exact services being provided
• State compensation amounts and calculation methods
• Comply with both Texas state and federal healthcare regulations

Our firm ensures all documentation is properly drafted to protect both parties while maintaining full regulatory compliance.

Preserving Clinical Independence

Perhaps the most critical compliance requirement is maintaining physician control over all clinical aspects of the practice. This includes patient care decisions, treatment protocols, clinical staffing, medical policies, and quality assurance.

Regulatory agencies watch carefully for warning signs that suggest improper interference with medical judgment, such as:

• Non-physicians pressuring physicians to increase sales or revenue
• MSO policies that direct patient care, such as requiring certain tests or procedures
• Organizational structures that put non-physicians in supervisory positions over clinical staff

The bottom line: Getting these structures right from the beginning is essential. Our healthcare attorneys have considerable experience crafting MSO relationships that achieve your business goals in compliance with complex state and federal regulations.

Frequently Asked Questions

Can a nurse practitioner own a med spa in Texas?

Texas law does not directly address this question. It is within a nurse practitioner’s scope of practice to order and prescribe medical spa treatments. A nurse is permitted to own and operate a professional entity engaged in professional nursing. However, the nurse practitioner’s ability to prescribe medical spa treatments is derived from a physician’s delegation of prescriptive authority.

Nurse-owned medical spas typically involve payment by the nurse practitioner to a physician in exchange for the physician’s delegation of prescriptive authority and supervision of the medical spa’s operations.

Despite being the sole owner of the medical spa business, state law and regulations require the nurse practitioner to operate under the direction and supervision of the supervising physician. This can create tension between the nurse practitioner, as business owner, and the physician who is ultimately responsible for the medical care performed under his or her supervision.

A CPOM violation might occur if the nurse practitioner uses the payment relationship as leverage for interfering with the physician’s professional decision-making authority.

How much does it cost to set up an MSO for a med spa?

Hendershot Cowart P.C. offers a one-hour, flat-fee consultation to discuss the MSO organizational structure, regulatory issues, scope of practice, and the prohibition against the corporate practice of medicine. Our law firm also offers complete med spa with MSO set-up services.

When you are ready to schedule a consultation or to establish the legal entities and draft the requisite agreements for a med spa with MSO, please call us at (713) 783-3110 to discuss your options and our fee structure.

Can a private equity firm own a med spa through an MSO?

Private equity firms or investors cannot directly own the physician practice, but they can own the MSO that manages it.

What happens if the physician wants to leave the MSO arrangement?

If properly structured, the management services agreement should dictate the exit process, including required notice periods (usually 90 to 180 days) and a plan for the orderly transition of physician services.

Making sure these contractual processes and mechanisms are in place in your management services agreement is another reason to work with experienced Texas med spa formation attorneys.

The Bottom Line: MSOs Enable Non-Physician Participation in Med Spa Businesses

While Texas law prevents non-physicians from directly owning medical spas, properly structured MSOs provide a legal pathway for entrepreneurs, nurses, aestheticians, and business professionals to:

• Invest capital in aesthetic medicine
• Manage day-to-day operations
• Control business decisions
• Share in profits
• Build equity value

The key is understanding where the physician's clinical authority begins and the MSO's administrative authority ends – then documenting that boundary clearly in compliant agreements.

Work With Experienced Texas Med Spa Attorneys

Getting involved in a med spa is lucrative, but it is not without risk.

Schedule a consultation with our Texas healthcare attorneys to discuss the best structure for your medical spa or MSO and review regulatory issues, the scope of your practice, and the prohibition against the corporate practice of medicine. We'll get to know you and your objectives and help you achieve your dreams on a foundation of compliance.

Ready to structure your Texas med spa MSO? Call Hendershot Cowart P.C. at (713) 783-3110 or contact us online to schedule a consultation with one of our Texas med spa attorneys.