Although doctors and non-doctors generally cannot be co-owners of a medical spa, there are several alternative commercial structures available to avoid violating Michigan law. Every business is unique, so it is important to consult with an attorney to determine the right structure for your medical spa. Not surprisingly, many entrepreneurs and non-medical health professionals see an opportunity on the property of a medical spa, but they are not sure how to proceed. The fact of the matter is that in most US states, the services provided by medical spas are considered medical.
According to a legal doctrine known as “corporate practice of medicine”, only a doctor or corporation owned by a doctor can own a medical facility. In addition, only physicians or physician-owned corporations may charge patients' fees for the provision of medical services. While a physician assistant may own minority shares in a medical spa or serve as a minority partner with a doctor or doctors, other healthcare providers, such as nurse practitioners and non-medical professionals, cannot do so. This agreement should define the roles that each entity will perform and the compensation that the physician or corporation owned by the physician will pay to the MSO for the use of its facilities, as well as the administration fees that the MSO will charge to the physician. The Michigan Radiological Society argues that the proliferation of company-owned MRI centers may threaten patient safety due to lack of quality controls, and also says it is economically damaging to medical practices. Although non-doctors cannot own doctors' offices, they may own the office space and equipment that a doctor may need to operate their office.
The objective of this doctrine is to provide patients with ethics-based care rather than for-profit care influenced by someone with no medical training. Last year, the Oakland County Circuit Court ruled in favor of Oakland MRI, holding that Oakland MRI is allowed to operate in Michigan as an LLC and that its owner, a gemologist by profession, is not required to be a licensed physician to own and operate the diagnostic imaging center. Dozens of for-profit MRI diagnostic centers, urgent care centers, and cosmetic medical spas in southeastern Michigan are owned by non-medical entrepreneurs. Under the law, doctors, lawyers, dentists and ministers must incorporate their medical practices or facilities as a professional services corporation or a professional limited liability corporation and must be licensed, several legal experts and state officials told Crain's. Christine Dardarian, an attorney for Sylvan Lake who represents the Michigan Radiological Society, said the corporate practice of medicine doctrine was created to protect the public and recognize that learned professions such as medicine, law and clergy work differently from other companies. When Katke owned M1 and employed Desai as medical director and hired other radiologists, he said he wasn't practicing medicine.
MSOs may also be responsible for making medical spas comply with the Stark Act, the Anti-Bribery Statute, the False Claims Act and HIPPA. Management fee cannot be a percentage of medical office bills, and a fixed fee structure is ideal; however, it can be difficult to assess the value of management services when office success is difficult to predict. In conclusion, although non-doctors cannot own doctors' offices in Michigan according to state law, they can own office space and equipment needed by doctors to operate their offices. It is important to note that any doctor or corporation owned by a doctor must enter into a Management Services Agreement (MSA) with an MSO before they can offer any medical services. It is also important for entrepreneurs looking to open a medical spa in Michigan to consult with an attorney before doing so in order to ensure they are following all applicable laws.
