Philadelphia Medicine Summer 2019 - 25

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or responsible officer or employee of an entity, who engages in
the unlicensed practice of medicine can be subject to fines and
imprisonment. These prohibitions would apply to any unlicensed
person who owns or operates a medical spa.
Because the corporate practice of medicine doctrine exists
in most states, non-physicians who are interested in owning an
aesthetic medical practice/medical spa are somewhat restricted.
Only physicians or approved licensed allied health professionals However, non-physicians are permitted to organize and operate
acting under physician supervision can perform the treatments "management services organizations" (MSOs), which provide varlisted above. Pennsylvania law provides specific requirements that ious types of management and administrative services to aesthetic
must be satisfied when a physician is supervising medical services medicine practices. As such, while the entity through which the
to be performed by non-physician clinical personnel.
medical treatments are furnished still require physician ownership,
Physician supervision is proper under Pennsylvania law when: the MSO model enables non-physicians to play a significant role
1) the level of supervision is consistent with state standards of in the day-to-day operations of a medical aesthetic practice.
acceptable medical practice; 2) the physician has knowledge that
In an MSO arrangement, the non-physician participants are
the clinician being supervised has the requisite education, training, permitted to administer and manage most aspects of the medical
experience and demonstrated competency to safely perform the aesthetics practice/medical spa enterprise, including marketing,
medical service being delegated; 3) the physician has determined owning the real estate, payroll, human resources, accounting, and
that the delegation does not create an undue risk to the particular billing, i.e., virtually everything except the actual provision of the
patient being treated; 4) the nature of the service has been explained medical treatments. It is important to note that the physicians
to the patient and the patient has no objection to the service being performing the services must be in charge of and accountable for
furnished by non-physician personnel who are properly supervised all medical and clinical decision-making to avoid scrutiny under
by the physician; 5) the physician assumes the responsibility for the a given state's corporate practice of medicine doctrine.
delegated medical service, including the performance of the service,
The success of the medical spa and the success of the MSO entity
and is available to the supervisee as appropriate to the complexity are interdependent, due to the fact that a significant portion of the
of the procedure, the skill level of the supervised personnel and compensation paid to the MSO by the medical practice entity is
the degree of risk to the particular patient.
driven by practice revenues. Keeping the MSO and the practice
Organizational Structure

Under Pennsylvania law, a medical spa is treated as a medical
practice. As such, a medical spa can be operated through the same
entity types as a medical practice in Pennsylvania, including a
professional corporation, a professional association, a partnership,
a professional limited liability company or a sole proprietorship.
Ownership of a medical spa, under any organizational form, must
be held entirely by a physician with a current, valid license issued
by the Pennsylvania Board of Medical Examiners.
Any ownership of this entity by non-physicians would be considered violative of the "corporate practice of medicine" doctrine,
which is a criminal offense under Pennsylvania law, subject to
fines and imprisonment. In addition, the entity through which
non-physician medical treatments which require some degree of
physician supervision are furnished must also be wholly owned
by physicians.
An unlicensed person or entity that violates the ban on the
corporate practice of medicine is deemed to have engaged in the
unlicensed practice of medicine, which is chargeable as a third-degree misdemeanor criminal offense in Pennsylvania. Any person,

entity separate provides benefits to both parties. For example, the
physician owner's risk is mitigated by the fact that the MSO owns
and operates all of the non-clinical assets used in the practice.

As such, if the medical practice fails, the physician owner is
not liable for any of the MSO's indebtedness or other liabilities.
Additionally, the creation of a separate medical spa entity through
which the physician delivers services protects the physician owner's
traditional medical practice from professional liability for services
delivered through the aesthetic medicine entity. Furthermore,
such an arrangement will benefit the MSO, as it will not be held
liable for the delivery of any clinical services.
Conclusion
The guidance set forth in this article is not intended to be
used in lieu of retaining a qualified health care attorney and
other professional advisors with direct, relevant experience in the
aesthetic medicine/medical spa area. For additional information,
please contact George W. Bodenger, Esquire, at 610-212-5031 or
gwb@bodengerlaw.com. *

Summer 2019 : Philadelphia Medicine 25


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