Alabama Management Services Agreement Guide: A No-Employer-Control Clause and a Fixed Fee
Alabama allows lay entities to employ physicians only if the physician keeps independent judgment, so the agreement needs a no-employer-control clause and a fee that is not tied to referrals.
Key Highlights
- Board and Commission rulings from 1992, 1995 and 2022 require physician independent judgment and no control by a non-physician.
- The fee-splitting statute bars dividing fees for bringing or referring a patient, and a 1988 informal opinion found a fixed percentage not a violation if reasonably related to the cost of facilities and services.
- A Board rule says financial incentives or contractual ties must not adversely affect medical judgment.
- Records rules set seven-year retention with patient access and notification on a departure or sale.
How to Price the Management Fee
The discipline statute bars dividing fees with any person for bringing or referring a patient. A 1988 informal General Counsel opinion, which is non-binding and predates the later rulings, found a fixed percentage paid to a contracting physician not a violation if the retained percentage was reasonably related to the cost of furnishing facilities and services and compensation was not directly related to referrals. We use a fixed monthly fee for defined services and nothing tied to referrals.
What the Practice Must Keep
The Board's declaratory rulings say a physician may contract with business corporations and other entities if the physician exercises independent judgment and is not controlled by a non-physician, and the 1995 ruling required a no-employer-control clause. The agreement says the physician decides all clinical matters and the management company has no authority over them, and a Board rule says financial or contractual ties must not adversely affect medical judgment.
Terms to Avoid
Avoid any term letting the management company make medical decisions, referral-based pay, standing-order IV models and compensation directly related to the referral of a patient. The 2022 ruling warns that owners and investors may implicate the prohibition on unlicensed persons maintaining an office to practice medicine.
Term, Records and Departing Clinicians
A Board rule sets seven-year record retention, patient access and notification when a physician leaves or a practice is sold, and does not address MSO custody directly, so the practice keeps records. Non-compete law is the 2016 Restrictive Covenants Act, and secondary sources say courts treat physicians as exempt professionals, which we could not verify, so we do not use non-competes for employed clinicians.
Filings, Notices and Watch Items
We found no Alabama transaction notice law. The Board warned in May 2026, per a state news outlet, against research-grade peptides even with a consent form, and we did not retrieve its notice. The professional corporation rule requires filing certified articles and a shareholder list with the Board within 30 days.
Drafting Checklist
- Fee: fixed for defined services, not tied to referrals.
- Control: a no-employer-control clause.
- Judgment: financial ties do not affect medical judgment.
- Records: kept seven years with patient notice on a departure or sale.
- Peptides: only from permitted sources.
- Board filing: within 30 days of formation.
How We Draft It
Patients pay the physician-owned practice, the practice pays the management company a fixed monthly fee under the agreement, and the management company pays MedGrid a fixed monthly retainer for consulting. The management company never practices medicine, and the agreement never moves a clinical decision to it. Our template follows the same flat-fee design in every state, with the state-specific limits below layered on top.
Disclaimer
This article is general educational information, not legal advice. Management agreement rules change and differ by state, and this summary draws on our published state guide, parts of which rest on secondary sources, so have health care counsel in the state review any agreement before you sign.
MedGrid MSO provides management services to independently owned practices; it does not practise medicine and does not direct clinical decisions. Requirements vary by state and by service, and change over time — nothing on this page is legal or medical advice. Talk to us or your own counsel before making a structural decision for your clinic.