Arizona Management Services Agreement Guide: Fees That Do Not Pay for Referrals and a Physician Who Is Actually Present
Arizona's fee-splitting ground is tied to referrals and does not by its terms ban a fixed or fair-market management fee, and attorney general cases show an absent or out-of-state physician does not satisfy supervision.
Key Highlights
- Section 32-1401(27)(v) makes dividing a professional fee for patient referrals among providers or institutions unprofessional conduct.
- We found no Arizona board rule, opinion or case on a percentage-of-revenue management fee.
- The practice act does not expressly bar a non-licensee from controlling clinical judgment, which is why the agreement leaves clinical decisions with the physician.
- A 1999 Supreme Court decision refused to enforce a three-year, five-mile physician non-compete.
How to Price the Management Fee
The physician practice act makes it unprofessional conduct to divide a professional fee for patient referrals among providers or institutions, or through an arrangement with the same effect. By its terms that is tied to referrals and does not ban a fixed or fair-market management fee to a non-provider. We found no Board rule, opinion or case on a percentage-of-revenue fee, so we use a fixed fee for defined services.
What the Practice Must Keep
The practice keeps clinical decisions, protocols and supervision. A 2025 Attorney General case charged a Scottsdale nurse over a med spa whose founding physician held only a Washington license, which the defendant denies, so supervision needs an Arizona-licensed physician who is actually involved.
Terms to Avoid
Avoid any referral-linked pay, any arrangement that leaves clinical judgment to a non-licensee, a medical director who is out of state or absent, and a practice that depends on a physician who is not Arizona-licensed.
Term, Records and Departing Clinicians
In Valley Medical Specialists v. Farber (1999) the Arizona Supreme Court refused to enforce a three-year, five-mile physician non-compete and said such covenants are strictly construed against the public interest. We found no statute banning them, and we do not use them for employed clinicians.
Filings, Notices and Watch Items
A 2026 bill to register med spas under the Board of Pharmacy was introduced and, as far as we found, did not advance. We found no Arizona transaction notice law, and the Arizona Medical Board has no separate registration for professional corporations.
Drafting Checklist
- Fee: fixed for defined services, no referral-linked pay.
- Clinical decisions: with the physician.
- Supervisor: Arizona-licensed and actually involved.
- Entity: physician-owned, with no use of the statute's lay minority allowance.
- Non-competes: none for employed clinicians.
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.