Hawaii Practice Structure Guide: The Professional Corporation Act, Limits on Management Roles and a Pending Market Oversight Bill
Hawaii has no corporate practice statute that we found, but its professional corporation act bars a practice from taking a management or member role in an enterprise outside its articles, so the practice should be the MSO's customer and not its manager.
Key Highlights
- Hawaii professional corporation shares may go to individuals authorized to practice in Hawaii or in any other state or territory, and the licensing authority may restrict that further.
- Section 415A-5 lets a professional corporation be a promoter, partner, member or manager only of an enterprise engaged only in professional services or business permitted by its articles.
- The physician practice act has no express fee-splitting ground, though it covers employing anyone to solicit patients and knowingly permitting unlicensed persons to perform licensed activities.
- Senate Bill 3175 of 2026 would require 180 days' notice of material health care transactions, and we could not confirm its status.
Entity and Ownership
Hawaii's Professional Corporation Act lists physicians among the professions. A corporation may be formed for one profession plus ancillary services, and for two or more professions or business purposes only to the extent the licensing laws permit. Shares may be held only by individuals authorized by law in Hawaii or in any other state or territory or the District of Columbia to render a professional service the articles permit, and the licensing authority may restrict that by rule. Violating shares are void and transfers go only to qualified individuals. At least half the directors and all officers except the secretary and treasurer must be qualified persons, and at least one director must be a Hawaii resident. Services are rendered only through individuals permitted to render them in Hawaii. The statute sets no mandatory name suffix, an annual report is required, and individuals keep liability for their own acts. We read no professional LLC provisions in the LLC chapter, so Hawaii has no express statute for one.
The Corporate Practice Position and the MSO Limit
We found no corporate practice statute, Board rule, case or Attorney General opinion in Hawaii, though we did not search the opinion archive directly. The functional limit is the professional corporation act and the licensing statute, and a medical liability insurer FAQ and a vendor guide describe the same position. A key provision for MSO design is that a professional corporation may act as a promoter, general partner, member or manager only of a partnership, joint venture, trust or other enterprise engaged only in rendering professional services or carrying on business permitted by its articles. The practice should therefore be a customer of the MSO and not its manager or member unless its articles permit that business. The discipline statute covers employing anyone to solicit patients, false advertising, knowingly permitting an unlicensed person to perform licensed activities and conduct contrary to recognized ethical standards.
The Management Agreement and Fees
The physician practice act has no express fee-splitting ground, and a search summary that cited a subsection for one was wrong. The AMA standard applies only indirectly through the ethics ground, which we did not open. We found no Hawaii authority on percentage management fees. Hawaii bans non-competes only for employees of technology businesses, so physician covenants face a reasonableness test, and sale-of-business covenants are permitted. Existing transaction review covers hospital acquisitions with 90 days' notice to the Attorney General. Senate Bill 3175 of 2026 as introduced would require 180 days' notice to the state planning agency before a material health care transaction involving a physician organization or provider group, including a change of control, governance or material influence. It does not name MSOs, and its last status we found was referral to committees in February 2026, so we treat it as not enacted.
Telehealth and Aesthetic Rules
Hawaii has no med spa statute or facility license that we found. Physician assistants act under physician direction and control with the physician retaining responsibility, and persons practicing medicine under physician supervision must be licensed as physician assistants. The telehealth statute requires a documented evaluation, says issuing a prescription based solely on an online questionnaire is not an acceptable standard of care and requires a Hawaii medical license for a physician forming a relationship by telehealth, with out-of-state consultation allowed only if the Hawaii physician retains control and responsibility. We found no Hawaii-specific IV hydration authority.
How We Structure It
As a rule we set up a professional corporation owned by the licensed physician, with no exceptions for what looks like a more flexible state. Patients pay the physician-owned practice. The practice pays the management company a fixed monthly fee under a written management services agreement. The management company pays MedGrid a fixed monthly retainer for consulting. The MSO never practices medicine, and the physician makes every clinical decision. In Hawaii the practice buys services from the MSO and does not manage it or own a share of it, and prescribers hold Hawaii licenses.
Disclaimer
This article is general educational information, not legal advice. Entity and corporate practice rules change, and parts of this summary rest on secondary sources, so have health care counsel in the state confirm the structure before you form or sign anything.
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.