Illinois Practice Structure Guide: Medical Corporations, the Section 22.2 Percentage-Fee Ban and Expanded Transaction Notice

Entity and Ownership

The joint IDFPR and Department of Public Health med spa memo, updated October 30, 2025, says only physicians may organize under the Medical Corporation Act, which allows only medical services, and that physicians may also use the Professional Service Corporation Act. A physician-run entity may have only physicians as shareholders, officers, directors or managers, with some limited exceptions, and entities must file articles with the Secretary of State and register with IDFPR. Professional service entities are limited to one profession plus listed related services, and none permits combining medicine with cosmetology or esthetics. We read the corporate statutes through FindLaw and search results because the legislature's site blocked access, so confirm renewal and naming details. The memo reflects IDFPR's position that an APRN with full practice authority may own through a professional service entity for some services.

The Corporate Practice Position

Illinois enforces the doctrine as case law backed by licensing. Berlin v. Sarah Bush Lincoln Health Center (Ill. 1997) held the doctrine does not bar licensed hospitals from employing physicians. Carter-Shields v. Alton Health Institute (Ill. 2002) declined to extend the exception to an unlicensed nonprofit corporation and held a physician's employment agreement unenforceable. We read both through secondary summaries.

The Percentage-Fee Ban

Section 22.2 of the Medical Practice Act, as summarized in FindLaw's copy current as of January 1, 2025, makes these points. It generally bars sharing a professional fee for a referral. It allows revenue sharing inside an entity organized under the Medical Corporation, Professional Service Corporation, Professional Association or LLC Acts where every owner is licensed. It allows a fair-market billing or collection service to be paid a percentage or flat fee if the licensee controls the fees and payments go directly to the licensee or a sole-control account. And it bars a licensee, apart from payments to owners or licensees, from paying a percentage of fees, revenues or profits for marketing or management, preferred-provider listings, network participation, fee negotiation or patient incentive programs. Violations are unlawful practices under the Consumer Fraud Act enforceable by the Attorney General, except for licensed hospitals and affiliates. We did not see the current legislature text for the percentage-of-revenue language. In Vine Street Clinic v. HealthLink (Ill. 2006), as described in a 2008 law-firm article, a percentage-based fee for administrative services was void under the earlier statute.

The practical rule for a template is a flat or fixed fair-market management fee. A 2026 act amended the medical patient rights act on billing notices, and we could not confirm any change to section 22.2, and another 2026 act extended the Medical Practice Act's sunset to 2032, according to a secondary source.

Transaction Notice

The Illinois Antitrust Act has required 30 days' notice to the Attorney General of covered health care transactions since 2024, with fines of $500 a day, and we saw the threshold for provider organizations only through a law-firm summary. A 2026 act effective January 1, 2027 broadens covered transactions from between to involving health care entities, covers private equity ownership held directly or indirectly including through MSOs, and removes the sunset. A single-physician practice with a small MSO and no private equity investor probably falls below any threshold, but we could not confirm the thresholds, so counsel should confirm if outside capital is involved.

Med Spa and Aesthetic Rules

The IDFPR memo says physicians may operate a med spa, perform cosmetic procedures affecting the living layers of skin, prescribe and administer Botox and weight-loss injections and delegate under the delegation statute, with delegation to unlicensed persons requiring an on-site licensed professional. Estheticians and cosmetologists may not affect the living layers of skin or do Botox, microneedling or radiofrequency, and a salon registration cannot be used to run a med spa. For lasers, ablative procedures need on-site physician supervision, and since January 1, 2025 non-ablative laser hair removal needs no on-site physician exam if a delegation protocol, an APRN exam, a trained RN or LPN delegate and electronic physician availability are all in place. The memo names IV therapy among med spa services but we found no Illinois-specific IV rule. Non-competes are limited only for certain mental health services, and we found no confirmed ban on physician non-competes.

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 Illinois the management fee is flat, nothing is paid as a percentage for marketing or management, and any billing service is a fair-market vendor whose payments go straight to the practice's account.

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.