Kansas Practice Structure Guide: A Strict Doctrine, the Professional Association and Why MSO Contracts Carry Real Risk

Entity and Ownership

Kansas's professional corporation law calls the entity a professional association, and its name must end in chartered, professional association or P.A., so P.A. in Kansas does not mean physician assistant. Stock may be issued only to a qualified person, meaning a natural person licensed in the same profession, plus qualified retirement trustees, certain revocable trusts and a healing arts school clinic. A general partnership or another professional association counts if at least one partner or shareholder is licensed, and shares issued in violation are void. Voting trusts and proxies may go only to another shareholder, and directors and officers other than the secretary must be shareholders. Incorporators must be licensed in Kansas, and the Board of Healing Arts must file a certificate that the incorporators are licensed and the name approved at formation and for name or purpose amendments. A physician association may combine only listed professions, including physicians with registered nurses and physician assistants, and the Board states that a physician assistant may hold no more than 49% of a physician association. When the last licensed owner dies or is disqualified the entity converts to a business corporation.

The Corporate Practice Position

Kansas's rule is that a general business corporation cannot practice medicine or contract with or employ physicians to do so, and such contracts are illegal and unenforceable. The exceptions are professional corporations, licensed hospitals and licensed ambulatory surgical centers. The Board's General Counsel states this in a published FAQ, adds that physicians often engage management companies to handle administrative functions, and urges consulting counsel. Early Detection Center v. Wilson (Kan. 1991) held a general corporation partly owned by laypeople could not provide medical services through licensed practitioners. St. Francis Regional Medical Center v. Weiss (1994) recognized the hospital exception. Central Kansas Medical Center v. Hatesohl (2018) held a licensed surgical center may employ physicians only for services within its license, and a separate concurrence urging abolition of the doctrine drew no other justice. In Clinical Colleagues v. Hutchinson Regional Medical Center (D. Kan. 2021) a federal court upheld the doctrine against equal-protection challenges, refused to certify the question to the Kansas Supreme Court, called Kansas law quite settled and dismissed a staffing corporation's contract claims as illegal and unenforceable.

A 2019 statute lets the Board issue a certificate of authorization to a business entity to employ physicians, but the definition covers only employer worksite clinics for their own employees, certain nonprofit health carrier subsidiaries and a health IT company serving worksite clinics. It excludes professional corporations and is not a route for MSOs, med spas or cash-pay clinics. Unlicensed practice and maintaining an office for the healing arts without a license are severity level 10 felonies.

The Management Agreement and Fees

The licensing act makes it unprofessional conduct to give or receive any fee, commission, rebate or other compensation for professional services not actually and personally rendered, other than through the legal functioning of lawful professional partnerships, corporations, LLCs or associations. The Board's medical spa FAQ ties fee-splitting with unlicensed individuals or entities to that provision. We found no statute, rule, case or opinion on percentage-of-revenue MSO fees, so a percentage fee to an unlicensed management company is a risk area whose outcome depends on the facts. Other grounds cover aiding unlicensed practice, referring to an entity in which the licensee has a significant investment interest without written disclosure, and anabolic steroids or growth hormone for non-medical use, which is relevant to peptide and hormone offerings. Because voting agreements with non-shareholders are void by statute, some friendly-PC control tools are unavailable. Records are kept ten years and transferred on patient request. Non-competes are governed by common law, and we found no transaction notice law.

Med Spa and Aesthetic Rules

Kansas has no med spa statute or facility license. The Board's General Counsel states in its medical spas FAQ that any business offering medical services can be owned only by a physician, or co-owned by a physician with other specified licensed professionals, that a person who is not licensed to practice medicine may not open such a business, and that violation is a felony. A lay-owned med spa that hires physicians is therefore expressly disfavored, and the FAQ does not address MSO arrangements. A physician may supervise up to three physician assistants at different locations without Board approval, and a physician assistant who owns a PA-only entity cannot employ a physician. A physician treating a Kansas patient needs a Kansas license. A February 2026 joint statement of the pharmacy and healing arts boards on IV therapy, which we read only through a summary, says a prescriber must evaluate and diagnose first, non-patient-specific standing orders are not valid prescriptions and patient menus are not allowed. Bills in 2024 to loosen laser hair removal supervision died in committee.

How We Structure It

As a rule we set up a professional association 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 Kansas the management company is a pure administrative vendor with no ownership, no voting rights or proxies, and no role in any clinical, hiring or pricing decision, and counsel reviews the agreement before signing.

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.