Kentucky Practice Structure Guide: The Professional Service Corporation and the Least Settled Corporate Practice Law in the Region
Kentucky has old case law saying corporations cannot practice medicine, a lenient board in practice and almost no recent authority. The fee-splitting carve-out covers division among licensees in a professional service corporation, not payments to a lay MSO.
Key Highlights
- Kentucky physicians use a professional service corporation (P.S.C.) whose shares go only to licensed individuals and qualifying entities, with at least half the directors qualified.
- The corporate practice position is unsettled: old case law, a lenient board in practice and secondary sources that we could not verify.
- The fee-splitting statute disciplines compensation for referrals or services not personally rendered and carves out division of fees within a professional service corporation, which does not clearly cover payments to a lay MSO.
- A 2023 Board opinion says a physician who drifts into another specialty is held to that specialty's standard, which matters for cosmetic medical directors.
Entity and Ownership
Kentucky's Chapter 274 lists physicians and surgeons and osteopaths as professional services. Shares may be issued only to individuals licensed in any state, partnerships of qualified persons, other professional service corporations and certain professional entities, and issuance or transfer in violation is void. The incorporator, shareholders, at least half the directors and all officers other than the secretary and treasurer must be qualified persons, and non-qualified directors must abstain from votes that deal exclusively with the art of the professional service. Services must be rendered only through licensed officers, employees and agents, with clerks and technicians not counted, and the corporation may do nothing but render the professional service, with investments and property needed for practice allowed. The name must end with professional service corporation or P.S.C., and the Secretary of State's articles form lists the profession and original shareholders. We found no Board of Medical Licensure filing requirement.
The Corporate Practice Position
Kentucky's licensing statute bars unlicensed persons from practicing or opening or maintaining an office for practice, and it has no general corporate employment ban. Secondary sources cite 1930s and 1940s decisions for the rule that corporations cannot practice medicine, and a Kentucky law-firm summary calls it older case law and says the Board finds physician employment by hospitals acceptable and other arrangements generally approved without lay interference with medical decisions. We could not confirm either the holdings or the Board opinion that secondary sources cite for that leniency, and the Board's published opinion list shows no corporate practice entry. One vendor cited a 2024 case as active enforcement, but the case concerns a physician's contract and interference damages and not the doctrine, so we do not cite it. Real uncertainty remains, which is why the physician-owned professional service corporation that employs clinicians is the safe structure.
The Management Agreement and Fees
Kentucky's discipline statute covers giving or receiving any fee, commission, rebate or other compensation for sending, referring or inducing a person to communicate with a licensee, or for professional services not actually and personally rendered. It carves out practice in a partnership or professional service corporation and the pooling or dividing of fees under that corporation's policies, plus fee division between licensees treating the same patient. That carve-out does not obviously cover payments to a lay MSO, so a percentage management fee rests on the reading that it pays for the MSO's own services and not for referrals, with no direct Kentucky authority we could find. A 2026 act amended the statute and we could not read its text. We found no MSO-specific rule on control, staffing or records, no recent physician non-compete legislation and no transaction notice law.
Med Spa and Aesthetic Rules
Kentucky has no med spa statute. A 2011 Board opinion on lasers, which has no force of law, says physicians may delegate to certified or licensed non-physicians and the supervising physician should be physically present on site and immediately available, with an exception for laser hair removal. The Board of Nursing's advisory opinion lets RNs and LPNs perform aesthetic procedures only as part of a medical plan of care under supervision, bars delegating diagnosis and treatment-plan creation, and names Botox and fillers as outside nurses' independent scope. The Board of Nursing also states that a qualified APRN may own a med spa and serve as its medical director, which we could not reconcile with the corporation statute, so we flag it and do not rely on it. A December 2023 Board opinion says a physician who drifts into another specialty is held to that specialty's standard, with the example of an emergency physician offering cosmetic procedures being held to aesthetic dermatology or plastic surgery standards. A joint statement on IV therapy clinics was revised in March 2025, and the Board of Pharmacy issued a compounded GLP-1 alert in November 2025.
How We Structure It
As a rule we set up a professional service 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 Kentucky the MSO invoices for its own defined services, the medical director's specialty matches the services offered, and nothing relies on the nursing board's ownership statement.
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.