North Carolina Management Services Agreement Guide: The Board's Percentage-Fee Position and Straw Ownership Red Flags

How to Price the Management Fee

Position Statement 10.1.1, last amended in 2021, says that except in instances permitted by law, a licensee cannot share revenue on a percentage basis with a non-licensee, and that doing so is fee splitting and grounds for discipline. A percentage-of-collections MSO fee is therefore the highest-risk term, and we state it as the Board's position and not a statute. The Board's line is non-licensee, so the MSO's ownership matters. A flat, fixed or cost-plus fee is lower risk, and we use a flat fee.

What the Practice Must Keep

Position Statement 10.1.2 says a business practicing medicine must be owned in its entirety by active North Carolina licensees or the permitted combinations. The practice keeps clinical control, its records, its bank accounts and the right to sell its interest, and the agreement does not limit the physician's control of those, because a July 2026 law-firm article reports that limits on physician control of records, bank accounts and sale of the interest are red flags and that the Board reviews practice revenue against owner profit.

Terms to Avoid

Avoid a percentage of collections, a management agreement that sends most revenue to the non-physician, limits on the physician's control of records, bank accounts or sale of the interest, a nominal physician-owner with no real decisions, and a paid medical director with no duties. A Board case study described a $2,000 a month director with no duties, listed as supervising physician for four advanced practice providers of a lay-owned med spa, as paying for use of a license.

Term, Records and Departing Clinicians

The Medical Board's employment statement tells licensees to scrutinize non-competes and non-solicits and to accept employment only from lawfully authorized employers, and its departures statement addresses patient notice and records. Any stock issuance or transfer in the professional corporation needs Board certification before it happens. We found no North Carolina statute banning non-competes.

Filings, Notices and Watch Items

The Board requires a certificate of registration for the professional corporation, with a notarized Certificate of Incorporators, a $50 fee and filing with the Secretary of State within four months. Senate Bill 570 of 2025, which would have banned common stakeholders between a practice and its MSO unless the MSO is wholly owned by licensees, stalled and is not law, and Senate Bill 978 of 2026 would ban non-competes for hospital-employed clinicians and is in Appropriations. Language from the first could return.

Drafting Checklist

• Fee: flat, fixed or cost-plus, never a percentage.
• Ownership: all licensed, with Board certification of every transfer.
• Control: physician controls records, bank accounts and sale of the interest.
• No nominee: a real owner makes real decisions.
• Medical director: actual duties, paid by the practice.
• APP practices: no physician contract unless solely for legal supervision.
• Non-competes: scrutinized, 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.