Pennsylvania Practice Structure Guide: The Professional Corporation, the OCA Partnership Cases and the 2025 Non-Compete Law

Entity and Ownership

Pennsylvania professional corporations are formed under Chapter 29 of the Associations Code through the business corporation law, with articles that identify the corporation as a professional corporation, generally limited to one kind of professional service. All ultimate beneficial owners of shares must be licensed persons unless a profession-specific rule says otherwise, non-conforming issuances and transfers are void, and voting trusts and proxies that give voting power to a non-qualifying person are void. Services are rendered only through licensed people, with clerks, nurses, administrators and technicians allowed if they do not perform the regulated service. The Board of Medicine's rule lets a physician form a professional corporation with other physicians or with other Pennsylvania-licensed practitioners who treat human illness if their own boards allow it, and the Board bars false, misleading or deceptive names. The Osteopathic Board's rule requires corporate documents to go to that Board before filing, and we found no equivalent for the Board of Medicine, though a vendor claims weeks of pre-approval that we could not verify. A Pennsylvania professional association is not a distinct modern form.

The Corporate Practice Position

The doctrine rests on common law beginning with Neill v. Gimbel Brothers (Pa. 1938), an optometry case, and secondary sources say the Medical Practice Act of 1985 reflects it. Sources conflict on whether Pennsylvania has a single statute, and we could not resolve it from the primary text. A 2026 law-school article argues enforcement is weak and the doctrine may be symbolic, which is the author's opinion. We found no 2025 or 2026 Pennsylvania appellate decision applying Neill to an MSO. Licensed hospitals, facilities and HMOs may employ physicians.

The MSO cases are Warren J. Apollon, D.M.D., P.C. v. OCA (E.D. La. 2008) and OCA v. Hodges (E.D. La. 2009), both federal decisions applying Pennsylvania law and so not binding on Pennsylvania courts. We read them through secondary sources. In both, an orthodontic management agreement created a de facto partnership with the non-professional manager and was unenforceable. The problem terms were MSO control of revenue and bank accounts, an equipment leaseback, a fee of practice revenue less a share of net operating margin, a 25-year term, mutual non-competes, a minimum opening hours requirement, and MSO managed-care contracting power. Secondary sources say sharing gross returns alone does not create a partnership but profit sharing is prima facie evidence of one.

The Management Agreement and Fees

We found no Pennsylvania physician fee-splitting statute or Board rule. The Board's unprofessional conduct rule has no fee-splitting item and covers knowingly permitting an unlicensed person to perform licensed activities, improper delegation, failure to supervise and deceptive advertising. Practitioner guidance recommends a fair-market fee, a shorter term, no MSO bank-account control, no unilateral MSO managed-care contracting and clinical decisions with licensees.

The Fair Contracting for Health Care Practitioners Act, effective January 1, 2025, covers physicians, nurse practitioners, nurse anesthetists and physician assistants, makes non-competes longer than one year unenforceable and any non-compete unenforceable on involuntary termination, carves out sale-of-business and equity deals, grandfathers earlier covenants and adds patient notice on departure, according to law-firm summaries. No transaction notice law is in force. House Bill 1460, the Health System Protection Act, passed the House in June 2025, was reported by a Senate committee in June 2026 and was pending on the Senate floor in October. As we read the printer's number text it is facility-centric, with covered entities defined by reference to health care facilities, and it does not expressly name physician offices or MSOs. House Bill 2115 would require 120 days' pre-closing notice to the Attorney General, covering MSOs only where they negotiate payer contracts according to one summary, and it was in committee.

Med Spa Rules

Pennsylvania has no med spa license or statutory medical director title that we found. The Board's delegation rule requires delegation to be consistent with accepted medical practice, the delegatee's competence to be known to the physician, no undue risk to the patient, patient notice and no objection, physician responsibility and availability in proportion to risk, and no delegation of services requiring physician-level skill. We found no Pennsylvania-specific primary source on laser supervision, IV therapy or compounded GLP-1s.

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 Pennsylvania the agreement avoids every term the OCA cases criticized: no MSO control of bank accounts, a fixed fee and a modest term.

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.