Rhode Island Practice Structure Guide: The Professional Service Corporation, the 2024 DOH Guidance on Management Companies and the New AG Notice Rule

Entity and Ownership

Chapter 7-5.1 of the Rhode Island General Laws governs professional service corporations and lists physicians. Every officer, director and shareholder must be an individual authorized to practice the profession and employed by the corporation in that practice, and no individual may be an officer, shareholder, director or employee of another corporation engaged in the same profession without prior written approval of the regulatory agency. Combinations are allowed for physicians with dentists, nurses and physician assistants and similar. Ineligible shareholders must transfer or redeem, and temporary estate ownership is limited to two years. Services are rendered only through authorized employees, with unlicensed staff doing non-professional functions. The name must end with professional corporation, corporation, incorporated, limited or abbreviations including P.C. The corporation must carry professional liability insurance of $50,000 per professional employee, with a $100,000 minimum and $500,000 cap, and file the certificate with the Secretary of State. Secondary guides say board approval precedes filing, which we did not find in the statute.

The Corporate Practice Position and the DOH Guidance

We found no express corporate practice statute. The restriction operates through the professional corporation rules, board discipline for aiding or abetting unlicensed persons, a criminal unauthorized practice statute carrying up to three years' imprisonment, and an injunction statute against any person, firm, corporation or association violating the chapter. The Department of Health's July 2024 guidance on medical spa and IV therapy businesses is the key document. It says a practice owned and operated by its members can be exempt from the organized ambulatory care facility license, but where such a corporation hires a management company that will actively operate the business with significant influence and no active involvement of the members, the management company will need the facility license and members may have adverse action taken against their professional licenses. It also says neither the business nor the business owner may exercise control over how the physician, physician assistant or nurse practitioner provides services. It is agency guidance and not a rule or statute, and we could not confirm it has been tested.

Pending Bills

Senate Bill 2459 and House Bill 7721 of 2026 would bar unlicensed entities from owning medical practices or employing licensees, require physicians to hold a majority of voting shares and directors, ban straw ownership, ban a practice's shareholder, director or officer from also owning or controlling the MSO unless the practice owns a majority of it, ban stock-transfer restriction agreements, and ban relinquishing de facto control over hiring, compensation, revenue disbursement, staffing, clinical policy, pricing, billing and payer contracting, with Attorney General penalties of $10,000 a day. Both committees held them for further study in March and April 2026 according to a trade association, and we could not read the official status pages. A companion bill would define control to include a management agreement and cover significant equity investors, and its final status is unverified.

The Management Agreement and Fees

The discipline statute covers dividing fees or agreeing to split fees for bringing to or referring a patient, soliciting patronage through agents and deceptive advertising, and a separate statute covers clinical-lab referral payments. That is the one referral-based fee-division provision we found in this batch, so an MSO paid per patient it markets could be examined under it, which is our inference. We found no authority on percentage-of-revenue fees. A statute voids any restriction on practicing medicine in a partnership, employment or other professional relationship with a physician, and any restriction on treating or soliciting current patients, with a sale-of-practice exception of up to five years. DOH guidance requires seven-year record retention for spa and IV settings.

The Attorney General's rule effective January 28, 2026 requires 60 days' written notice before a transaction that materially changes a medical-practice group. Triggers include a merger or affiliation producing a group of eight or more physicians, physician assistants or nurse practitioners or involving a hospital system, acquisition of substantially all assets or equity, a transaction involving a significant equity investor, meaning a private equity company or an investor holding more than 10% of the group or its MSO, and forming an MSO created for administering contracts with insurers. Penalties run up to $200 a day and up to $100,000 for no notice. A solo or small cash-pay practice with a physician-owned MSO and no outside equity investor appears to fall outside the triggers, which is our inference.

Med Spa Rules

The Medical Spas Safety Act, effective June 30, 2025, requires each medical spa to appoint a medical director who is a physician or certified nurse practitioner, with duties including cosmetic-procedure training, written protocols kept on site, oversight of all procedures and direct supervision. Supervision means on-site direct observation or off-site but in state and immediately available. The supervising practitioner must perform an initial assessment, prepare a written treatment plan and document consent, and ablative lasers are limited to physicians, physician assistants and certified nurse practitioners. The Department of Health was directed to adopt licensing rules by July 1, 2026, and a law-firm summary says that deadline passed without regulations, which we could not confirm. The 2024 DOH guidance treats IV therapy as the practice of medicine and calls RN-only and standing-order models unprofessional conduct.

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 Rhode Island the practice's members stay actively involved in running the business, so the management company never operates it, and we track the pending bills closely.

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.