Texas Practice Structure Guide: The Professional Association, the MSO and the Fee Rules That Matter

Entity and Ownership

The Texas Business Organizations Code defines a professional association, a professional corporation and a professional LLC, but the definition of professional corporation excludes the practice of medicine by physicians. That leaves the professional association as the practical form for a physician-owned practice. An owner must be an authorized person, which for a physician practice means a physician licensed in the same profession. The entity may provide professional services only through its licensed owners, managerial officials, employees and agents, and may employ nurses and non-professional staff such as clerks, bookkeepers and technicians. A professional association's name must include a word such as association or associates or a statutory abbreviation, and may not conflict with the rules of the profession.

Physicians may co-own with physician assistants, but physicians must organize and control the entity, and a physician assistant's ownership is limited to a minority stake that cannot equal any individual physician's. A physician who co-owns with a physician assistant reports annually to the Texas Medical Board. We did not find a Medical Board registration for a plain physician-owned association.

The Corporate Practice Position

Texas has no single corporate practice statute. The limit comes from the Medical Practice Act, which makes it grounds for discipline for a physician to aid or abet the practice of medicine by an unlicensed person or entity, and which makes it an offense for an unlicensed entity to hold itself out as entitled to practice medicine. Case law reaches the same result, and a frequently cited Dallas appellate case, Flynn Brothers v. First Medical Associates (1986), involved lay promoters who took a large share of a physician's profits and controlled the practice. We read that case through secondary sources and did not pull the opinion.

The state's nonprofit health organization certification exists as an exception, but it is limited to nonprofit entities organized by licensed persons and is not available to a for-profit cash-pay clinic. We found no recent Texas court decision on management companies, and we could not confirm any recent Medical Board action aimed at them.

The Management Agreement and Fees

No Texas statute sets a percentage cap on management fees. The risk comes from the Patient Solicitation Act, which makes it a misdemeanor to offer or accept remuneration for securing or soliciting patients, and from a Medical Practice Act provision making it an offense for a physician to pay anyone for securing or soliciting patients. A fee that pays the management company for lead generation or marketing results is more exposed than a fee for space, staff, billing, technology and administration.

The Business Organizations Code also bars one profession from controlling another's clinical authority through agreements, directives or financial incentives. Practitioner guidance recommends fair-market-value fees and caution with fees at the upper end of a percentage range, but that is a rule of thumb and not law. A fixed monthly fee set in advance for defined services is the cleanest answer.

Non-Competes

Senate Bill 1318 rewrote the physician non-compete rule for covenants entered into or renewed on or after September 1, 2025. The covenant must allow a buyout no greater than the physician's total annual salary and wages, may not exceed one year or a five-mile radius, must be in writing and conspicuous, must preserve access to patient lists and records, and is void if the physician is involuntarily discharged without good cause. The statute also says administrative management is not the practice of medicine for this purpose.

Med Spa and Aesthetic Rules

Texas has no med spa facility license. The Texas Medical Board reorganized its rules in January 2025, repealing the old nonsurgical cosmetic procedures rule and moving the content into a new subchapter, though secondary sources disagree on the final section numbers. The content, as summarized by a medical liability insurer, requires a trained delegating physician, written protocols and orders, a good-faith exam or an established relationship, a trained person on site, a physician or supervised provider available for emergencies, and posted physician information. Texas uses the term delegating physician and not medical director.

House Bill 3749, effective September 1, 2025, added a chapter on elective IV therapy given outside a physician's office or licensed facility. It limits who may order and administer, and the enacted text we read has no ownership or medical director provision.

2025 and 2026 Developments

Bills that would have required health entities to report ownership and control to the Secretary of State did not pass, according to bill trackers. A 2025 bill that would have barred cosmetologists from injecting was reportedly vetoed, which we could only confirm through secondary sources. The Legislature does not meet in regular session in 2026, so the next chance for new structure rules is the 2027 session.

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 Texas the management fee is drafted around defined non-clinical services and not around patient volume or marketing outcomes.

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.