If you’re running a MedSpa, IV hydration clinic, or functional medicine practice in California, one of the most important decisions you’ll make is how you work with your medical director. The wrong setup can expose your business—and your license—to serious legal risks.

Let’s break down what you need to know to protect your practice.

What the Law Requires

Under California law, registered nurses (RNs), nurse practitioners (NPs), and physician assistants (PAs) cannot independently own or operate a business that provides medical services. Medical services must be performed under the supervision or collaboration of a licensed physician, specifically an MD or DO. That requirement applies even if you’re simply offering “routine” procedures like Botox, IV drips, or wellness injections.

This rule stems from California’s Corporate Practice of Medicine (CPOM) doctrine, which prohibits non-physicians from owning or controlling medical practices. Violating this doctrine can trigger fines, board discipline, or worse.

Structuring Your Business Properly

To comply with CPOM, most non-physician-owned MedSpas operate using a Management Services Organization (MSO) model. This allows you—the non-physician entrepreneur—to run the business side of the practice, while a physician-owned Professional Corporation (PC) handles the clinical side.

In this model, the MSO contracts with the PC to provide administrative services like staffing, billing, and marketing, while the PC retains control over all medical decisions.

If you’re using a medical director, but haven’t set up a proper MSO-PC structure, your business may be out of compliance.

Choosing the Right Medical Director

Not all physicians are the right fit for a MedSpa or IV clinic. Your medical director should:

• Be licensed in California as an MD or DO
• Be willing to review and co-sign protocols and documentation
• Understand your niche—whether that’s aesthetics, wellness, or functional medicine
• Provide adequate supervision as required by California law

Avoid medical directors who are disengaged or simply “renting” their license. This kind of passive relationship won’t meet legal standards—and may put both of you at risk.

What Your Medical Director Agreement Should Include

A well-drafted agreement is critical. It should clearly outline:

• The roles and responsibilities of each party
• The scope of supervision or collaboration
• Compensation terms, including whether it’s fixed or percentage-based
• Protocols for clinical decision-making and emergency situations

If your contract is vague or missing these elements, now’s the time to revisit and revise.

Already Operating? Audit Your Setup

Many providers launch their practices quickly and assume they can “fix the legal stuff later.” Unfortunately, regulators don’t share that mindset.

If you’re already operating, now is the time to audit your current structure, contracts, and compliance protocols. Make sure your medical director relationship is more than a formality—and that it aligns with California law.

Want Help Getting It Right?

At Freedom Thru Business, we specialize in helping healthcare entrepreneurs legally structure and protect their businesses. From reviewing your MSO-PC setup to drafting custom medical director agreements, we’ll make sure your foundation is solid—and your risk is minimized.

Book a free strategy call through THIS LINK.