PART 2 OF 4: The Management Services Agreement

The contract that defines the relationship, and the terms that matter most.

The relationship between a practice and its MSO lives in the management services agreement. This contract governs what services are provided, what the practice pays, and how control is allocated, and its terms determine whether the arrangement serves the practice well and stays compliant. This article examines the management services agreement and the provisions providers should scrutinize.

Scope of services

The agreement should define, clearly and specifically, what the MSO will provide. Vague service descriptions lead to disputes and disappointment when expectations diverge. A provider should understand exactly which functions the MSO handles, the standards to which it will perform them, and what remains the practice's responsibility.

The management fee

How the MSO is paid is among the most consequential and most scrutinized terms:

• The fee must represent fair-market-value compensation for the services actually provided.

• A fee structured as a percentage of practice revenue or profit can raise legal concerns if it functions as a split of professional fees.

• The basis for the fee should be documented and defensible, not arbitrary.

Preserving clinical control

The agreement MUST keep clinical authority with the practice, both on paper and in operation. Provisions that give the MSO control over clinical decisions, provider hiring based on clinical judgment, or patient care can render the arrangement unlawful. A well-drafted agreement is explicit that the practice retains these decisions, and the parties must honor that division in practice.

Term, termination, and transition

The agreement should address how long the relationship lasts and how it can end. Providers should understand the term, the grounds and notice for termination, any exclusivity, and what happens on termination, including how the practice recovers its operations, records, and the ability to function independently. An arrangement that is difficult or costly to exit deserves careful attention before signing.

Ownership of assets and records

The agreement should make clear who owns what, particularly patient records, which must remain under the practice's control, and the practice's other essential assets. A provider should not discover on termination that the MSO controls the records or systems the practice depends on to operate.

How West Coast Health Law Can Help

We review and negotiate management services agreements for California providers, confirming the fee structure, service scope, control provisions, and exit terms protect the practice and keep the arrangement compliant.

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every situation is different; consult a qualified attorney about your specific circumstances.