Five Red Flags in an MSO Agreement That Should Stop You From Signing

By the time an MSA lands in front of an owner for signature, there’s usually momentum behind it — a lease is close to signed, a physician relationship has been verbally agreed to, and the paperwork feels like the last formality before opening. That’s exactly the moment a flawed agreement is most likely to get signed anyway. Here are the five issues we flag most often.

1. A Management Fee Tied to a Percentage of Clinical Revenue

This is the single most common problem we see. A management fee structured as a straight percentage of the professional entity’s clinical revenue — rather than fair market value for actual services rendered — can look like fee-splitting to a regulator, which is prohibited in most states regardless of a state’s broader CPOM posture. The fee needs to be justifiable on its own terms: what services is the management company providing, and what would those services reasonably cost on the open market.

2. Vague or Missing Scope of Services

An MSA that says the management company will provide “management services” without specifying what those actually are is a document that can’t be defended if questioned. The agreement should itemize what’s actually being delivered — staffing support, marketing, facilities, billing, systems — because that itemized list is what justifies the fee.

3. No Real Physician Control Over Clinical Decisions

If the agreement gives the management company approval rights over clinical protocols, staffing of clinical providers, or treatment decisions, it’s inverting the relationship CPOM requires. The physician needs actual, documented authority over clinical matters — not authority that exists in title while the management company drives every real decision.

An MSA that reads like the management company runs the medicine isn’t a compliance document. It’s evidence.

4. An Assignment Clause That Doesn’t Account for Ownership Changes

If either entity changes hands — the practice is sold, the physician retires, the management company is acquired — a poorly drafted assignment clause can leave the agreement unenforceable exactly when it’s needed most. This matters even more for owners planning eventual growth or exit.

5. No Termination Provision That Protects Patient Continuity

Agreements that don’t address what happens to patient records, ongoing treatment plans, or staffing if the relationship ends can create a scramble — and a compliance gap — exactly when things are already going wrong.

If you have an MSA in hand, whether it’s new or one you signed years ago, and want a second set of eyes on it before committing further, that’s exactly where we start every engagement.