Business, Legal Structure

The Legal Structure Question (And Why Getting It Right Matters)

When experienced PAs think about starting a cash-based practice, most of the mental energy goes to the clinical side: the specialty, the services, the patient experience. The legal and structural side gets less attention — usually because it feels either dry or intimidating.

That's the expensive mistake.

Three Things You Need to Know About Your State

Before you form an entity or see your first cash-pay patient, you need clarity on three things specific to where you practice.

First: Can you own the practice entity? In AAPA Optimal states (Utah, Wyoming, North Dakota, Montana, Iowa, New Hampshire), the answer is a clean yes — form an LLC or PLLC, own it outright, keep all revenue. In states that enforce corporate practice of medicine (CPOM) doctrine, ownership may be restricted to physicians or require specific structural workarounds. Knowing which situation you're in before you build is non-negotiable.

Second: What is your collaboration requirement, if any? In states with active supervision or collaboration requirements, you need a formal agreement with a collaborating physician before practicing independently. That agreement has a cost ($500–$2,000/month typically) and specific terms. It also needs to be structured correctly — a poorly drafted collaboration agreement can expose both parties.

Third: Can you bill patients directly? In most states, you can. But in states with stricter CPOM enforcement, the entity receiving payment may need to be structured differently than a standard LLC. Utah, for example, explicitly allows PAs to bill patients directly by statute. Other states leave it more ambiguous.

The Right Entity for Your Situation

For most PAs in Optimal states: a PLLC (Professional Limited Liability Company) is the standard structure. Clean ownership, liability protection, straightforward tax treatment.

For PAs in states with CPOM doctrine: the structure gets more complex. Options include a management services organization (MSO) arrangement, a PC structure with appropriate ownership provisions, or a collaborative practice model with a physician partner. Each has trade-offs.

The Mistake Worth Avoiding

The expensive mistake isn't getting the structure slightly wrong initially. It's skipping it entirely — building revenue, building a patient base, and then discovering the foundation needs to be rebuilt because it was never compliant.

Understand your state's specific position first. Build your structure around it. Involve a healthcare attorney for the specifics — an hour of legal time at the beginning is significantly cheaper than restructuring after the fact.

Your structure quietly shapes how you’re taxed, protected, and able to grow.