July 2, 2024

Navigating Scrutiny of Friendly Professional Corporations in California

John C. Saran | Kenneth Jonathan Yood | Shalyn Watkins

Healthcare attorneys John Saran, Kenneth Yood and Shalyn Watkins co-authored an article in Law360 discussing the evolving regulatory landscape impacting the friendly professional corporation model in California. This model allows medical groups to access capital, such as through private equity, and provide private equity-based compensation packages for non-clinical personnel while still allowing clinicians to provide high-quality care in accordance with the state's corporate practice of medicine rules. New legislation, court decisions and governmental policies have challenged this model, and the authors advise stakeholders on strategic planning and evaluation of management services agreements (MSAs) to comply with the changes. The article also emphasizes the importance of ensuring that operations strictly adhere to corporate practice of medicine prohibitions while maintaining the separation of clinical and non-clinical decision-making processes.

The authors also published a Holland & Knight client alert on this topic.

READ: Navigating Scrutiny of Friendly Professional Corporations in California

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