The Financial Flow of a Medical Spa: Understanding the MSO-PC Model

The financial operations within the healthcare industry, and specifically of Medical Spas, can be overwhelming, at the very least. However, it doesn’t have to be - we’re delving into the intricate financial operations of a Medical Spa within the context of the MSO-PC model. 

The MSO, or Management Services Organization, plays a pivotal role in managing various aspects of a medical practice, allowing healthcare professionals to focus solely on patient care. In this model, the term "PC" refers to the Professional Corporation, indicating a medical practice consisting of licensed physicians in the state where the Medical Spa operates.

The Revenue Account: Where It All Begins 

The financial flow of a Medical Spa starts with patients paying for a range of services, including laser treatments, intravenous nutrients, compounded medications, and other medically supervised procedures. To maintain a clear distinction between revenue generated from medical services and revenue from other Med Spa offerings like skincare, facials, massages, supplements, and tangible goods, the income is channeled into a bank account under the practice's name, aptly called the "Revenue Account." This segregation is crucial for accounting and compliance purposes.

The Role of the MSO 

The MSO enters the picture as it utilizes the funds in the PC's Revenue Account to cover various qualified expenses, as outlined in the Management Services Agreement between the two entities. These qualified expenses typically encompass:

1. Medical Supplies: This includes essentials like syringes, needles, and other medical equipment.
2. Insurance: Covering medical liability and property insurance for the Med Spa.
3. Medical Director Supervision Fees: Compensation for medical oversight.
4. Onsite Medications: Covering medications used in patient care.
5. Payroll: Salaries for licensed workers, such as nurse injectors.
6. Accounting and Bookkeeping: Ensuring proper financial management.
7. Management and Licensing Fees: Compensation to the MSO for its services.

Managing MSO Expenses 

Turning our focus to the MSO, the management fees paid by the PC serve as the primary source of revenue to cover administrative, management, and licensing costs incurred by the MSO. These expenses can encompass property leases, equipment, marketing, website maintenance, and customer engagement services such as feedback surveys.

Distribution of Remaining Funds 

Once MSO expenses are settled, any remaining revenue is utilized to pay the salaries of the MSO's operators, typically on a W2 classification basis. Subsequently, any surplus funds are distributed to the owners and shareholders of the MSO as shareholder distributions.

Summary

In Conclusion, the financial flow of a Medical Spa in the MSO-PC model follows a systematic path: patient fees first enter the Revenue Account, which is used to cover qualified expenses. It also facilitates payments to the MSO for management and licensing services, and any remaining funds are then distributed among owners and shareholders.

Understanding this financial framework is essential for medical professionals and entrepreneurs entering the world of Medical Spas. It ensures transparency, compliance, and effective financial management within this unique healthcare business model.