This is not legal advice. Foundry PC is not a law firm.
Most founders spend more time negotiating a SAFE than they spend reading the agreement with the physician who will legally own their care delivery entity. That's backwards. Here are the questions worth answering before you sign.
1. What exactly happens if this physician leaves?
This is the whole ballgame. The stock transfer restriction agreement (sometimes called a continuity or succession agreement) defines when and how the physician's shares transfer to a successor. You need to know:
- What triggers a transfer (death, disability, loss of license, breach, voluntary resignation with notice)
- Who the successor is or how they're selected
- How long the transition takes and what happens to operations in the meantime
- Whether the MSO has a unilateral right to trigger a transfer "for any reason" (increasingly a problem in California and prohibited in Oregon)
If the answer is "we'd figure it out," you don't have a structure. You have a hope.
2. Is the physician licensed in every state you operate in, and will they stay that way?
A PC owner needs an active license in each state where the PC practices. Confirm current licenses, confirm who pays for renewals and CME, and confirm what happens if the physician lets a license lapse in a state you depend on. Licensure maintenance for a 40-state physician is real work, and the agreement should say whose job it is.
3. What is the physician actually obligated to do?
Owning the entity is not a duty; it's a status. The agreement should list the actual services: attend a monthly governance meeting, approve clinical policies, sign credentialing documents, review quality data, be available for board or payer inquiries. Defined duties are what make the stipend defensible as fair market value.
4. How is the physician paid, and does it ever vary with revenue?
Flat stipend, fair market value, annual review. If any part of the compensation moves with PC revenue, patient volume, or collections, stop and talk to counsel.
5. Who indemnifies whom, for what?
The MSO should indemnify the physician for liabilities arising from the MSO's operations, billing, and business conduct. The physician's own clinical acts are covered by professional liability insurance, which the agreement should assign responsibility for. Make sure the indemnification is mutual where appropriate and doesn't leave the physician exposed for things they don't control. Physicians who feel exposed ask for more money or walk.
6. What clinical decisions does the physician control, in writing?
At minimum: clinical protocols, credentialing and privileging of providers, clinical supervision, quality assurance, and the decision to accept or discharge patients. In the current enforcement climate (California's 2026 AG position is the clearest example), MSO control over clinical hiring and firing, coding, or payer contracting is treated as evidence of improper control. Draw the line clearly and then operate on the right side of it.
7. Can the physician own other PCs, and can they compete?
Many friendly physicians own several PCs for different MSOs. That's normal and often preferable, since experienced PC owners understand the role. But you want a non-solicit covering your providers and a confidentiality clause covering your business. Avoid broad noncompetes; several states now void physician noncompetes outright, and an unenforceable clause is worse than none.
8. What does exit look like for the MSO?
If you sell the company, the acquirer will need the PC to come with it. The agreement should contemplate assignment of the MSA and a transfer of the PC to the acquirer's designated physician on a change of control, with the physician's cooperation obligated and compensated. Investors' counsel will look for this during diligence.
A note on the physician's counsel
Experienced physician owners often have their own attorney review the agreement, and sometimes ask the company to cover that cost. Budget for it. A physician who has been through this before, with counsel who understands the model, is worth far more than one who signs whatever you send.
How Foundry PC handles it
Every Foundry physician placement uses a standard physician owner services agreement built around these eight questions: defined duties, flat stipend, defined transfer events, MSO-to-physician indemnification, and change-of-control cooperation. Independent healthcare counsel reviews it for each engagement, and we walk both founder and physician through it before anyone signs.
Book a 20-minute call if you'd like us to review an agreement you've already been handed.