Three years ago, I wrote an article breaking down the basics of the MSO-PC model that went viral. The fundamentals I discussed in that article still hold true, but the telehealth industry has evolved—fast. New business models have emerged, regulatory landscapes have shifted, and companies now have more options than ever when structuring their virtual care businesses.
Back then, the typical founder conversation went something like this:
Founder (2021): “We’re launching next month in all 50 states. What’s the fastest way to get set up?”
Me: “Well… let’s talk about CPOM, entity structuring, and what ‘fast’ really means in healthcare.”
Fast forward to today, and the conversation has changed.
Founder (2024): “We know we need an MSO-PC structure, but should we build it from scratch, buy an existing one, or partner with a provider network?”
Me: “Ah, now you’re asking the right question.”
In this article, I’ll give you an overview of the MSO-PC model, but I’ll also bring you up to speed on what building a telehealth company looks like today—including new models that can speed up your launch, reduce compliance risks, and help you scale smarter.
Let’s dive in.
The MSO-PC Model: The Foundation of Telehealth Business Structuring
Most multi-jurisdictional telehealth companies are built using the MSO-Friendly PC Model due to state Corporate Practice of Medicine (CPOM) laws. This structure allows non-physicians to participate in growing healthcare companies while keeping clinical decision-making independent.
How the MSO-PC Model Works
The Three Key Players
- The Management Services Organization (MSO): Handles technology, billing, administrative, and operational support for the Friendly PC.
- The Physician Owner: A licensed physician who owns the Friendly PC, ensuring compliance with CPOM laws.
- The Friendly PC: The entity responsible for hiring providers, setting clinical standards, and billing for medical services.
Why Use the MSO-PC Model?
- Compliance with CPOM laws while allowing investors and operators to build scalable virtual care businesses.
- Operational efficiency through centralized admin services provided by the MSO.
- Branding flexibility, as the MSO can own trademarks and customer relationships.
The Evolution of Telehealth Business Models
Just a few years ago, launching a telehealth company meant building an MSO-PC structure from scratch. Today, new models have emerged that make it faster and more cost-effective to bring telehealth solutions to market. Keep in mind speed and reduced cost are tradeoffs—many companies still choose a “from scratch” method (sometimes in parallel with other models) because it’s vital to their vision. So how are these decisions made?
1. Partnering with Provider Networks
A major shift in recent years is the rise of third-party provider networks, which allow companies to partner with independent networks of virtual physician practices to serve their customers rather than build their own. Note: This must be done carefully to comply with CPOM and state and federal antikickback and fee splitting laws.
- Originally, most telehealth startups built proprietary or “captive” networks. But after the VC bubble burst in 2022, many sold off their provider networks or shut down altogether. In the funding environment that followed, there were smaller budgets for building in telehealth, which forced companies to seek alternative solutions.
- Now, many companies choose to outsource clinical services while focusing on branding, technology, and consumer engagement.
Pros: Faster launch, no need to recruit, hire, and maintain a clinical workforce, ability to serve insured patients right away (if provider network holds contracts)
Cons: Less control over provider selection, EHR, pharmacy partnerships, and patient experience.
2. "MSO-PC in a Box" Services
Some companies now sell pre-packaged MSO-PC setups, including:
- Template legal agreements for MSAs and PC ownership structures.
- A pool of properly licensed and available physician owners for Friendly PCs.
- Various consulting services (e.g., operational protocols, valuation)
While these services lower entry barriers, their models commoditize the construction of telehealth companies, so they may not be a good fit for bespoke models and they’re not a replacement for specialized legal advice, which requires nuance and attention to changes in law and policy. Companies considering this option should ensure they are tailored to their business model and regulatory requirements. Further, it’s a myth that the basic document set is all you need for compliance. These models often still require significant guidance to ensure model compliance.
Pros: Lower cost for documents needed to build a “captive” PC network, intros to properly licensed PC “owners” can save time
Cons: Unknown quality of important legal documentation, lack of precision, not an “end to end” solution
3. Network—Payor Partnership
Some of the most successful telehealth newcomers have adopted a network model that looks a lot like an Independent Practice Association (IPA). Some are true IPAs, some are clinically integrated networks, while others are simply networks of providers associating with each other to gain leverage in payer negotiations.
These companies act as intermediaries, leveraging their collective size to secure better rates from insurers while allowing participating providers to maintain independent practices. These models enable virtual care companies to engage in B2B relationships with independent practices—providing technology, billing, marketing, and other administrative support in return for the independent practice’s agreement to serve the broader network.
NOTE: This model involves complex regulatory structures beyond the MSO-PC model (in fact, some don’t use the model at all), including antitrust law.
These models are gaining traction in telehealth, particularly in specialty care fields like behavioral health, chronic disease management, and women’s health. One significant benefit is the ability to create a two-sided marketplace with a value add for the patient and provider side.
Pros: Network effects of model support scale, easier to offer specialty services (because you don’t have to recruit valued specialists individually)
Cons: Legally complex, requires cooperation and buy-in from insurance companies, higher cost (e.g., CAC for consumers AND businesses), operationally complex (e.g., requires careful management of the quality of services provided by a broad and varied set of independent providers)
4. The Outsourced Payor Model
This is an analog of the network-payor model and is built for telemedicine companies whose PCs have (or intend to get) insurance contracts and then use leased providers to serve their patients. In this model, the telemedicine company works with independent practices who lease their providers out to them. These providers are credentialed with the health plan(s) of the Friendly PC(s). The Friendly PC bills insurers while the independent practice (or solo practitioner) earns revenue through staffing fees.
While this model is technically feasible (and operates in the marketplace today), there is still risk that insurance companies will reject some models that are not appropriately monitored for quality of care and network management, which could be an existential threat to the model.
Pros: Avoid employing large provider workforce; easy to scale up and down based on volume, attracts traditionally cash-based providers (e.g., behavioral health) by offering them insured business
Cons: Relatively untested, risk of insurance company rejection of the model
The Rise of Niche Telemedicine Models
Telemedicine is shifting from generic urgent care services to highly personalized, specialized care.
- 2020: Most telehealth companies targeted general adult populations needing quick virtual visits.
- 2025: Companies now build solutions for specific demographics, like black women navigating perimenopause with culturally competent care, or parents of chronically ill children navigating multi-disciplinary care
- This shift is driving a return to proprietary networks, as large staffing agencies often lack diverse, specialized providers.
Regulatory & Compliance Shifts
CPOM Laws Under Scrutiny
Some states are considering legislation that could make MSO-PC structures more difficult for VC- and PE-backed telehealth companies.
Legal concerns include:
- State privacy laws (e.g., reproductive care post-Roe v. Wade).
- Scope of practice rules impacting nurse practitioners and PAs.
- Teleprescribing regulations, particularly for controlled substances.
Payor Prerogative
Some of the newer models depend on payers’ willingness to play ball. Network provider arrangements aren’t new, but even if not legally required, payers typically expect them to be clinically integrated, with clear processes for clinical quality and oversight. Some payers may push back on models that rely on growth by adding independent providers from all over the country without the right formalities.
And now, a few time-tested lessons from a veteran…
Rather than launching in all 50 states at once, successful telehealth companies are:
- Starting with 3-5 states with favorable regulations.
- Optimizing workflows before scaling.
- Planning for payor negotiations early to avoid revenue bottlenecks.
Future-Proof Your Telehealth Model by:
- Integrating privacy-by-design into your product.
- Starting with a limited geographic footprint before scaling.
- Working with legal, clinical, and operational experts from day one.
- Exploring new provider network models, and understanding the trade-offs.
- Monitoring state legislation that could impact MSO-PC structures (or better, outsource this 😇.)
Have fun with it and do some good!
The telehealth landscape is evolving faster than ever. Staying ahead of regulatory shifts, consumer trends, and emerging technologies is key to building a sustainable, scalable, and profitable telemedicine company.
Building a virtual care solution? Let’s chat!