Medical Spa Business Classification Categories 101

If you're opening a medical spa, classification is the first thing you need to get right. How your business is legally categorized shapes who can own it, which professionals can treat patients, and what protocols you need. If you misclassify your med spa, you risk fines, losing your license, or worse.

States have different ways of classifying med spas. Some make it tough for non-physicians to have any ownership, while others allow flexibility if you follow the rules. Learn the essential business classifications, what's required in your state, and how to set up a legally compliant med spa.

Understanding Medical Spa Business Classification Categories

When it comes to “classification” for med spas, generally that means the laws that decide how you structure your business, who can invest or own it, and how you deliver patient care.

It's not just paperwork. Your business structure controls things like:

• Compliance risk
• Liability exposure
• Your ability to expand

If you classify your spa the wrong way, you could be breaking state laws. This usually centers around offering healthcare procedures (like neurotoxin injections, laser resurfacing, or IV nutrition), which triggers a whole set of ownership and supervision requirements.

Universal vs. State-Specific Regulations

Every med spa works under a few layers of regulations:

• Federal: HIPAA, FDA device rules, and FTC advertising
• State: Licensing, ownership, and provider scope of practice
• Local: Things like zoning and health department permits

Federal and local requirements stay the same almost everywhere, but state rules are all over the map. Some states strictly limit med spa ownership to doctors. Others give nurse practitioners or non-physicians a path to own a practice (as long as you follow strict guidelines.)

The Corporate Practice of Medicine

The corporate practice of medicine (CPOM) is key when you set up a med spa. In many states, you can't practice medicine unless you're a licensed doctor or you're part of a company that's completely owned by doctors. The idea is to make sure medical care doesn’t get influenced by business interests.

Here's what you need to know:

• In CPOM-heavy states, only physicians can own and operate a medical spa. Non-physicians have to use the MSO structure.
• Other states let non-physicians invest, but they have to stay out of clinical care.
• Some states don’t enforce CPOM at all. In those cases, you have more flexibility.

If you're not a doctor and live in a strict CPOM state, you'll need an MSO structure or a physician partner with majority ownership.

Ownership Constraints

These rules decide who can own your med spa. In physician-only states, only a licensed MD or DO can run the practice or control most of the shares.

• California is about as strict as it gets—only licensed doctors or, in rare cases, nurse practitioners with specific agreements can own med spas.
• Some states allow non-doctors to invest, as long as they're not dictating patient care and there's a qualified medical director in place. Florida takes this approach—non-doctors can own the business, but a certified physician has to supervise everything medical.
• Other states allow nurse practitioners or physician assistants to own a spa directly. Washington lets NPs and non-doctors own med spas, if a physician serves as medical director over all medical services.

Delegation and Supervisory Requirements

Delegation rules say what treatments non-doctors can perform and what kind of supervision is needed.

• Only licensed medical professionals should do clinical procedures. That means physicians, nurse practitioners, physician assistants, and registered nurses under physician supervision.
• State laws decide if a doctor needs to be physically present. Some require the physician in the building for certain treatments. Others say the doctor just needs to be available by phone.
• Iowa is strict—nonphysician practitioners can only do delegated procedures if the medical director is on-site for at least four hours a week.

Most states require a "good faith exam" before you treat someone. A doctor or another authorized provider must review the patient's history, do an evaluation, and sign off on the treatment. You can’t delegate this exam to anyone who’s not licensed.

Business Structures for Med Spa Owners

Your business structure has to match your state's classification rules. Most med spas are set up as a professional LLC or professional corporation in CPOM states. Where CPOM doesn't apply, you might use a standard LLC or regular corporation.

The three most common structures are:

• Physician-owned model
• Non-physician partnership
• Management services organization (MSO)

Each one has different levels of control, liability, and paperwork, so choose carefully.

Physician-Owned Model

Here, a licensed doctor owns the business outright or holds the majority share. You'll usually structure the spa as a professional corporation (PC) or professional LLC (PLLC). States like New Jersey, Texas, and New York require this setup.

The doctor makes all patient care decisions and runs the business. Their personal assets are protected by the business, but they're still on the hook for malpractice. This structure keeps things simple if you're a physician, but non-physician investors can't own equity unless they take a minority stake and the rules allow it.

Non-Physician Partnerships

Some states let non-physicians invest in med spas, but physicians must control medical care. For example, in California, the doctor owns at least 51%.

The physician handles everything related to care. The non-physician takes care of business tasks like marketing, finance, staff management, and daily operations. You'll need a clear agreement that keeps medical and non-medical roles separate.

This setup is allowed in states with more relaxed CPOM enforcement. But you have to be careful: regulators look closely for any sign the non-physician is interfering with clinical care.

Management Services Organizations (MSOs)

The MSO model is the go-to choice in states with strict CPOM where non-physicians want to get involved. You split the business into two: a physician-owned company that hires providers and makes medical decisions, and an MSO that handles the business side.

The MSO owns things like real estate, equipment, and non-clinical staff. The physician entity controls all medical records, hires licensed providers, and retains clinical decision-making. A management services agreement (MSA) spells out what the MSO does, including everything from payroll to marketing.

This setup lets non-physicians profit from the business, but you have to work harder to stay compliant. You’ll need clear contracts, separate bank accounts, and a documented process to make sure the MSO never supervises patient care.

Portrait’s PC Membership is made just for med spas that operate with the MSO-PC structure. You get access to licensed medical directors, built-in compliance tools, and secure messaging to make oversight simpler.

States with Restrictive Corporate Practice Doctrines

You'll encounter the Corporate Practice of Medicine (CPOM) doctrine in over 30 states. This legal framework prohibits lay entities or standard corporations from employing physicians to provide professional medical services.

Here are the states that currently uphold restrictive corporate practice doctrines:

• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• District of Columbia
• Georgia
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Montana
• Nevada
• New Jersey
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• South Carolina
• South Dakota
• Tennessee
• Texas
• Washington
• West Virginia
• Wisconsin

States with More Flexible Ownership Options

You typically have more operational freedom in states that do not strictly enforce the Corporate Practice of Medicine doctrine. These jurisdictions generally allow non-physicians to own medical practices or employ licensed providers directly without needing a complex Management Services Organization structure:

• Alabama
• Alaska
• Delaware
• Florida
• Hawaii
• Idaho
• Maine
• Missouri
• Nebraska
• New Hampshire
• New Mexico
• Rhode Island
• Utah
• Vermont
• Virginia
• Wyoming

Essential Steps to Verify Your Classification

Staying compliant is an ongoing job, not a one-time thing. Here’s what you need to do:

• Look up every applicable law, including federal, state, and local.
• Read state rules on CPOM, provider scope of practice, and delegation.
• Work with a healthcare attorney before you open. Get help picking your business structure, creating compliant agreements, and setting up medical supervision protocols. Skip the generic templates or out-of-state examples.
• Register with your state’s medical and nursing boards, and get all required licenses and permits. Document your medical director’s involvement in written protocols.
• Do regular compliance audits. Check your agreements, supervision logs, and patient charts. Make sure your supervising physician is truly involved, not just doing paperwork. Update your policies as laws change.
• Join groups like the American Med Spa Association and subscribe to updates from your medical board. Software like Portrait helps track regulatory changes and keeps your paperwork straight.

How Portrait Can Support Compliance and Growth

Portrait gives you everything you need to run a medical spa on one simple platform built for providers and wellness businesses. It's designed for compliance, but also makes daily life easier.

With Portrait, you can:

• Pair with MDs fast using our network of vetted medical directors. You can filter by state, specialty, or availability.
• Access ready-to-use SOPs and receive update alerts when relevant state rules shift.
• Get PC Memberships for MSO-PC models so you can operate with licensed medical directors and a secure messaging platform for oversight.
• Save up to 60% on supplies by joining our collective pricing for injectables, devices, and wellness products.
• Schedule patients, chart visits, manage payments, and track inventory all in one place.
• Automate good faith exams with built-in templates, scheduling, and oversight tools.
• Boost bookings and new patient leads with easy marketing tools for SEO, digital ads, and workflows that keep clients coming back.
• Scale from one provider to dozens of locations without switching software.

Over 800 clinics and spas already use Portrait to stay compliant and grow faster.

Get Support for Classifying Your Med Spa and Beyond

How you classify your med spa is the foundation for everything else. Get it right, and you’ll keep your license, your clients, and your business safe.

State rules aren't one-size-fits-all. Some require physician control while others allow non-physician investment if you have the right safeguards. And some are still reworking their rules. You have to know your state requirements and build your business structure on those rules.

The right software should support your med spa in everything you do, from compliance to text reminders for patients. Book an intro call with Portrait and see the difference a software tailor-made for med spas can make.