In California, may a non-clinical owner or manager be paid a share of revenue?
Ownership · part of The Practice Perimeter
Short answer
Yes — a percentage-of-revenue fee is lawful if it pays for services other than patient referrals and is commensurate with the value of those services or the fair rental value of premises or equipment; paying for referrals stays unlawful even among co-owners.
⚠️ California’s ban is broad and expressly survives co-ownership. The offer, delivery, receipt or acceptance by a licensee of “any rebate, refund, commission, preference, patronage dividend, discount, or other consideration, whether in the form of money or otherwise, as compensation or inducement for referring patients, clients, or customers” is unlawful — “irrespective of any membership, proprietary interest, or coownership in or with any person to whom these patients … are referred”. Shared ownership is not a defense.
Cal. Bus. & Prof. Code § 650(a) · verified Sep 2, 2026 · regulatory monitoring, not legal advice
Related California rules
⚠️ AND THIS IS THE MSO percentage-fee question answered in a sentence. “The payment or receipt of consideration for services other than the referral of patients that is based on a percentage of gross revenue or similar type of contractual arrangement shall not be unlawful if the consideration is commensurate with the value of the services furnished or with the fair rental value of any premises or equipment leased or provided” by the recipient to the payer. A percentage-of-revenue management fee is lawful in California where it is commensurate with value — and unlawful where it is not.
Cal. Bus. & Prof. Code § 650(b) · verified Sep 2, 2026 · read at Public.Law — California Codes
Corporations and other artificial legal entities have no professional rights, privileges, or powers — laypersons and lay entities may not own any part of a medical practice or control clinical decisions.
Cal. Bus. & Prof. Code §2400 · verified Jul 26, 2026 · read at Public.Law — California Codes
How other states answer this
- Alaska
- Arizona
- Colorado
- Delaware
- District of Columbia
- Florida
- Georgia
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Nebraska
- Nevada
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
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← All California rules and changes · MedSpaRadar is regulatory monitoring and reference: it summarizes public laws, regulations and agency actions and links each to its source. It is not legal, medical, or compliance advice, and using it creates no attorney-client relationship. A summary can lag its source or leave out detail, and monitoring itself can be interrupted — so an absence of alerts means nothing reached you, not that nothing happened. Read the cited source, check its effective date, and confirm any change to your operations or clinical practice with qualified health-law counsel and your medical director. Legislative data via LegiScan (CC BY 4.0).