There are many different sectors and industries in the world of franchising but one that has been gaining substantial momentum over the past few years and is very familiar to our audience is the healthcare industry. Healthcare franchises come in a few different shapes and sizes from traditional medical services such as urgent care clinics to aesthetic oriented MedSpas to alternative healthcare like chiropractic services and even mental health services.

The common denominator in most of these concepts is that they require licensed medical providers to either own or oversee the operations depending on the type of services rendered and the state the business operates in. Having personally consulted on the franchisor setup of two separate healthcare brands, I can confidently state that the nuances can be complex.

Many of the franchise brands that we are seeing gain momentum have developed systems that allow non-medical professionals to become franchise owners, which has significantly helped the brands add new units but the way this is accomplished brings a new layer of complexity to starting a business. As I’m sure everyone reading this article is all too familiar, laws and regulations such as Stark laws and Corporate Practice of Medicine (CPOM) doctrine have to be closely adhered to in the medical world. With that in mind, the way these brands end up working through those challenges are by utilizing Managed Service Organization (MSO) structures that will contract with a professional entity through a Managed Services Agreement (MSA). Essentially, the medical provider will have a professional entity responsible for all patient care and medical oversight while the MSO will handle all of the administrative aspects such as facility rental, office management, financial management, supplies, etc

The biggest challenges to this model structure revolve around the relationship between the franchisee (MSO) and the medical provider. Proper and compliant compensation models are crucial but there also needs to be a high degree of mutual trust in that relationship for it to work long term.

Now that we’ve established some contextual background, let’s talk about why this matters to you and why this could be a great option to consider.

The healthcare industry can be extremely complex and add an additional layer of risk for a non-medical professional but should be much easier to navigate for a licensed medical provider. The glaring benefit is that you would not have to potentially partner with someone you don’t have a previous relationship with in order to launch the business, like a non-medical professional would have to do. This fact alone eliminates one of the biggest concerns I see people have getting into this industry.

In other articles, we’ve discussed the various ownership models in the world of franchising. In those articles, we discussed the best options for physicians would likely be semi-absentee or executive models. For those of you who would want to be more hands on in a business, the healthcare franchises provide you a great opportunity to do so while still being able to utilize the education and experience that you have invested so much time and money into already.

For those who still prefer the semi-absentee or executive ownership models, you still have a major advantage in these healthcare franchise brands by being able to provide the regulatory oversight in most cases. This allows you to focus on building the right team to run the daily operations without having to dilute your earning potential by adding a high compensation physician to your regular payroll.

The regulations will vary across different states as to who can provide oversight and what that entails, so I would still recommend you connect with a qualified healthcare attorney to discuss specific situations but in many cases, the franchise brands in this industry will provide guidance on state specific regulations.

A few specific categories in this space include:

• Urgent Care clinics
• MedSpas (primarily aesthetic services; different brands will have varying degrees of medical requirements)
• Wellness/ Concierge Medicine (Similar to medspas but focused less on aesthetic services)
  • Sub-categories would include men’s health, weight loss, mental health
• Chiropractic (regardless of opinion on practice legitimacy- I understand it is a point of debate for some, it still falls into the healthcare industry)
• Physical Therapy/ Rehab Services
• Hearing Clinics
• Eye care practices

The above list is not all-encompassing but should provide you with a starting point to understand the variety of options available in the space.

The healthcare industry in franchising is a great industry, gaining a lot of momentum and showing strong future promise but it does not come without downside either. We have seen some brands that have been cursed with the “shiny new object” syndrome that has resulted in franchise sales growth at unsustainable levels and with the complexity of the industry, will likely lead to financial heartache for some. I say that not to dissuade anyone from the industry but to stress the importance of due diligence and understanding the intersection of healthcare and the franchise business model.