You have the idea. The telehealth space is moving fast, especially in categories like GLP-1 weight loss, TRT, ketamine therapy, longevity medicine, peptides, and mental health. Then you hit the part most founders do not expect…
Launching a telehealth company is not just building a website and hiring doctors. One of the biggest legal and operational decisions comes early: do you build your own MSO/PC structure, or do you partner with a telehealth infrastructure company like OpenLoop, Wheel, or SteadyMD?
At LumaLex Law, we advise telehealth companies, digital health startups, wellness brands, and investors navigating these structures. This guide explains how each model works, the practical pros and cons, and how many companies evolve through stages as they scale.
MSO/PC vs OpenLoop style infrastructure
If you want the simplest way to frame the decision:
- MSO/PC (friendly PC) tends to offer more operational control, long-term economics, investor appeal, and flexibility.
- OpenLoop-style infrastructure providers tend to offer a faster launch timeline, reduced upfront compliance burden, easier multistate expansion, and lower initial capital requirements.
There is no universal best choice. Many telehealth companies start one way and evolve into another as the business grows.
The fork in the road: two ways telehealth companies structure the medical side
Most founders are deciding between:
Path A: Build an MSO/PC (friendly PC) structure
This is the common structure used to comply with corporate practice of medicine (CPOM) rules in many states.
Path B: Partner with a telehealth infrastructure company
This is often described as telehealth infrastructure as a service. Instead of building your own nationwide clinical infrastructure, you plug into an existing one.
Both can work. The best fit depends on what you value most right now, and what you want your company to look like later.
What is an MSO/PC model in telehealth?
Many states prohibit the corporate practice of medicine (CPOM). In general, that means non-physicians cannot directly own or control the practice of medicine. To comply with these laws, many telehealth companies use a Management Services
Organization (MSO) structure. Typically:
- A physician-owned Professional Corporation (PC) or PLLC provides medical services
- A separate MSO owned by non-physicians handles administrative and non-clinical functions
- The MSO and PC enter into a Management Services Agreement (MSA)
The MSO may provide:
- marketing
- technology
- staffing
- billing
- customer support
- scheduling
- office infrastructure
- business operations
While the physician-owned entity handles clinical decision-making and patient care.
This is commonly referred to as a friendly PC structure.
What is OpenLoop (and similar telehealth infrastructure companies)?
Companies like OpenLoop offer telehealth infrastructure as a service. Instead of building your own nationwide clinical infrastructure, these companies may provide:
- provider networks
- state licensure coverage
- telehealth workflows
- EHR systems
- credentialing
- compliance support
- prescribing infrastructure
- clinical operations
For many startups, this means launching faster without immediately building a full multistate MSO/PC operation.
Path A: Pros and cons of building your own MSO/PC structure
Why founders choose MSO/PC
1) Greater operational control. This can matter for companies seeking long-term enterprise value. With your own MSO structure, you typically have greater control over:
- branding
- patient experience
- physician onboarding
- protocols
- provider quality
- marketing strategy
- technology integrations
2) Better long-term economics
Third-party telehealth infrastructure providers often take significant fees or revenue shares. As companies scale, many founders realize they are paying substantial amounts annually for infrastructure they could internalize. Owning your own infrastructure may improve margins over time.
3) Stronger investor appeal. A company entirely dependent on a third-party provider may appear less differentiated. Many investors prefer companies with:
- proprietary provider networks
- internal compliance systems
- operational control
- scalable infrastructure
- defensible intellectual property and workflows
4) Greater flexibility. This flexibility can be especially important in emerging healthcare sectors. An internal MSO structure may allow for:
- custom care models
- specialized provider compensation arrangements
- unique patient workflows
- proprietary AI integrations
- specialized pharmacy and lab relationships
What MSO/PC can cost you upfront
1) Significant legal complexity. Improper structuring can create major regulatory exposure.
Operating a multistate telehealth company involves substantial regulatory considerations, including:
- CPOM compliance
- physician ownership rules
- state-by-state telehealth laws
- licensure requirements
- prescribing regulations
- HIPAA compliance
- fee-splitting laws
- marketing compliance
2) Provider licensing challenges. This can become operationally intensive. Most states require providers to be licensed where the patient is located. Scaling nationally may require:
- multistate physician recruitment
- credentialing
- provider oversight
- malpractice coverage management
3) Increased regulatory scrutiny. This is especially true in high-growth sectors like GLP-1s, peptides, ketamine, TRT, and longevity medicine. Regulators may closely evaluate:
- financial relationships
- management fees
- provider independence
- marketing influence
- prescribing practices
- chart review procedures
- asynchronous telehealth models
Path B: Pros and cons of using OpenLoop
Why founders choose infrastructure providers
1) Faster launch timeline
This is often the biggest advantage. Companies can frequently launch in weeks instead of spending months building infrastructure.
2) Reduced upfront compliance burden. This reduces the initial administrative burden on startups. Infrastructure providers may already have:
- licensed providers
- compliance systems
- credentialing
- operational workflows
- multistate coverage
3) Easier multistate expansion
Rather than independently building a 50-state provider network, startups can leverage existing infrastructure. This can be attractive for early-stage companies testing product-market fit.
4) Lower initial capital requirements
Building a nationwide telehealth operation internally can be expensive. Using an infrastructure provider may allow companies to conserve capital during early growth stages.
What you may give up with infrastructure providers
1) Reduced operational control
Companies may have less control over:
- provider responsiveness
- prescribing philosophy
- clinical workflows
- patient experience
- customer service standards
This can create brand consistency challenges.
2) Vendor dependency risk. For some businesses, this can create existential operational risk. If the relationship with the infrastructure provider ends, the telehealth company may lose access to:
- providers
- licensure coverage
- clinical workflows
- operational systems
3) Margin compression
While outsourcing infrastructure may reduce short-term costs, it often reduces long-term profitability. Many scaling telehealth companies eventually consider internalizing operations to improve margins.
4) Regulatory risk still exists. Using OpenLoop does not shield a company from FDA, FTC, state medical board, or attorney general scrutiny. Importantly, outsourcing clinical infrastructure does not eliminate regulatory exposure. Regulators may still evaluate:
- marketing claims
- patient acquisition tactics
- telehealth intake processes
- prescribing influence
- asynchronous care models
- advertising compliance
Which telehealth structure is best?
There is no universal answer. In practice, many telehealth companies evolve through stages:
Early stage
Use OpenLoop or similar providers to launch quickly and validate the business model.
Growth stage
Build hybrid infrastructure and internalize portions of operations.
Mature stage
Develop full internal MSO/PC infrastructure for greater control, scalability, and valuation optimization.
The best approach depends on:
- growth strategy
- capital availability
- investor expectations
- compliance tolerance
- operational sophistication
- long-term goals
Telehealth regulatory counsel for emerging healthcare companies
At LumaLex Law, we advise telehealth companies, wellness brands, and healthcare startups on:
- MSO/PC structuring
- CPOM compliance
- multistate telehealth expansion
- physician contracting
- telehealth regulatory compliance
- GLP-1 and peptide businesses
- ketamine and mental health clinics
- healthcare marketing compliance
- provider compensation structures
- digital health transactions and investments
If your company is evaluating whether to build its own telehealth infrastructure or partner with a provider like OpenLoop, experienced healthcare counsel can help you navigate the legal and operational risks before scaling nationally.
Book a telehealth structuring consultation with LumaLex Law Today.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Telehealth and healthcare rules vary by state and change frequently. Consult qualified counsel about your specific facts.
To discuss your Telehealth consultation needs, contact LumaLex Law today to get started.
