The patients decide where they go. The charts stay with whoever the contract and state law name as records owner, and patients can get copies on a federal deadline. The money, memberships and prepaid packages follow the termination clause, which is why it should be written before you need it. Here is what to settle before you sign.
Patients choose. Nobody owns them
No agreement can make a patient stay. The AMA’s ethics code requires a physician ending a relationship to give notice “long enough in advance to permit the patient to secure another physician” and to help transfer care [AMA Op. 1.1.5]. When a physician leaves a practice, patients must be told how to reach their records and for how long [AMA Op. 3.3.1].
What an agreement can control is the business around the patient: who sends the notice, what it says, who keeps the booking system and the phone number, and whether either side can solicit the other’s patients for a period afterwards. Write all of those down.
The charts follow the records owner
In a PC-MSO, the professional entity is the medical practice, so it normally holds the medical records. State law then sets the rules. In Florida, an employer is the records owner only if the contract with the practitioner “designates the employer as the records owner” [Fla. Stat. § 456.057(1)]. Name the records owner in the agreement.
Retention and closure rules come with it:
| Florida | New Jersey | |
|---|---|---|
| Retention | At least five years from the last patient contact [Fla. Admin. Code 64B8-10.002] | Seven years from the most recent entry [N.J.A.C. 13:35-6.5(b)] |
| On leaving or closing | Written notice to patients, or newspaper notice, and an offer of copies. The board is told who the new records owner is [Fla. Stat. § 456.057] | Published notice monthly for three months, and direct notice to patients seen in the prior six months [N.J.A.C. 13:35-6.5(h)] |
| Unpaid balance | n/a | Records needed for care can’t be withheld because a balance is owed [N.J.A.C. 13:35-6.5(c)(7)] |
Patients also have a federal right to their records. The practice must act on a request within 30 days, with one 30-day extension if it gives a written reason [45 CFR 164.524(b)(2)]. So the practical question is rarely whether the operator can get records for continuing patients. It is how fast, in what format, and who pays for the export. Put that in the agreement.
Money: the last sweep is the one to write down
In many PC-MSO structures, patient payments go into an account the professional entity owns, and the management company is paid its fee from it. Some structures run the other way, with the operator’s revenue collected by the practice and swept to the operator. Either way, no statute sets how fast money moves at the end. The agreement does. The fee mechanics behind it are at fixed fee vs percentage.
Settle these terms before signing:
- Sweep schedule. How often funds move, the deadline for each transfer, and what happens if a transfer is late.
- Visibility. Read-only access to the account for the party whose money it is, and a monthly reconciliation report showing deposits, refunds, chargebacks and fees.
- Reserve. If either side holds back a reserve for refunds and chargebacks, state the amount, what it can be used for, and the date of final release after termination.
- Final reconciliation. A fixed number of days after the last service to reconcile and pay out, and who pays the costs of closing the account.
- Disputes. Undisputed amounts are paid on time even while another amount is in dispute.
Memberships and prepaid packages are liabilities
A patient who prepaid for six sessions and received two is owed four sessions or a refund. That obligation doesn’t disappear when the medical director changes. The agreement should say who honors open packages and memberships after termination, who refunds them if the services can’t be provided, and how the money already collected is split to match. A list of open packages as of the termination date, with balances, should be one of the deliverables.
Termination terms to negotiate
- Without cause. Either party can leave on written notice. Common periods are 30, 60 or 90 days. Longer notice protects patients, and shorter notice protects the party who wants out.
- For cause. A shorter path for breach, loss of license, loss of insurance or a regulatory finding, with a short cure period where a cure is possible.
- Transition duties. Coverage continues through the notice period. Prescriptions and follow-ups in progress are handed off. Supplier accounts and licenses in the departing party’s name are closed or transferred.
- Fees. Whether any early termination fee applies, and that fees stop on the effective date of termination.
The operator side of this is at how to fire a medical director. The clause list is at what a management services agreement needs.
Noncompetes are a state-law question
There is no federal noncompete ban. The FTC’s 2024 rule was set aside in court, and in September 2025 the FTC voted to drop its appeals and “accede to the vacatur” [FTC]. State law governs.
Some states restrict physician noncompetes directly. Colorado voids a covenant that “restricts the right of a physician to practice medicine” after the agreement ends [C.R.S. 8-2-113(5)]. A 2025 amendment extends that protection to physician assistants, advanced practice nurses and dentists for covenants entered into or renewed after its effective date [Colorado SB 25-083]. Florida limits covenants where one entity employs all the physicians in a specialty in a county [Fla. Stat. § 542.336]. Other states have changed their rules recently. Check the law where the clinicians practice before relying on a covenant.
Nonsolicitation clauses are more common and usually easier to enforce than noncompetes. Write them narrowly: a defined period, defined staff and defined patients, with a carve-out for patients who come back on their own.
What this means for you
Before signing, name the records owner and the export terms, the sweep schedule and reporting, the reserve release date, and who honors open packages. Pick a without-cause notice period you could live with from either side. Check your state’s noncompete rules before you rely on one, and prefer a narrow nonsolicitation clause. If the structure itself is new to you, start with friendly PC and MSO structure and the stock transfer restriction agreement.
Related reading
Frequently asked questions
Who owns patient records when you leave a PC-MSO arrangement?
Usually the professional entity, because it is the medical practice. State law sets the details. In Florida, an employer is the records owner only if the contract says so. Patients have a federal right to copies within 30 days, extendable once. The agreement should say how records for continuing patients are exported and who pays.
What happens to prepaid packages and memberships when a med spa changes medical director?
They stay obligations to the patient. A patient who prepaid is owed the services or a refund. The agreement should require a list of open packages with balances at termination, say who honors them afterwards, and split the money already collected to match the services still owed.
How much notice is needed to terminate a medical director agreement?
Whatever the agreement says. Without-cause notice periods of 30, 60 or 90 days are common. Separately, physician ethics rules require patients to get enough notice to find another clinician. Agree on a for-cause path too, with a short cure period, for breach or loss of license or insurance.
Are physician noncompete agreements enforceable?
It depends on the state. The FTC’s federal noncompete rule was vacated, and the FTC dropped its appeals in September 2025. Colorado voids physician noncompetes, and a 2025 amendment extends this to PAs, APRNs and dentists. Florida restricts them where one entity employs all of a county’s specialists. Check local law.
Can a PC-MSO delay paying out revenue after termination?
Only as the agreement allows. No statute sets the timing. A well-drafted agreement fixes the sweep schedule, gives the owner of the money read-only account access and monthly reconciliations, sets a final reconciliation deadline, and requires undisputed amounts to be paid on time.
This is general information, not legal advice. Rules vary by state and change. Confirm your own facts with counsel.