How to Start a TMS Clinic as a Non-Physician
The Question Most Operators Are Afraid to Ask
Transcranial Magnetic Stimulation (TMS) has become one of the fastest-growing service lines in outpatient mental health. The clinical evidence is strong, the reimbursement environment is improving, and the unit economics—a single chair generating $8,000+ per completed treatment course—are genuinely attractive to anyone who has ever evaluated a healthcare business.
Which is why we get a version of the same question almost every week: “Can I open a TMS clinic if I’m not a physician?”
The short answer is yes—thousands of TMS clinics across the country are owned, in substance, by non-physician operators, including nurses, MBAs, healthcare entrepreneurs, and private equity. The longer answer is that how you structure that ownership matters enormously, and getting it wrong can expose you to fee-splitting violations, payer clawbacks, license discipline for your medical director, and in extreme cases, the unwinding of your entire business.
This post is a practical primer on the two main paths a non-physician can take to own a TMS clinic—the friendly PC-MSO model in strict states, and direct LLC or facility-entity ownership in more permissive ones. It is not legal advice, and you absolutely need a healthcare attorney licensed in your state before signing anything. But by the end of this article, you should know enough to have an intelligent first conversation with one.
Why You Can’t Just Open an LLC and Hire a Psychiatrist
The reason this question has a complicated answer is a doctrine called the Corporate Practice of Medicine (CPOM). Roughly 33 states have some version of CPOM on the books, and the core idea is straightforward: clinical decisions should be made by licensed physicians, not by corporate shareholders whose primary obligation is to maximize profit.
In practice, CPOM means three things in strict-enforcement states:
A standard LLC or C-corp owned by a non-physician cannot directly employ a physician to deliver medical care.
The legal entity that bills for medical services must generally be owned by licensed physicians (and in some states, only by physicians licensed in that specific state).
Non-physicians cannot make clinical decisions—patient selection, treatment protocols, dosing, discharge—even indirectly through pressure on employed clinicians.
CPOM is not federal. Each state defines and enforces it differently, and that variation is the entire reason this article exists. The structure that works perfectly well in Florida is illegal in California. The structure that works in California is more legal infrastructure than a Florida operator would ever need.
The first step in starting a TMS clinic as a non-physician is figuring out which kind of state you’re operating in.
Path 1: The Friendly PC-MSO Structure (Strict CPOM States)
In states with strong CPOM enforcement—California, New York, Texas, New Jersey, North Carolina, Illinois, Michigan, Ohio, Washington, Colorado, and others—the standard solution is a structure known as the friendly PC-MSO (sometimes called the “friendly professional” or “captive PC” model). It is the same structure used by virtually every private equity–backed medical platform, every venture-backed telehealth company, and every multi-state behavioral health rollup operating in CPOM states.
Here’s how it works at a high level:
1. The Professional Corporation (PC)
A licensed physician forms a Professional Corporation (or, in some states, a Professional Limited Liability Company, or PLLC). The PC is the entity that:
Holds the clinical license to practice medicine.
Employs the physicians, NPs, PAs, and TMS technicians who deliver care.
Bills insurance and collects reimbursement under its own NPI and tax ID.
Owns the clinical chart and remains legally responsible for clinical decisions.
On paper, the PC is owned 100% by the physician. In substance, the physician—the “friendly” in friendly PC—is a designated party who agrees to hold the shares on behalf of the broader business arrangement.
2. The Management Services Organization (MSO)
Separately, the non-physician operator forms a standard LLC or C-corp. This is the MSO. The MSO does everything that isn’t the practice of medicine:
Leases the clinic space and owns the build-out.
Buys, finances, or leases the TMS device.
Hires and pays non-clinical staff (front desk, billing, marketing, operations).
Manages scheduling, the EMR, IT, HR, and the website.
Runs marketing and patient acquisition.
Takes capital from outside investors, if any.
The MSO is what the non-physician operator actually owns. It is the entity that builds enterprise value and that can ultimately be sold.
3. The Management Services Agreement (MSA)
The PC and the MSO are tied together by a long-term Management Services Agreement. Under the MSA, the MSO provides administrative services to the PC in exchange for a management fee. The fee must be set at fair market value and structured to avoid running afoul of fee-splitting and anti-kickback rules—typically a fixed dollar amount, a market-rate cost-plus arrangement, or a percentage of administrative costs (not a percentage of clinical revenue, in most states).
The MSA is the document that, in practice, transfers nearly all of the economic upside of the clinic from the PC to the MSO—legally, and without violating CPOM.
4. The Stock Transfer Restriction Agreement (STRA)
This is the piece that most newcomers miss, and it is arguably the most important.
Because the friendly physician technically owns 100% of the PC, the operator needs a mechanism to ensure that physician can’t walk away with the practice, sell their shares to a competitor, or hold the business hostage during a dispute. That mechanism is the Stock Transfer Restriction Agreement (sometimes called a Shareholder Control Agreement).
Under a typical STRA:
The friendly physician cannot transfer, pledge, or sell their PC shares without the MSO’s consent.
Upon termination, death, disability, or loss of license, the physician must transfer their shares to a successor physician designated by the MSO—often for a nominal price ($1–$100).
The MSO has the right to replace the friendly physician at will, subject to state-specific limits.
Together, the MSA and STRA give the non-physician operator practical control over the economics and governance of the clinic, while the friendly physician retains the formal authority over clinical decisions that CPOM requires.
Path 2: Direct LLC or Facility Ownership (Permissive States)
Not every state requires the PC-MSO dance. In states with no CPOM doctrine or with limited enforcement—notably Florida, Alabama, Arizona, Iowa, Nevada, and a handful of others—non-physicians can often own a medical practice more directly. The structures that show up most often are:
Standard LLC Ownership
In these states, a non-physician can form a regular LLC, hire a medical director, employ providers and technicians, and operate a TMS clinic without a separate PC overlay. This is dramatically simpler, cheaper to set up, and easier to bring outside investors into.
Florida is the most common example. There is no CPOM doctrine, and a non-physician can form an LLC that directly owns and operates a TMS practice. The catch is on the facility licensure side: Florida’s Agency for Health Care Administration (AHCA) requires facility licensure for clinics organized as mental health treatment centers (such as those offering structured outpatient programs), so a non-physician operator should plan accordingly. A solo TMS practice typically falls outside AHCA’s requirements.
Facility Entity (Health Care Clinic) Ownership
Some states allow non-physician ownership through a licensed health care facility entity, which is regulated as a facility rather than as a medical practice. The facility holds its own license, employs the providers, and can be owned by anyone. This is how many ambulatory surgery centers, infusion centers, and behavioral health treatment programs are structured—and TMS can sometimes be folded into the same model.
This path is most relevant if you’re building a multi-service mental health platform (e.g., TMS + IOP + medication management) rather than a standalone TMS clinic, since standing up a facility license is a heavier lift than standing up a basic outpatient practice.
Midlevel-Owned PLLCs
A growing number of states explicitly permit non-physician licensed clinicians—nurse practitioners and, in some cases, physician assistants—to own a professional entity that practices medicine within their scope. North Carolina, for example, allows PAs to fully own a PLLC with a supervisory agreement. Many states allow NPs with full or reduced practice authority (e.g., Colorado, Arizona, Washington, Oregon, New Mexico) to own a PLLC and serve as the prescribing provider.
This is increasingly relevant in TMS, because the supervising provider role can be filled by an NP in many states—meaning if the non-physician operator is themselves an NP (or partners with one as a co-founder), the friendly-PC structure may not be necessary at all.
State-by-State: A Working Cheat Sheet
CPOM enforcement is a moving target, and the rules below are directional rather than definitive. A healthcare attorney in your state of operation should always have the final word.
Strict CPOM — Friendly PC-MSO Required:
California, New York, Texas, New Jersey, Illinois, Michigan, Ohio, Pennsylvania, North Carolina, Washington, Colorado, Massachusetts, Connecticut
Moderate CPOM — Structuring Care Required, Some Flexibility:
Georgia, Indiana, Tennessee, Maryland, Virginia, Minnesota, Wisconsin, Oregon
Permissive — Non-Physician LLC Ownership Often Workable:
Florida, Alabama, Arizona, Iowa, Nevada, Missouri, Oklahoma, South Dakota, Utah
This is a starting point only. “Florida is permissive” doesn’t mean Florida has no rules—it means the rules sit in different places (facility licensure, fee-splitting statutes, scope-of-practice rules) and need to be navigated differently. Operators routinely get blindsided by ancillary regulations even in states with no CPOM doctrine.
Practical Considerations Before You Build
Beyond the legal entity question, there are several issues that consistently surprise non-physician operators in their first 12 months. Plan for them up front.
Find Your Medical Director Before You Sign a Lease
Whether you’re using a friendly PC or a permissive-state LLC, you need a credentialed, motivated, and properly contracted medical director from day one. The medical director sets protocols, supervises clinical staff, and—in most TMS clinics—personally performs initial evaluations and motor threshold determinations. Trying to recruit one after you’ve already signed a lease, financed a device, and committed to a launch date is one of the fastest ways to lose six months and a lot of money.
Get Credentialing Started Early
Insurance credentialing for a new TMS practice can take 90–180 days from application to in-network status, and you cannot collect reimbursement during that window. The credentialing application is filed under the PC (or whatever clinical entity is billing), so if you’re still finalizing your PC structure two months before launch, your first patient will be cash-pay whether you intended that or not.
Don’t Underestimate the Friendly Physician Relationship
In the PC-MSO structure, the friendly physician is technically your business partner—even if the agreements are drafted to give the MSO practical control. Pick someone you trust, document the relationship carefully, and pay them fairly for the role they’re playing. Many of the friendly-PC arrangements that fall apart do so because the operator treated the friendly physician as a formality rather than as a real participant in the business.
Watch the Fee-Splitting Trap
Many CPOM states—and some non-CPOM states—have separate fee-splitting prohibitions that limit how the MSO can be paid. A management fee structured as a straight percentage of the clinic’s clinical revenue is illegal in New York, and fair-market-value cost-plus or fixed-fee structures are the standard workaround. This is a place where a generic LLC operating agreement template will get you in trouble fast.
Plan for Your Exit From Day One
If you’re building a TMS clinic with the long-term goal of selling it, your structure choice will shape the eventual transaction. PC-MSO structures are well understood by healthcare buyers and private equity, but they require careful documentation—the buyer’s diligence team will review every MSA, STRA, and friendly-physician agreement you have. Permissive-state LLC structures are simpler but can become a liability if you eventually want to expand into a CPOM state, which will require restructuring the entire operation.
Ready to build a TMS practice that’s structured for growth from day one?
The TMS Business Certification Course at Solstice Training Institute, A Public Benefit Corporation walks through entity structure, medical director recruiting, payer credentialing, SOPs, and the operational playbook that turns a single chair into a scalable behavioral health business. Enroll today at solsticetraining.org.
