What a management fee should be and how to defend it: non-clinical cost by specialty from CMS data on roughly 1.1 million clinicians, the markup implied by 73 outsourced-services comparables, and the 2026 state rules that now read the fee.
Benchmarking and defending MSO management fees: cost, markup, structure, and the 2026 state rules.
The defensible answer is cost plus a fair market value markup. Median non-clinical cost spans 16.6% to 75.7% of net revenue depending on specialty, and comparable managers earn a median 22.7% markup on cost.
Non-clinical cost spans 16.6% to 75.7% of practice net revenue across 25 specialties, a 4.6x spread. Geography moves the same basket only 1.7x. Built from CMS data on roughly 1.1 million clinicians.
Across 73 healthcare outsourced-services deals, the median EBITDA margin is 18.5%, an implied 22.7% markup on cost. That markup is the second half of a defensible MSO management fee.
Three ways to structure an MSO management fee, and a state map that treats them very differently. Percentage fees are void in Illinois, misconduct in New York, and under new scrutiny everywhere else.
Regulators expect a management fee to bear a reasonable relationship to the cost of the services. The workflow that gets there: build the cost base, apply a market markup, test from both directions, and document it.
New York has treated percentage-of-revenue management fees as fee splitting for decades, and it is professional misconduct, not a technicality. What survives is a flat or cost-based fee, sized from a build-up that holds.
The friendly-PC workaround held for thirty years. In 18 months, Oregon, California, Massachusetts, and a lengthening list of statehouses rewrote the rules around MSO control and MSO money. The map, dated.
Two laws took effect January 1, 2026. SB 351 draws a hard line around what an MSO may control, and AB 1415 gives OHCA 90 days notice and a look at the money. The management fee is now a document regulators read.
The management fee decides where a platform's EBITDA sits, so a mispriced fee misprices the deal. How QofE teams test MSO fees, what repricing to the benchmark means at a platform multiple, and the checklist.
A management services organization owns everything about a medical practice except the medicine. How the structure works, why it exists, what changed in 2026, and why the management fee is where the whole model gets tested.
The annual data report the pillar will link to once it exists.