Quick answer

Many NPs considering starting a practice in California receive the (incomplete) guidance that they need a physician to own 51% of their practice.

Thankfully this isn’t the case, but the myth persists because the underlying legal nuance is rarely explained clearly. For a broader look at the “51% physician owner” idea in other states, see our guide on whether NPs need a physician owner.

California law gives NPs a direct path to 100% ownership. The structure is a nursing corporation under Cal. Bus. & Prof. Code § 2775.

This guide explains the distinction between a nursing corporation and a medical corporation and corrects common misconceptions.

Nursing Corporation vs. Medical Corporation: which structure allows full NP ownership?

California requires healthcare practices providing professional services to organize as professional corporations (PCs). The type of PC you form determines who can own it.

Nursing Corporation: full NP ownership is allowed

Under Cal. Bus. & Prof. Code § 2775, a nursing corporation is a specific type of professional corporation where its shareholders and officers must be registered nurses. NPs hold a registered nurse license, making them eligible.

Cal. Bus. & Prof. Code § 2775: "A nursing corporation is a corporation which is authorized to render professional services, as defined in Section 13401 of the Corporations Code, so long as that corporation and its shareholders, officers, directors, and employees rendering professional services who are registered nurses are in compliance with the Moscone-Knox Professional Corporation Act, the provisions of this article and all other statutes and regulations now or hereafter enacted or adopted pertaining to such corporation and the conduct of its affairs."

Because ownership is limited to registered nurses, an NP can wholly own their practice, or own 100% of the shares. No physician involvement is required (or even permitted) in the ownership structure.

Bottom line: Form a nursing corporation and the practice is yours outright.

Medical Corporation: physician majority is required

A medical corporation operates under a different set of rules. Under Cal. Corp. Code § 13401.5, non-physician licensed professionals — including registered nurses, physician assistants (PAs), and psychologists — may hold shares, but their total ownership is capped.

Cal. Corp. Code § 13401.5: "Notwithstanding subdivision (d) of Section 13401 and any other provision of law, the following licensed persons may be shareholders, officers, directors, or professional employees of the professional corporations designated in this section so long as the sum of all shares owned by those licensed persons does not exceed 49 percent of the total number of shares of the professional corporation so designated herein."

For a medical corporation, this means physicians must hold at least 51% of shares. NPs can participate as minority shareholders, but they cannot hold a controlling stake.

This structure is used in some practice settings. But it is certainly not the only option available to NPs.

MSO-PC structure: full NP ownership of the management layer

A third option is a Management Services Organization (MSO) paired with a physician-owned Professional Corporation (PC). In this structure, the NP owns 100% of the MSO, which manages the administrative and operational side of the practice. The clinical professional corporation is owned by a physician.

This structure allows NPs to retain full financial control of the management entity (MSO) while keeping the clinical corporation compliant with physician ownership rules. It is a common structure, but it does require forming and maintaining two separate entities, which adds significant legal complexity and ongoing cost.

Bottom line: The MSO-PC structure works, but it is more complex and expensive than a nursing corporation. For most NPs seeking full ownership, a nursing corporation is the preferred path.

Three misconceptions about NP practice ownership in California

1. "I need a physician to co-own my practice."

Not if you form a nursing corporation. Cal. Bus. & Prof. Code § 2775 authorizes a professional corporation owned entirely by registered nurses. The 51% physician majority requirement in Cal. Corp. Code § 13401.5 applies only to medical corporations.

2. "My collaboration agreement gives my physician partial ownership."

No. A collaboration agreement is a clinical supervision requirement under California law, not an ownership document. The two are completely distinct. A collaborating physician has no equity interest in your nursing corporation.

3. "All California healthcare practices must be formed as medical corporations."

False. California authorizes multiple professional corporation types, each keyed to the license held by the shareholders. A nursing corporation is a recognized structure, separate from medical, dental, optometric, and other professional corporations.

Do NPs still need a physician supervisor under AB 890?

Ownership structure and clinical supervision requirements are separate questions. Under AB 890, NPs who have not yet achieved "104" full practice authority still require a collaborating physician. That requirement does not affect who owns the practice.

Bottom line: An NP can own 100% of a nursing corporation, even while needing a physician supervisor and a collaborative agreement.

103 NPs require standardized procedures and a collaborating physician if they set up a nursing corporation as their practice structure. For official 103, 104, and supervision requirements, see the California Board of Registered Nursing’s AB 890 resources.

Conclusion: own it the right way

California is clear — NPs can fully own their practice if set up as a nursing corporation. The physician co-ownership requirement applies to medical corporations, not nursing corporations.