Pre-banking: Get the legal structure right first
Banking comes after legal structure, never before. Confirm the following before you talk to any bank:
- The MSO entity exists, has its own EIN, and is registered in its operating state.
- Each PC entity exists, has its own EIN, and is registered (and properly clinician-owned) in the state where it operates.
- The Management Services Agreement (MSA) between the MSO and each PC is signed, with management fee structure and intercompany flow expectations spelled out.
- State-specific CPOM compliance reviewed by a healthcare attorney. Specifically: who can own the PC, what services the MSO can provide, and any state-specific filing requirements.
- Beneficial ownership disclosures prepared per FinCEN's Corporate Transparency Act requirements.
If any of these are open, fix them first. Banking timelines compound on legal-structure timelines.
Bank selection
Not every business bank can handle a 5-PC structure efficiently. Evaluate banks on:
- Multi-entity onboarding speed. Generalists run 35 to 75 days for a 5-PC group. A bank that treats multi-entity onboarding as the default (opens in a new tab) runs 5 to 10 days instead. Ask for the specific timeline before signing.
- Virtual account support. Each PC should be able to issue per-location routing numbers without opening dozens of additional accounts.
- Automated sweep rules. The bank should support cross-entity rules that respect MSA-defined intercompany transfers.
- Consolidated dashboard. A single view across every entity is non-negotiable for the CFO.
- FDIC sweep coverage. Each entity should qualify for $10M coverage via IntraFi or equivalent.
- Pricing transparency. Free ACH, flat wires, and no per-item lockbox surprises.
Documentation per entity
Every entity (MSO and each PC) needs its own documentation package. Even at healthcare-native banks where collection is streamlined, the underlying items must exist:
- Articles of incorporation or organization (state-filed).
- EIN letter (IRS Form CP-575 or equivalent).
- Operating agreement or bylaws.
- List of authorized signers with valid government ID for each.
- Beneficial ownership disclosure (FinCEN compliant).
- State professional licensure documentation (for PCs).
- NPI for each PC.
- For MSOs: management services agreement copy referencing the PCs it serves.
Compile these per entity in a shared folder before onboarding starts. Onboarding stalls are almost always documentation stalls.
Bank-side account setup
Once documentation is in hand, the bank-side flow runs in this order:
- Submit applications for all entities together. Don't submit one at a time; healthcare-native banks process in parallel.
- Complete KYC for every authorized signer.
- Receive routing and account numbers. These are the trigger for payer EFT enrollment, so capture them immediately.
- Configure online banking access for each entity, with role-based permissions for billing staff and CFO.
- Order debit cards or treasury cards as needed.
- Activate ACH and wire capabilities. Confirm any per-transaction limits match expected payer volumes.
- Confirm FDIC sweep coverage is enabled at account opening, not as a post-activation request.
Payer EFT enrollment
This step usually takes longer than the bank setup itself. Run it in parallel where possible:
- For each PC, gather the EFT enrollment form for every payer that PC is contracted with: Medicare, Medicaid (state-specific), commercial payers, dental carriers if applicable, workers' comp, auto.
- Submit EFT enrollment with the PC's bank routing number and account number the moment they're available, even if account is in pending status.
- Track each enrollment by payer and entity. A simple spreadsheet works. Most payers process EFT enrollment in 30 to 60 days.
- For ERA enrollment (separate from EFT), follow the same process.
- Don't go live with any PC until all top-volume payer EFTs are confirmed active. Otherwise reimbursements will route to the wrong account or get held.
Sweep rules and treasury configuration
Once accounts are live and payers are enrolled, configure the operational rules. These should match the MSA flow:
- Sweep rules from PC operating accounts to PC reserve accounts (overflow management).
- Sweep rules from PC operating accounts to MSO management fee account (per MSA, monthly or scheduled).
- Threshold-based alerts ("if PC-3 operating cash drops below $X, notify CFO").
- FDIC sweep configuration: confirm $10M coverage per entity is active.
- Yield placement: which accounts earn the 1.75% APY, how often interest is paid, where it's deposited.
- Authorized signer hierarchy and approval thresholds for wires above a certain amount, the kind of detail a treasury policy template built for PE-backed platforms (opens in a new tab) spells out in full.
Compliance and audit layer
Compliance setup is mostly documentation and process, not banking configuration. Get it right early:
- HIPAA-aligned audit logging at the bank. Confirm Business Associate Agreement (BAA) coverage with the bank.
- Internal documentation: written policy on how to document intercompany transfers for audit defense (opens in a new tab), who approves them, how they reconcile to the MSA.
- External documentation: payer audit defense file with EFT enrollment confirmations, NPI records, and account ownership history.
- Annual review schedule: who reviews account structure, when, and what they're checking.
- State filing reminders: PC license renewals, MSO state registrations, NPI updates.
90-day post-setup review
The first 90 days after go-live are when problems surface. Schedule a structured review at day 90:
- Reconcile every PC account against payer remittances received. Confirm deposits match expected volumes.
- Audit the EFT enrollment status for every payer-entity pair. Any still pending after 90 days needs escalation.
- Review sweep activity. Confirm intercompany flows match the MSA.
- Check FDIC coverage allocation in case any single entity holds more than $10M.
- Walk the CFO and practice administrator through the consolidated dashboard. Confirm visibility is sufficient for monthly close.
Anything that surfaces in this review is far cheaper to fix at day 90 than at day 365 or during a future audit.
What Lemma handles, and what it does not
Lemma handles the banking layer of the checklist: multi-entity onboarding, virtual accounts, automated sweeps, FDIC sweep coverage, consolidated dashboards, and BAA-covered compliance. It does not write your MSA, structure your CPOM-compliant entity setup, or replace your healthcare attorney. Use Lemma after the legal structure is in place, not as a substitute for the structural work.
Common mistakes that slow the setup down
Even with a clean checklist, a few patterns repeatedly cause delays. Watch for these:
- Submitting bank applications before the PC entities are fully registered. Banks won't process applications for entities that don't exist yet.
- Using personal SSNs in beneficial ownership where EINs are required. Banks return these for correction.
- Inconsistent legal names across documentation. The PC's articles of incorporation, EIN letter, and operating agreement should match exactly. Discrepancies trigger compliance review.
- Skipping the MSA. Some practices think they can configure the management fee flow informally. Banks will not run intercompany sweep rules without an MSA in writing.
- Filing payer EFT enrollments before the bank account is even in pending status. Most payers will reject the enrollment and push you to the back of the queue.
Each of these mistakes adds 7 to 14 days of cleanup. Doing them right the first time is the difference between a 2-week setup and a 6-week setup.
How to sequence the first 30 days
If you're starting from scratch, the realistic 30-day plan:
- Days 1 to 5: legal structure confirmation, MSA finalization, documentation gathering.
- Days 5 to 10: bank application submitted for all entities together, KYC for signers complete.
- Days 10 to 15: routing and account numbers received, payer EFT enrollments filed in bulk.
- Days 15 to 20: online banking, debit cards, ACH and wire capabilities activated. Sweep rules configured.
- Days 20 to 30: payer EFT enrollment processing (most payers running in parallel). First reimbursements landing in correct accounts.
This timeline assumes a healthcare-native bank. At a generalist bank, multiply by 2 to 3.
Documentation you should keep on file after setup
Save the following in a shared compliance folder for every entity, with annual review dates noted:
- Initial bank application and approval confirmation per entity.
- EFT enrollment confirmations from every payer.
- Authorized signer list with effective dates.
- Sweep rule configurations and any changes to them, with dates and approvers.
- BAA and any privacy/security agreements with the bank.
- FDIC coverage statement showing aggregate insured amount per entity.
This file is your audit defense if a payer or regulator asks how funds flow between entities. Keeping it current is far cheaper than reconstructing it after the fact.
When to bring in external help
Most MSO-PC banking setups can be run by a competent practice administrator and CFO if the legal structure is already in place. A few situations call for outside help:
- First-time MSO-PC: bring in a healthcare attorney for the structural review and CPOM sign-off, even if you've done plenty of single-entity setups.
- Multi-state practice: each state's CPOM and PC ownership rules vary enough that a state-specific attorney review is worth the cost.
- Practice acquisition or restructure: an M&A-focused healthcare attorney plus a CPA who has handled MSO-PC unwinds before. The cost of doing this without specialists is much higher than doing it with them.
- Audit response: if a payer or state issues an audit notice that touches fund flows, first check it against the banking red flags PE diligence looks for (opens in a new tab), then escalate to your healthcare attorney and CPA before responding.
For everything else, the checklist above plus a healthcare-native banking partner handles the operational work cleanly.