Corporate Practice of Medicine

Navigating the Strictest States

The Corporate Practice of Medicine (CPOM) doctrine, prevalent in several states across the U.S., restricts or outright prohibits corporations and other business entities from practicing medicine or employing physicians. The intent behind CPOM is to ensure that medical decisions are firmly rooted in patient welfare and aren’t unduly influenced by profit motives.

However, the degree to which states enforce this doctrine varies significantly. This post aims to shed light on states with the strictest CPOM laws and offer some details about these regulations.

1. California

Key Restrictions:

Corporations and lay entities are prohibited from practicing medicine.
Physicians must own and control medical practices. This means all decisions, including clinical ones and operational ones like hiring staff, setting hours, and selecting equipment, must be made by licensed physicians.

Exceptions & Noteworthy Points:

Hospitals can employ physicians but cannot exert control over their medical judgments.
Management service organizations (MSOs) are often used to separate clinical and non-clinical operations.

2. New York

Key Restrictions:

Only licensed professionals can own shares or have voting rights in a medical service corporation.
Medical decisions and operations must remain under physician control.

Exceptions & Noteworthy Points:

Certain health facilities can employ physicians, but they cannot influence medical decisions.
MSOs are commonly used for non-clinical operations and administrative functions.

3. Texas

Key Restrictions:

Corporate entities are generally prohibited from employing physicians or exerting control over medical decisions.

Exceptions & Noteworthy Points:

While the prohibition is stringent, Texas allows for several exceptions, including non-profit health organizations, federally qualified health centers, and hospitals in counties with populations under 50,000.
Like other states, Texas often sees the use of MSOs to segregate clinical and non-clinical operations.

4. Colorado

Key Restrictions:

Only physicians or groups of physicians can own and control a medical practice.

Exceptions & Noteworthy Points:

The state does grant certain exceptions to the rule, including for podiatrists, chiropractors, optometrists, and dentists.
Despite its CPOM doctrine, Colorado allows for direct employment contracts between hospitals and physicians.

5. Illinois

Key Restrictions:

The state enforces a strong stance against the corporate practice of medicine.
Only licensed professionals can have an ownership interest in a medical practice.

Exceptions & Noteworthy Points:

There are specific exemptions, including partnerships, medical corporations, or limited liability companies consisting solely of health providers.

Conclusion

The Corporate Practice of Medicine doctrine, while rooted in a single principle, manifests differently across states. If you’re considering expanding or starting a medical practice, it’s crucial to understand the CPOM implications in the specific state you’re targeting. Legal consultation and due diligence can save practices from hefty fines, legal complications, and operational challenges down the line.