GOAL ORIENTED HEALTHCARE AND BUSINESS ATTORNEYS

What Is the Corporate Practice of Medicine?

The corporate practice of medicine refers to when medical decisions are taken out of the hands of individual doctors and instead are controlled, even in part, by non-physicians.  It can also exist when non-physicians are compensated for doctors' medical decisions.  This control by non-physicians may be exercised in arrangements such as: 

• Partnerships
• Employment contracts
• Fee-splitting

Why Is the Corporate Practice of Medicine Prohibited?

States prohibit the corporate practice of medicine based on the idea that it benefits public health and safety if only doctors are licensed to practice medicine.  If corporations or other non-physician entities are able to practice medicine, they will face a conflict of interest between the demands of the corporation and the best interests of the patient. 

Where Is the Corporate Practice of Medicine Prohibited?

The laws of each state continue to change, but states that currently prohibit the corporate practice of medicine include California, Colorado, Illinois, Iowa, New Jersey, New York, Ohio, and Texas. 

While these states prohibit the corporate practice of medicine, they also have created many exceptions to the doctrine.  Depending on a state's particular laws, institutions that may not be subject to the prohibition include hospitals, clinics, universities, and professional corporations.  For example, doctors may be allowed to form professional corporations that are licensed to practice medicine, but only if the corporation is controlled by doctors. 

Do I Need a Corporate Attorney?

Doctors who are seeking employment, or considering incorporating their practice should be well-informed about laws controlling the corporate practice of medicine in their home state.  A corporate attorney with experience in health care matters can advise you on how to structure your business in a lawful corporate arrangement.