How to Franchise a Medical Services Business and How Does Corporate Practice of Medicine Work?

The corporate practice of medicine (CPOM) is a legal doctrine that dictates whether non-physicians or non-medical corporations can own or control medical practices and make decisions about patient care. CPOM regulations vary significantly across states in the United States. Some states have stringent laws that strictly prohibit corporate involvement in medical practices, while others have more permissive regulations, allowing various forms of corporate structures in healthcare. In this comprehensive overview, we will explore the states that permit the corporate practice of medicine and the reasons behind these regulations.

Understanding the Corporate Practice of Medicine Doctrine

The corporate practice of medicine doctrine is rooted in the principle that the practice of medicine should be driven by medical professionals who prioritize patient care over profit. It aims to prevent conflicts of interest that may arise when non-physicians or business entities make medical decisions solely for financial gain. The doctrine is intended to protect the autonomy of medical practitioners and maintain the quality of healthcare services.

In states where the CPOM doctrine is strictly enforced, non-physicians and non-medical corporations are typically prohibited from:

1. Directly employing or contracting with licensed healthcare professionals.

2. Interfering with the clinical judgment and medical decisions of licensed practitioners.

3. Owning or controlling medical practices, including the equity ownership of medical facilities.

States Allowing Corporate Practice of Medicine

While many states uphold the corporate practice of medicine doctrine, some have more lenient regulations, allowing various forms of corporate involvement in healthcare. These states typically permit:

1. Corporate Medical Practices: In these states, non-physician business entities can own and operate medical practices, often through the establishment of professional medical corporations (PCs) or professional medical associations (PMAs). Physicians remain independent and are not directly employed by the corporation.

2. Management Services Organizations (MSOs): Some states allow non-medical corporations to provide management and administrative services to medical practices, such as billing, staffing, and facility management. This enables physicians to focus on patient care while non-medical entities handle the business aspects.

3. Hospitals and Health Systems: States may also permit hospitals and healthcare systems to employ physicians directly, allowing for integrated healthcare delivery models.

It is essential to understand that even in states permitting corporate practice of medicine, regulations often have limitations and guidelines in place to ensure that patient care and medical decision-making remain in the hands of licensed practitioners. Below is a list of states known for permitting various degrees of corporate practice of medicine:

1. Arizona: Arizona allows corporate ownership of medical practices through professional corporations and permits non-physician entities to provide management services to healthcare providers.

2. Colorado: Colorado permits corporate-owned medical practices and allows physicians to practice as employees of non-physician corporations.

3. Illinois: Illinois allows the establishment of professional service corporations and professional service limited liability companies (LLCs) to provide healthcare services.

4. Iowa: Iowa permits the corporate practice of medicine and allows licensed physicians to enter into employment agreements with non-physician entities.

5. Michigan: Michigan permits the establishment of professional medical corporations and professional medical LLCs, allowing for corporate ownership of medical practices.

6. Nevada: Nevada permits corporate ownership of medical practices and does not prohibit non-physician entities from employing physicians.

7. Oregon: Oregon allows for the corporate practice of medicine, permitting non-physician entities to own and operate medical practices.

8. Pennsylvania: Pennsylvania permits corporate ownership of medical practices, and non-physician entities can employ physicians.

9. Tennessee: Tennessee allows the corporate practice of medicine, enabling both corporate-owned medical practices and physician employment by non-physician entities.

10. Washington: Washington permits the corporate practice of medicine and allows for various corporate structures in healthcare.

11. New Mexico: New Mexico permits corporate-owned medical practices and the direct employment of physicians by non-physician entities.

12. West Virginia: West Virginia allows corporate ownership of medical practices and permits the direct employment of physicians by non-physician entities.

13. South Carolina: South Carolina allows for corporate-owned medical practices and the direct employment of physicians by non-physician entities.

14. Kansas: Kansas permits corporate ownership of medical practices and the employment of physicians by non-physician entities.

15. Utah: Utah allows corporate ownership of medical practices and employment of physicians by non-physician entities.

16. Vermont: Vermont permits corporate ownership of medical practices and allows non-physician entities to employ physicians.

These states have embraced more flexible approaches to the corporate practice of medicine, recognizing the potential benefits of corporate involvement in healthcare, such as increased access to medical services and improved efficiency in practice management. However, it is crucial to note that each state has specific regulations and requirements that must be followed to ensure compliance with the law.

The Rationale Behind Allowing Corporate Practice of Medicine

States that allow corporate practice of medicine have distinct reasons for permitting corporate involvement in the healthcare sector. Some of the rationales behind these regulations include:

1. Expanding Access to Healthcare: Allowing non-physician corporations to own and operate medical practices can increase the availability of healthcare services in underserved areas, improving access to care.

2. Efficiency and Management: Corporate entities often possess expertise in management, administration, and technological advancements that can enhance the efficiency of medical practices. This allows physicians to focus on patient care.

3. Capital Investment: Corporate involvement can provide capital resources needed to establish and maintain medical facilities and technology, facilitating the delivery of quality healthcare services.

4. Attracting Physicians: Allowing physicians to be employed by non-physician entities can attract medical professionals who prefer the stability and benefits offered by corporate employment.

5. Competition and Innovation: Encouraging competition within the healthcare industry can drive innovation and improvements in the quality of care and patient experience.

6. Multidisciplinary Collaboration: In some states, the flexibility to form corporate entities can promote collaboration between physicians, nurse practitioners, physician assistants, and other healthcare professionals.

7. Economic Benefits: Permitting corporate practice of medicine can lead to economic growth, job creation, and increased revenue for the state.

It is important to recognize that states allowing corporate practice of medicine often implement strict regulations and oversight to ensure that patient care remains a top priority. Physicians practicing in these states are required to adhere to ethical and professional standards, maintain their clinical independence, and prioritize the well-being of their patients.

Challenges and Concerns

Despite the benefits of allowing corporate practice of medicine, there are also challenges and concerns associated with this approach. Some of the potential issues include:

1. Conflicts of Interest: Allowing non-physician entities to control medical practices may raise concerns about potential conflicts of interest, where profit motives could influence medical decisions.

2. Quality of Care: The quality of patient care can be compromised if business interests prioritize cost-cutting measures over clinical excellence.

3. Regulatory Compliance: States must have robust regulatory oversight to ensure that corporate-owned medical practices and employed physicians adhere to legal and ethical standards.

4. Patient Confusion: Patients may be confused or misled by corporate-owned medical practices, especially if they do not clearly understand the corporate structure and medical decision-making processes.

5. Liability and Responsibility: Determining liability and responsibility in cases of medical malpractice can be complex when multiple parties are involved, including corporate entities.

6. Standardization: Achieving standardized practices and quality of care in a corporate healthcare system can be challenging due to variations in corporate structures and priorities.

The corporate practice of medicine doctrine is a complex and evolving area of healthcare regulation, with each state adopting its approach based on its unique healthcare landscape and priorities. States permitting corporate practice of medicine seek to strike a balance between expanding access to care, promoting efficiency, and ensuring the quality and ethical standards of medical practice.

It is essential for healthcare practitioners, corporate entities, and policymakers to remain informed about the regulations specific to their state and to prioritize patient care and ethical decision-making. As the healthcare industry continues to evolve, the corporate practice of medicine will remain a topic of discussion, with the aim of delivering the highest quality care to patients while meeting the changing needs of the healthcare landscape.

For more information on how to franchise a medical services business, contact Franchise Marketing Systems (FMS Franchise): www.FMSFranchise.com