The Corporate Practice of Medicine (CPOM) is a doctrine that permits a corporation, other business entity, or individual who has no professional provider license to own and operate a medical practice or other healthcare entity. For example, a layperson can start and own a clinic and employ licensed medical staff.
State-by-State
Each state has its own version of this doctrine. Some states, such as New York, forbid ownership by anyone but a physician (or recently, a nurse practitioner), while some, such as California, require at least 51% physician ownership with lesser-licensed providers owning a minority of the entity. Several states allow anyone to own a healthcare entity and employ licensed providers. You need to carefully understand you state’s CPOM laws to set up and operate your business legally.
Purpose of CPOM Restrictions
Each state has its own particular CPOM laws and restrictions in order to safeguard the integrity of licensed healthcare professions and the delivery of care to patients. CPOM-friendly states – such as Florida, Utah, Montana, and many others – allow non-licensed persons and entities to own healthcare businesses to prevent unreasonable restriction of commerce. However, these states protect the integrity of licensed providers by prohibiting non-licensed and non-equally-licensed persons from interfering with their independent clinical judgment.
Med Spas and Other Practices
Many licensed providers, such as nurses, have started their own businesses, including med spas. Sadly, many of these have realized after the fact that their practices violated CPOM laws in their states, and they have had to either walk away from the businesses or pay exorbitant legal fees to properly structure the entities, often losing majority control or significantly changing the business plan. Be sure that your healthcare business is compliant with CPOM laws before taking any further action.
If you are thinking about starting a healthcare entity in your state, call us to help guide you through the maze of CPOM laws and have confidence that your business is set up legally.