Understanding the Corporate Practice of Medicine (CPOM) doctrine is crucial for anyone involved in the healthcare industry, especially when forming or expanding medical practices. CPOM laws, designed to protect the physician-patient relationship from undue corporate influence, vary significantly across the United States. While many states have robust CPOM regulations, a notable number do not, offering different opportunities for healthcare businesses. This guide will focus on providing a comprehensive overview of states with no corporate practice of medicine, helping you navigate this less restrictive landscape.
Understanding States Without CPOM Restrictions
In states without CPOM prohibitions, standard corporations, including those not owned by physicians, can typically employ physicians and other healthcare professionals. This allows for more flexible business models and investment opportunities in healthcare. These states generally prioritize ensuring licensed professionals make independent medical decisions, rather than strictly regulating the ownership structure of medical practices.
Below is a detailed look at states that currently do not enforce CPOM doctrines:
Alabama
Alabama does not have explicit CPOM laws. While practicing medicine without a license is prohibited, Alabama law allows clinics and various corporate entities to employ physicians. The key condition is that physician employment contracts must ensure doctors maintain independent medical decision-making authority, free from corporate interference. This makes Alabama a relatively open state for diverse healthcare business structures.
Alaska
Alaska also stands out as a state without CPOM restrictions. The state’s laws do not dictate the structure of medical practices beyond the general requirements of the Alaska Professional Corporation Act. This act allows corporations to provide professional services, including medical services, provided that licensed professionals primarily manage and operate the corporation. Alaska focuses on professional licensing rather than corporate practice restrictions.
Delaware
Delaware, while not having a CPOM ban, does have regulations that impact medical practice structures. Physicians can form professional corporations, and individuals remain personally liable for their professional actions even within a corporate structure. Delaware’s focus is more on professional conduct and integrity, with laws against referral fees and fee splitting, rather than broad CPOM prohibitions.
Florida
Florida does not have a CPOM statute, but it’s essential to note the Health Care Clinic Act. This act mandates that medical practices not wholly owned by physicians and billing insurance must obtain a Health Care Clinic License. This licensing requirement can be burdensome. However, the absence of a CPOM ban, coupled with the possibility of using a MSO-Friendly PC model, still makes Florida an attractive option for various healthcare business arrangements.
CPOM States and Non CPOM States Corporate Practice of Medicine Guide
Understanding the Corporate Practice of Medicine (CPOM) landscape across different states.
Hawaii
Hawaii’s legal framework suggests a lean towards CPOM restrictions, primarily through physician licensing and limitations on for-profit corporations in professional services. However, the CPOM doctrine is not actively enforced in Hawaii, and it remains a less significant legal concern compared to states with explicit CPOM laws. This makes Hawaii practically function as a state without stringent CPOM enforcement.
Idaho
Idaho operates without a specific CPOM statute, relying on legal precedents. While unlicensed entities cannot practice medicine through licensed employees, and vice versa, enforcement appears limited. Idaho adopts a relatively permissive approach, especially when corporate entities do not interfere with the medical judgment of licensed practitioners. This flexible environment can be beneficial for healthcare businesses.
Maine
Maine lacks a direct CPOM statute. The Board of Licensure in Medicine emphasizes individual physician accountability, regardless of employment status. Physicians are responsible for their professional conduct, and corporate employment is generally permitted. Maine’s regulatory focus is on physician conduct and patient care standards rather than corporate structure limitations.
Mississippi
Mississippi presents a mixed picture. Historically, case law suggested CPOM restrictions, particularly in optometry. However, current policies from the Mississippi State Board of Medical Licensure and the Board of Dental Examiners indicate a less restrictive approach. The emphasis is on licensed professionals retaining control and autonomy, suggesting a practical absence of broad CPOM prohibition, except notably in optometry.
Missouri
Missouri was an early adopter of a non-CPOM stance. Legal precedent in Missouri allows corporations to contract with physicians for medical care. Missouri’s courts have interpreted medical practice acts to permit corporations to have similar rights to individuals in contracting physicians. This long-standing acceptance of corporate practice makes Missouri a state with no CPOM doctrine.
Nebraska
Nebraska, like Missouri, has a historical precedent of not enforcing CPOM. The Nebraska Supreme Court ruled in 1905 that corporations could provide medical services through licensed physicians under contract. Nebraska focuses on individual physician licensure rather than restricting corporate entities, resulting in a state without CPOM concerns.
New Hampshire
New Hampshire does not have a codified CPOM doctrine. Physicians can practice medicine by forming professional corporations or by working as employees or contractors for healthcare organizations. The state provides a framework for professional corporations but does not restrict corporate employment of physicians, effectively functioning as a non-CPOM state.
New Mexico
New Mexico does not have a CPOM doctrine. The Attorney General has opined that corporations run by non-physicians can legally offer medical services through employed physicians, provided there’s no undue influence over medical decisions. This makes New Mexico a state where corporate healthcare practices are generally permissible.
Ohio
Ohio’s CPOM status is historically yes, but potentially not enforced currently. While past Attorney General opinions supported a CPOM restriction, recent indications from the State Medical Board of Ohio suggest an evolving perspective. Amendments to corporate and medical practice acts in 1994 removed language supporting CPOM. While not definitively resolved, current enforcement of CPOM in Ohio is questionable, leaning towards a non-CPOM state in practice.
Oklahoma
Oklahoma operates without a CPOM doctrine. There are no specific statutes or case law imposing CPOM restrictions. Oklahoma allows non-medical professionals to own and operate medical clinics and healthcare organizations, providing significant flexibility for healthcare businesses.
Utah
Utah neither explicitly permits nor prohibits CPOM. State statutes allow licensed physicians to form professional corporations, but there isn’t a prohibition on other corporate structures employing physicians as long as professional judgment isn’t compromised. Utah’s approach offers flexibility while maintaining professional accountability, making it functionally a non-CPOM state.
Vermont
Vermont lacks an established CPOM doctrine. There are no specific statutes, regulations, or case law that regulate corporate practice of medicine in Vermont. This absence of regulation means Vermont operates as a state without CPOM restrictions.
Virginia
Virginia does not have a specific CPOM statute or strong enforcement history. Attorney General opinions clarify that Virginia laws do not prohibit nonprofit or for-profit corporations from employing licensed physicians, provided physicians retain control over medical decisions. This makes Virginia a state where corporate employment of physicians is generally permissible.
Wyoming
Wyoming has a permissive approach to corporate practice of medicine. State regulations do not restrict healthcare practice through business entities. Wyoming’s business organization statutes facilitate professional corporations and LLPs for licensed professionals, ensuring accountability without CPOM restrictions.
Why Focusing on Non-CPOM States is Strategic
For healthcare businesses and investors, understanding states without CPOM laws is strategically advantageous. These states offer:
- Greater Business Flexibility: Non-CPOM states allow for more diverse corporate structures, including management service organizations (MSOs) and other models that may be restricted in CPOM states.
- Increased Investment Opportunities: The lack of CPOM restrictions can attract investment from non-physician entities, fostering growth and innovation in healthcare delivery.
- Simplified Operations: Navigating regulatory landscapes is often less complex in non-CPOM states, reducing administrative burdens and legal hurdles for healthcare practices.
- Faster Expansion: Businesses looking to scale quickly can find non-CPOM states more conducive to rapid expansion and multi-state operations.
Navigating Regulations in Non-CPOM States
It’s crucial to remember that even in states without CPOM, healthcare businesses are still subject to various regulations. These include:
- Licensing Requirements: Physicians and other healthcare professionals must be appropriately licensed in the state where they practice.
- General Healthcare Laws: Federal and state healthcare laws related to patient privacy (HIPAA), anti-kickback statutes, and fraud and abuse laws still apply.
- State-Specific Healthcare Regulations: Each state has its own set of healthcare regulations that govern patient care, facility operations, and other aspects of medical practice.
Therefore, while non-CPOM states offer greater structural flexibility, compliance with all other applicable healthcare regulations remains paramount.
Conclusion
For healthcare entrepreneurs and organizations, states with no corporate practice of medicine present significant opportunities for innovation and growth. By understanding the nuances of these state-specific regulations, businesses can strategically position themselves to thrive in a less restrictive environment. This guide provides a starting point for navigating this landscape, but always consult with legal counsel to ensure full compliance with all applicable laws and regulations in your target state.
If you’re seeking to establish or expand your healthcare business and need assistance navigating the CPOM landscape or setting up a compliant MSO-PC structure where needed, Permit Health is here to help. Contact us today for expert guidance and support.
