Michael Byrd and Brad Adatto

Can Non-Doctors Own a Medical Practice in Texas? Texas Corporate Practice of Medicine Field Guide- Part 1 of 5

Co-Author | 2.1.21

This article is co-authored by partners Brad Adatto and Michael Byrd

 

When talking about health care in Texas (particularly elective, non-invasive procedures), an almost visceral reaction is triggered by the question: can non-doctors own a medical practice in Texas?  The law is not only confusing but emotion, opinion and rhetoric further cloud the issue.  The vision for this field guide is get to the root of the problem to help answer this question.  Taking it a step further, it examines the risk of non-doctors owning a medical practice.

This field guide is a five part series and will address the following questions:

Part One – What is the Corporate Practice of Medicine?

Part Two – Does the Corporate Practice of Medicine Exist in Texas?

Part Three  – Is the Corporate Practice of Medicine Doctrine Actually Enforced in Texas?

Part Four – Are There Exceptions to the Corporate Practice of Medicine Doctrine in Texas?

Part Five – Can a Non-physician Hire a Texas Medical Doctor via an Independent Contractor Agreement?

 

Part One – What is the Corporate Practice of Medicine?

Before diving into a discussion of the corporate practice of medicine (“CPOM”), we must first acknowledge a complex question in its own right:  What is the practice of medicine?  Asked another way: What qualifies as a medical service.  Ultimately, these questions are the key to determine whether CPOM is even at issue.  If the services provided by a business are not the practice of medicine, then the business will not be regulated by a state’s CPOM laws.  Most of the states define the practice of medicine broadly so many services that intuitively may seem non-medical do qualify as medical services.  This has created confusion across the spectrum of elective and non-invasive medical services, including common services provided in medical spas, IV hydration bars, weight loss centers, wellness centers, and alternative medicine practices.  Some states, like Texas, have enacted specific laws stating non-invasive services are in fact considered medical services.  However, most states provide little to no guidance on the issue creating confusion and leading to differing interpretations and opinions. As we continue through the discussion of CPOM in this field guide, we do so without commenting on particular types of procedures and operate on a blanket assumption that the practice of medicine is involved.

 

The CPOM doctrine is a state law doctrine developed to ensure only licensed physicians (or entities wholly-owned by licensed physicians) practice medicine, thus limiting the commercialization of medicine by non-physicians.  The underling purpose of the CPOM doctrine is to protect patients and preserve the integrity of the provision of health care by preventing undue influence on or interference with patient care.  Stated differently, the CPOM doctrine, by restricting ownership of a medical practice to licensed physicians, attempts to ensure patient care is held to a standard established and controlled by physicians.  As we journey through this field guide and explore the law, this underlying goal helps illuminate the risk factors.

 

The position with respect to CPOM differs from state to state but tend to fall into one of three categories:  (1) Strict CPOM doctrine – only physicians may own a business that provides medical services; (2) CPOM doctrine with limited exceptions – physician and non-physicians may jointly own a business that practices medicine with certain boundaries in place; or (3) No CPOM doctrine – anyone may own a business that provides medical services.  Illinois, New York and New Jersey are examples of strict CPOM states.  Most states fall in the second category where the exceptions allowing non-physician ownership are all over the map.  Some states allow only certain health care providers to own with a physician while other states allow anyone to own with a physician.  Regardless, all of these states have common rules requiring the medical decision making be made by the physician.  California, Texas and Arizona are examples of states that fall into this second category.  Florida and Ohio are examples of states that do not have a CPOM doctrine.

 

Although ownership is the predominant principle associated with the CPOM doctrine, the CPOM doctrine may also extend to regulate other areas where non-physicians could conceivably impact patient care.  For example, many states either through statute or through the interpretation of their laws, have prohibitions or limits on the management and control of a medical practice by non-physicians.  Additionally, some states have CPOM restrictions structured in a way that prohibits non-physicians from employing or contracting with physicians to provide medical services to a non-physician owned business entity.  Finally, some states have fee splitting laws restricting the sharing of medical revenues with non-physicians.

 

Because each state confronts CPOM differently, this field guide will focus on the CPOM doctrine in Texas.  In Part Two of this series we will address the question, “Does the Corporate Practice of Medicine Exist in Texas?”  If you have any questions or would like to learn more about the Corporate Practice of Medicine, email us at info@byrdadatto.com.

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