The Corporate Practice of Medicine in Illinois

The Corporate Practice of Medicine (CPOM) doctrine frustrates entrepreneurs interested in starting a medical practice in many states, including Illinois. In this four-minute video, Erin Jackson explains the basics and a compliant workaround.

Transcript:

“Why are you telling me I can’t do what it is that I want to do?” This is a common question we hear in relation to a lot of topics. But I’m going to dive into just one right now, which is the corporate practice of medicine. 

I’m Erin Jackson with Jackson LLP Healthcare Lawyers. 

What Is the Corporate Practice of Medicine?

The corporate practice of medicine, or CPOM, is a doctrine that’s enshrined in many states’ laws, either by statute, which is the laws on the books, or by judge-made law — case law. 

So, what it means is that only doctors can practice medicine. This has come about out of concern that non-physicians might exercise any sort of judgment or control over a physician’s independent medical judgment for patient care. Thus, it prevents and prohibits a business from practicing medicine. That is, I (as an attorney who’s not a doctor) cannot hire a doctor to work for our practice to potentially offer concierge medical care for our employees. A therapist or a physical therapist also cannot hire a doctor to work for their practice. This is because the status of the doctor’s employment with that practice could interfere with the doctor’s independent medical judgment for patient care. 

Frequently, people reach out to us and say, “I have a business that I would like to start. It’s going to offer this phenomenal level of care. I’m not licensed in any way, but I wish to begin this practice and to hire some doctors. My plan is to pay the doctors each $100,000 a year and then I’m going to bill the patients, and I’ll keep the money from patient care. Win-win for everybody! The doctor gets a steady salary and I am responsible for collecting the billables and I get to keep them.” 

Well, you’re not licensed. So, if that was me, or if that was a therapist or a nurse or a medical assistant, that’s not going to work because that individual is being compensated based on the volume and value of patients, and is potentially going to impact the physician’s independent medical judgment. 

Management Service Organizations

So, some people say, “Well, then what?” Well, if you’re really enthusiastic about being involved in establishing and managing a medical office, one option is to establish an MSO, a management service organization. An MSO allows you to do things like manage their HR, not related to physician hiring and such, but HR, marketing, patient billing (although you can’t keep the money), real estate management — everything else that goes into running a medical practice besides rendering the actual medical care. 

If you run an MSO or one of these management companies, then the next question is, “I can get a percentage of what the doctor brings in each month, right?” Again, we get back to the same problem with the corporate practice of medicine. Someone who’s not a physician cannot receive money that comes directly from patient care. So, if the money is coming right out of the pot of money with billables from patient care, that cannot go to someone who’s unlicensed. 

Instead, we typically recommend setting a flat fee per month for the management services. But this is a very complicated issue that we’ve discussed in other videos. 

Does It Apply to You?

So it’s also important to remember regarding the corporate practice of medicine, that it applies to nonprofits. So it’s not just about whether there’s money involved. It’s truly about whether someone other than a doctor’s influencing a doctor’s medical judgment. This is a really important issue, and it can have significant legal consequences if it’s not navigated correctly. 

If you have any questions, feel free to reach out to us. You can visit our website at JacksonLLP.com or you can also schedule a consultation with one of our attorneys.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.