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For health care practices and facilities, employing and/or “partnering” with physicians and other licensed health care professionals is a necessary part of doing business. The profitable advantages and increased revenue that come with offering the services of a licensed health care professional often drive health care practices and facilities to find creative methods for proffering these service arrangements. However, depending on the state within which the health care practice of facility sits, many service arrangements implicate “corporate practice of medicine” regulations and must be thoroughly crafted and evaluated to avoid regulatory violations.
Most states have laws and regulations that prohibit – in varying degrees - the “corporate practice of medicine” by certain business entities and unlicensed individuals making it extremely important to fully evaluate the regulatory implications and validity of the proposed corporate structure or partnership. Moreover, while largely dependent on the state within which the health care practice or facility is located, there also exist statutory “exemptions” to the “corporate practice of medicine” and various methods for organizing and structuring a health care practice or facility in order to lawfully employ and/or partner with a physician or other licensed health care professionals.
In the State of New York, individual practitioners, professional partnerships, professional corporations, professional limited liability companies and professional service corporations (where all shareholders are licensees of one profession and whose members practice only that profession) are all authorized to offer professional services. Additionally, several statutory exemptions exist for hospitals and other health care “facilities” allowing these licensed/accredited organizations – often owned and/or managed by unlicensed health care professionals - to offer the services of physicians and other licensed health care professionals.
Most states also maintain “fee-splitting” or profit sharing regulations which mandate that licensed health care professionals or professional firms cannot share with other than members of their own professional firm the fees earned for providing professional services. The fee-splitting regulations normally coincide with the individual state’s corporate practice of medicine regulations and have similar degrees of prohibition.
For more information on the corporate practice of medicine laws and regulations in New Jersey and New York, please visit www.hccwlaw.com.
