CHAPTER 8
Corporate Practice of Medicine
and Other Legal Impediments
to Nonphysician Ownership
Adam Winger
from
STATE HEALTH-CARE LAWS OFTEN have a dramatic impact on the legal structuring of an urgent care business. This chapter focuses on the legal issues confronted when entities or nonphysician individuals attempt to own an equity interest in an urgent care company. Although the discussion is directed largely toward those in the startup phase, it should also be helpful to those considering either growing their business outside the state in which they currently operate or accepting an investment from one or more nonphysicians.
Several statutory and common law principles limit a layperson’s ownership of a company engaged in the business of practicing medicine. Although the principles that have found their ways into state statutes and case law share several fundamental commonalities, each state has devised its own approach to confronting the concerns with unlicensed persons owning interests in medical practices. This fragmented regulatory approach leads to frustration in the urgent care community, especially for those in the startup phase. Having fielded dozens of calls from prospective entrants into the urgent care market, I would like to address this frustration and also provide some insight into the regulatory limitations applicable to ownership of an urgent care business by a nonphysician.
The health-care industry has long been among the most heavily regulated in the United States. From patient privacy laws to the detailed provider licensure and supervision rules, it is clear that our state and federal governments are focused on every aspect of the health-care delivery process. Given the government’s intense interest in our medical care, it is of little surprise that the ownership and operation of an urgent care company is also subject to a number of regulatory constraints.
Unfortunately, many of those considering entering the urgent care business are either unaware of or unconcerned with this aspect of the business. In a recent conversation, a prospective client told me, “Owning an urgent care center is really not much different from owning a McDonald’s.” To this I said, “Although you may be right in some respects, you won’t go to jail for owning a McDonald’s.” The prospective client was exaggerating; I was not.
The nonchalant tone of the McDonald’s comment has become somewhat commonplace in my interactions with potential clients, and it continues to disturb me. Anyone entering the urgent care industry should understand that although the industry shares many characteristics of a retail business, the regulations applicable to the medical industry are vast and complex, and the penalties for noncompliance can be devastating. If you are considering involving yourself in the urgent care business, I urge you to gain an understanding of the law before making an investment.
This chapter
