Colorado Corporate Practice of Medicine (CPOM) Overview
- Does Colorado have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
- Summary of Current Law: Colorado has a stricter CPOM ban than do most states, with a more active state Medical Board. In the state of Colorado, the CPOM restriction is outlined explicitly in state statutes. Under the Medical Practice Act (C.R.S. 12-36-117(m)), it is unprofessional conduct to engage in the practice of medicine as an employee, agent, partner, or in collaboration with unlicensed entities. Doing so puts at risk the licensure of these healthcare professionals. This CPOM prohibition extends to various forms of partnerships, associations, or corporations, excluding professional service corporations specializing in medicine. Nevertheless, there are exceptions to this regulation. Licensed physicians are permitted to be employed by individuals, partnerships, associations, or corporations to provide medical care to their employees. Additionally, professional service corporations (PCs), limited liability companies, and registered limited liability partnerships are authorized to engage in medical practice. These entities may appoint lay directors and officers; however, they are not permitted to hold shares in the corporation. Historically, before 1995, county-owned hospitals were allowed to employ physicians. Subsequently, in 1995, a broader exception was introduced (C.R.S. 25-3-103.7), facilitating most hospital-physician employment arrangements. Furthermore, a significant exemption (C.R.S. 6-18-303(2)) exists, allowing employment within provider networks. These exceptions serve to prevent conflicts of interest arising from referrals and undue influence on a physician's professional judgment.
- Sources: Colorado Rev. Stat. § 12-240-138(6)(a).
What are Corporate Practice of Medicine (CPOM) Laws?
CPOM laws are regulations that prohibit standard corporations (or other non-physician entities) from practicing medicine or employing practicing physicians. The primary goal of these laws is to ensure that medical decisions are made solely based on patient care and not influenced by corporate interests. These laws vary by state, but they generally aim to protect the physician-patient relationship from commercial influence.
While the focus is often on physicians and medical care, the CPOM family of laws typically apply to a wide range of licensed healthcare providers, including psychologists, speech therapists, physical therapists, occupational therapists, mid-level providers (nurse practitioners and physician assistants), dentists, dietitians, podiatrists, chiropractors, pharmacists, optometrists, and many others. The goal of CPOM laws is shared across these professions: ensure clinical decisions aren’t influenced by corporate pressures.
Who Do These CPOM Laws Apply To?
A state’s CPOM restrictions typically apply to any standard corporate entity that seeks to provide medical or licensed healthcare services. This includes corporations, limited liability companies (LLCs), and other business entities. For an entity to comply with CPOM laws and practice medicine, it typically must be:
- 100% owned by a physician (or physicians) licensed to practice medicine in that state, and
- Formed as a special type of physician-owned legal entity: a Professional Corporation (“PC” for short). In some states, a Professional Limited Liability Company (“PLLC”) is also permitted.
Most states with CPOM laws only permit the corporate practice of medicine through these physician-owned PCs or PLLCs.
Complying with Colorado CPOM laws
If you're looking to start a healthcare business in Colorado and need to comply with Colorado CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
