Hawaii Corporate Practice of Medicine (CPOM) Overview
- Does Hawaii have a Corporate Practice of Medicine (CPOM) Doctrine?: No.
- Summary of Current Law: In Hawaii, the legal framework hints at a prohibition against the corporate practice of medicine, emphasizing physician licensing and limiting for-profit corporations from providing professional services outside the Professional Corporations Act. This doctrine, however, hasn't become a significant legal issue in the state and is primarily discussed among a few health care law experts. Typical scenarios triggering legal examination in other states, such as contract disputes involving physicians or regulatory actions against unauthorized medical practice, haven't led to notable decisions or regulatory actions in Hawaii. The doctrine mainly surfaces when forming new corporations, with the Department of Commerce and Consumer Affairs (DCCA) reviewing and sometimes rejecting articles of incorporation based on this prohibition, as seen when a local hospital's attempt to incorporate a subsidiary was denied. As Hawaii's healthcare system evolves with managed care, the doctrine's implications, particularly for non-compete clauses in employment contracts, remain uncertain.
- Sources: Hawaii Rev. Stat. § 453-2; Haw. Rev. Stat. § 448-15.
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 Hawaii CPOM laws
If you're looking to start a healthcare business in Hawaii and need to comply with Hawaii CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
