New York Corporate Practice of Medicine (CPOM) Overview
- Does New York have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
- Summary of Current Law: New York enforces a strict prohibition against the corporate practice of medicine (CPOM), barring corporations from engaging in medical practice, except for specific exemptions. It generally enforces one of the strictest prohibitions (relative to other states). Although not explicitly outlined in statute, this doctrine derives from New York's Education Law, which reserves medical practice licensure exclusively for natural persons. The concept of prohibiting corporate practice of medicine in New York dates back to the early 20th century, with cases like People v. Woodbury Dermatological Institute (1908) expressing concerns about commercializing medicine and compromising the moral character of licensed professionals. Subsequent case law, such as Stern v. Flynn (1936), refined these concerns by highlighting the potential erosion of the trust between physicians and patients if physicians' loyalty were divided between corporations and patients. Notably, recent cases involving the corporate practice of medicine have shifted from state prosecutions to business disputes among private parties. Physicians have even used this doctrine as defense against contract claims filed by corporations (e.g. to get out of restrictive covenants), illustrating its role as a strong barrier to certain trends in New York. The doctrine prohibits corporations, especially those controlled by non-physicians, from employing physicians for medical practice. In New York, it also limits various organizational structures, such as publicly-owned hospital chains and physician management companies, which are common in other states. The corporate practice of medicine (CPOM) in New York can only occur via professional entities, such as a professional corporation (PC) or professional limited liability company (PLLC) that is granted authorization from the New York State Education Department, Office of Professions, Professional Corporations Unit. The department often has a backlog of filings. Forming a professional corporation (PC) can be cumbersome in New York, requiring the submission of many documents to several different governmental bodies, as well as a wait that can (at times) be up to 3-5 months long (though it varies). New York also has stricter rules on corporate medical practice than other states, including governing the type of management fee that a PC can pay an affiliated MSO, as well as strict naming rules and requirements for PC entities.
- Sources: New York Educ. Law § 6522; N.Y. Pub. Health Law § 2806.
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 New York CPOM laws
If you're looking to start a healthcare business in New York and need to comply with New York CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
