North Carolina Corporate Practice of Medicine (CPOM) Overview
- Does North Carolina have a Corporate Practice of Medicine (CPOM) Doctrine?: Yes.
- Summary of Current Law: North Carolina is a state that has relatively more vigorous enforcement of its CPOM doctrine. The North Carolina Medical Board has taken action against corporate practice of medicine concerns, including in inquiries following reports of an adverse patient event, the unlicensed practice of medicine, or other complaints. In North Carolina, the law prohibits unlicensed individuals from practicing medicine, as defined in North Carolina General Statutes §§ 90-1 to 90-21 and 21 NCAC 32B.0001. This includes diagnosing, treating, operating, or prescribing for any physical or mental ailment, injury, or deformity. While other states have used similar statutes to limit corporate practice of medicine (CPOM), North Carolina has not yet seen a formal court decision on this matter. (Action has been through administrative bodies like the North Carolina Medical Board.) A 1955 opinion from the North Carolina Attorney General to the Board of Medical Examiners did acknowledge the CPOM doctrine. It stated that nonprofit and public hospitals could set rules and arrange services with licensed physicians without constituting CPOM. However, it emphasized that private corporations are banned from practicing medicine for profit. This opinion aligns with concerns about lay control of medical judgment, commercial exploitation, and conflicting loyalties between patients and employers. The doctrine suggests that arrangements where physicians directly provide medical services, like in alliances or integrated delivery systems, may not conflict with these public policy issues. The Medical Board has also placed scrutiny on registered nurses, nurse practitioners, and physician assistants operating cash-pay elective practices like medical aesthetics clinics (med spas), IV hydration, or medical weight loss outside of a physician-owned corporate structure.
- Sources: North Carolina Gen. Stat. §§ 55B-2; 55B-4.
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 North Carolina CPOM laws
If you're looking to start a healthcare business in North Carolina and need to comply with North Carolina CPOM laws by setting up a MSO-friendly PC structure, Permit can help—affordably and fast. Feel free to reach out.
