Can a Professional Medical Corporation Stop Corporate Practice of Medicine?

Can a Professional Medical Corporation Stop Corporate Practice of Medicine?

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In today’s video, we discuss whether having a professional medical corporation can get you out of corporate practice of medicine enforcement.

This reminds me of a t-shirt a friend of mine used to wear, it said: “can I pay my Mastercard bill, with my VISA?”

In fact, if you’re a medical doctor, then having a professional medical corporation can help you house your nurses, physician assistants, and other clinical extenders in a proper corporate vehicle.  A professional medical corporation can practice medicine, so almost by definition, you’re not facing an issue of corporate practice of “medicine” by a general corporation—by a business run by people who are not doctors.

My name is Michael H. Cohen and I’m founding attorney of Cohen Healthcare Law Group.  With over a thousand healthcare practices and businesses coming to us for advice, we’re deep in the weeds of this special creature, called, healthcare law.

Many healthcare businesses and practices have questions about corporate practice of medicine and whether having a professional corporation is the ultimate answer to the risk of enforcement.

The answer is that while a professional corporation works for healthcare professionals, if you’re creating a medical spa, a telemedicine company, or a health and wellness software platform or app, or another business in the healthcare space, and, you’re not a doctor, chances are that the real legal key is the legal relationship between your business on one hand, and the professional medical corporation on the other.

Often, we call this an MSO arrangement.  MSO, as you might know from the healthcare & FDA law blog on our website, references to a management services organization.  The MSO is the business end of the whole enterprise: all the administration, operation, management and marketing that goes on to support the medical or clinical side.

So you might have, for example, billing and coding; customer management; payroll and accounting and finance; and advertising and marketing.

What you then need, to mitigate risk of corporate practice of medicine, is a contract, or written legal agreement, between the professional medical corporation and the MSO.    This document, called an MSO Agreement, or sometimes an MSA (which stands for Medical Services Agreement), in a nutshell spells out what the MSO does, in terms of its business functions –and thus clearly differentiates the MSO’s business functions from the clinical medical side.

The MSA spells out a few things:

  1. The rights and obligations of the professional medical corporation. The professional medical corporation, very simply, delivers medical services; and, the professional medical corporation hires the MSO to manage and market the whole operation.
  2. The rights and obligations of the MSO. The MSO delivers management and marketing services, and gets paid for that.
  3. The management and marketing fees, and when they get paid by the professional medical corporation to the MSO.

If you set your healthcare venture up in this way, you’ll help mitigate the risk that enforcement authorities will flag a corporate practice of medicine violation.  As Rudyard Kipling put it: “East is East and West is West, and never the same shall meet.”  You have these two different entities in place, with an agreement between them.  That signals investigators that you’ve invested time in getting a legal structure that separates the medical from the business side.

Thanks for watching. If you still have questions, click on the link below to send us a message or book an appointment. We look forward to the success of your healthcare venture, and to speaking with you soon.

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