Why Do I Need a Professional Medical Corporation?

Why Do I Need a Professional Medical Corporation?

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In today’s video, we discuss whether you need a professional medical corporation if you’re a licensed medical doctor.

Many of our physician clients ask us whether they in fact need a professional medical corporation. We also get this question from nurse practitioners, dentists, licensed social workers, psychologists, chiropractors, acupuncturists, and other healthcare practitioners.  They also ask whether you can “mix and match”—for example, a naturopathic medical doctor or ND and a chiropractor.

My name is Michael H. Cohen and I’m founding attorney of Cohen Healthcare Law Group.  We’ve advised over a thousand healthcare industry clients on similar healthcare legal issues. While I was on faculty at Harvard Medical School, my job was to draft policies and procedures to help Harvard-affiliated hospitals integrate multidisciplinary practices, incorporating different kinds of licensed healthcare   providers. The permutations keep changing—for example, a really popular combination right now is a professional corporation that houses both the MD and the DC (or licensed medical doctor and chiropractor) for the delivery of stem cell therapies to patients who need regenerative medicine.

Here are three keys to understanding why a professional corporation can help you mitigate your overall  legal exposure in any kind of professional  practice—and especially, in an integrative medicine clinic, functional medicine center, or any kind of multidisciplinary healthcare enterprise.

First, a sole proprietorship doesn’t work well if you plan to have employees, and/or other clinicians to whom you want to refer inside your walls. While you should consult with your tax advisor for tax advice, and, while there are limits to the protection a corporation can afford you… in general, corporations exist to help shield individuals from personal liability. And, if you want to hire a physician assistant or nurse practitioner, for example, this person can become the employee of the corporate entity—not you personally.

The second legal key is to understand the difference between a general corporation, and a professional corporation. Many people get tripped up here, because someone else has talked to them about the difference between an “S” corporation, a “C” corporation, and an LLC.  These are, in fact, different structures for a company, but the differences have a lot to do with things like tax concerns, the number and kind of investors, and what gets contribution to the company in its formation—and nothing to do with the fact that you need a professional corporation (or in some states, a professional limited liability company) to deliver professional services.

So, if you’re providing medical services, dental services, psychology services, or even, for example, legal services, then you need a professional corporation and not a general corporation.

What makes your entity a professional corporation?  It’s very simple. In the Articles of Incorporation, you state that the purpose of the corporation is a professional purpose—for example, the practice of “medicine,” or “chiropractic,” or “nursing,” or “dentistry.”

The general rule, the black-letter law, is that only a professional corporation can offer professional services, and that a general corporation or LLC cannot offer professional services. So, if you want to practice medicine or some other healthcare profession, organize as a professional corporation—or PLLC in states such as New York that allow such an entity.

These distinctions might seem tedious, yet if you get them wrong, you’re giving enforcement authorities one more target.  We have these different legal buckets for a reason: lay people can’t practice medicine; and companies can’t practice medicine; only doctors can practice medicine, and they can do so in their own practices, or as heads of their own professional corporation.

There’s one more critical piece of information, and that’s how you mix and match healthcare providers within a professional corporation or PC.  We’ll talk about that next.

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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