Many assume only licensed physicians can own and operate a healthcare clinic. While this may hold true in some cases, particularly when medical diagnosis and treatment are involved, there are corporate structures and legal strategies that allow non-physicians to own or co-own a clinic, if they do it the right way. This is where compliance with corporate practice of medicine (CPOM) laws, HIPAA rules, and state-specific healthcare regulations becomes important.

You must not be a doctor to open a clinic. However, there’s a complex legal framework involved, and failing to follow the rules can lead to serious consequences like fines, license revocation, or even criminal charges.

At Cohen Healthcare Law Group, we specialize in helping entrepreneurs and professionals legally structure and operate clinics, even if they’re not doctors. With over 30 years of experience, our team can help you with HIPAA compliance help and much more. Contact us today! 

This blog will help you know the types of clinics you can open without a medical license. It will also break down the steps involved in opening a clinic without being a doctor in California.

Who Can Open a Clinic in California?

Under California law, not just anyone can open a medical clinic. Only certain individuals and entities are legally allowed to own or operate a clinic, especially when the services offered involve direct medical care or clinical decisions. Licensed medical professionals such as MDs, DOs, chiropractors, and dentists are authorized to own and operate a medical practice, as they have the required medical training and are regulated by professional boards.

However, non-physicians can also participate in the healthcare industry by owning or investing in clinics as long as they do not violate California’s corporate practice of medicine. This typically means they must avoid directly providing or supervising medical services and instead focus on the business aspects of running a clinic, such as management services, human resources, billing services, and marketing. 

Business people and corporate entities can legally operate clinics through compliant legal structures that respect the division between clinical expertise and business operations. These include models like Management Services Organizations (MSOs), where non-doctors manage administrative functions but leave all clinical operations and medical decisions to licensed healthcare providers.

To legally open a clinic in California, it’s not just a matter of setting up an office and hiring staff. It requires full compliance with state laws, especially California Business & Professions Code §2400, which governs the corporate practice of medicine. The law is designed to ensure that only licensed professionals make decisions about patient care, safeguarding the integrity of medical services. This separation of roles is fundamental to maintaining quality healthcare and legal compliance across the state.

What Happens if You Break California Healthcare Laws?

Failing to comply with California’s healthcare laws can have devastating consequences, as the state takes violations of the corporate practice of medicine very seriously. If you open or operate a clinic illegally, especially without being a licensed medical professional or without ensuring compliance, you could face steep fines and civil penalties from state regulators like the Medical Board of California. These fines may reach thousands or even hundreds of thousands of dollars, depending on the severity of the offense.

Beyond financial penalties, the state may shut down your clinic entirely or revoke any associated licenses, even if the only issue is with the clinic’s ownership structure, which alone can render the entire operation unlawful. In some cases, individuals may face criminal charges for the unauthorized practice of medicine, which can be charged as a misdemeanor or felony under Business & Professions Code §2052.

The financial risks are also immense. If your clinic is shut down, you could lose all your investment, such as your leased office space, your staff, your equipment, your branding, and everything you’ve built. Physicians who lend their names to non-compliant clinics risk disciplinary action from their licensing board, which could result in license suspension or permanent revocation.

Insurance companies may also refuse to cover malpractice claims or defend you in court if your clinic was not legally structured. This could leave you open to civil lawsuits from patients or employees who claim harm due to improper oversight or an illegal operation. 

A violation can also lead to a permanent ban from owning or investing in another healthcare business and could trigger serious investigations from state and federal agencies, including the Department of Justice, the Department of Consumer Affairs, or even the FBI, especially if fraud is suspected.

Can a Non-Physician Own a Medical Practice in California?

No, a non-physician cannot legally own a medical practice in California if that ownership involves exercising control over clinical decisions or providing medical services. Under California’s Business & Professions Code §2400, the state enforces a strict ban on the corporate practice of medicine.  

Therefore, only licensed medical professionals such as medical doctors (MDs), doctors of osteopathy (DOs), and other regulated healthcare providers can legally own medical practices and directly provide medical services. This law protects the quality of patient care by ensuring that clinical expertise and medical decisions remain under the control of those with proper medical training and licenses.

However, non-physicians are not entirely excluded from the healthcare industry. With the right legal structure, such as a Management Services Organization (MSO), a non-doctor can participate in the business aspects of a clinic without violating the law. 

In this arrangement, the non-physician may own and operate a management entity that provides billing services, human resources, medical equipment procurement, and general administrative support to a physician-owned Professional Medical Corporation (PMC). The key is to ensure that the non-physician has no control over patient care, clinical operations, or any medical decisions.

What Types of Clinics Can You Open Without a Medical License?

If you’re not a licensed doctor but want to enter the healthcare industry, there are still several types of clinics and health-focused businesses you can legally open, especially those that do not involve the practice of medicine. For example, non-physicians can fully own and operate non-medical clinics, such as wellness centers offering services like yoga, massage therapy, nutrition coaching, and fitness programs. These services do not require a medical license and fall outside the purview of the corporate practice of medicine laws. 

Similarly, mental health services provided by licensed therapists such as psychologists or licensed clinical social workers can be offered through a legally compliant structure, provided the clinical side is managed by the appropriate licensed providers. Non-doctors can also run cosmetic clinics staffed with licensed estheticians, although the services offered must be within a limited, non-medical scope.

For more medically inclined ventures, non-doctors can open clinics that provide medical services, but only if they follow legal guidelines that maintain clinical oversight. Examples include Botox and filler clinics, which must have a supervising medical doctor or nurse practitioner, and urgent care or family medicine clinics, which must be structured through an MSO model and properly staffed with licensed medical professionals. In all cases, the non-physician must not interfere with the clinical side of the practice or attempt to provide medical services without proper licensure.

What You Can and Can’t Offer Without a License

If you’re not a licensed healthcare provider, you’re still allowed to offer a wide range of services related to the business and operational support of a clinic. You can manage booking systems, office staff, marketing, financial management, and other in-house services that support the delivery of healthcare services. You can own the building, manage the brand, and even collect fair market management fees from your partnership with a licensed provider.

However, you cannot engage in any aspect of practicing medicine. This includes offering diagnoses, treatment plans, prescribing medications, or performing any form of surgical or invasive procedures. Even suggesting certain treatments or implying medical expertise without the proper license can be seen as violating state laws. These restrictions are enforced by the Medical Board of California and apply equally to all healthcare providers, whether you run a med spa, new clinic, or are simply a business person trying to get involved in the healthcare space.

In addition to California’s laws, federal regulations, including those from the FDA and the Health Insurance Portability and Accountability Act (HIPAA), also apply. If your clinic handles protected health information, you must comply with privacy and security regulations under the Health Insurance Portability and Accountability Act (HIPAA), even if you’re not directly involved in patient care.

What Do You Need to Open a Clinic in California?

Starting a new clinic in California involves more than just leasing a space and hiring staff. You must carefully follow state laws and set up the right legal structure to avoid violating California’s corporate practice of medicine rules. 

Your goal should be to build a successful medical practice that delivers quality healthcare while ensuring full compliance with regulatory standards. The steps outlined below are essential for both medical professionals and business people aiming to operate healthcare services legally in California.

Entity Formation

To open a clinic legally in California, the first step is to choose the correct legal structure. If you’re a licensed medical professional, you can form a Professional Medical Corporation (PMC) to directly own your medical practice and provide medical services. If you’re a non-physician, you cannot practice medicine or interfere in clinical decisions, but you can operate through a Management Services Organization (MSO).

The MSO model allows you to manage the business aspects of the clinic, such as billing services, human resources, financial management, and medical equipment procurement, while a licensed provider retains full control over the clinical side of the operation. Depending on your structure and goals, you may register your business as an LLC, S corp, or traditional corporation, but the setup must be done in compliance with California’s healthcare law.

Licenses & Permits

Every clinic in California must obtain the proper licenses and permits to operate. At a minimum, you’ll need a California business license and may need to file a Fictitious Business Name if the clinic operates under a name different from the legal entity. If you’re a medical doctor or another licensed provider, you may also need approvals or registration through the Medical Board of California. 

Beyond licensing, your physical location must pass zoning, fire, and building inspections to ensure it meets all health and safety requirements. These steps are essential whether you’re opening a med spa, urgent care, or federally qualified health center serving Medicaid patients.

Staff & Supervision

Whether your clinic offers mental health, medical care, or wellness services, it is important to hire only licensed medical professionals for roles that require clinical expertise. For non-physicians who want to operate medical practices, it is required by law to designate a medical director to oversee all patient care and clinical operations. 

This ensures that all medical decisions are made by properly credentialed individuals and not influenced by the business aspects of the clinic. All licenses and credentials should be verified with the relevant state boards to maintain compliance and uphold patient safety.

Insurance Requirements

To protect your clinic and meet healthcare compliance standards, securing appropriate insurance coverage is essential. Every clinic should have general liability insurance, and those offering medical services must carry malpractice insurance to cover potential patient claims. 

If you employ staff, workers’ compensation insurance is also required by California law. Clinics that manage digital health records must ensure that their cybersecurity insurance is HIPAA-compliant, in line with the Health Insurance Portability and Accountability Act (HIPAA). Following these insurance requirements not only protects your medical providers, staff, and patients, but also helps in ensuring compliance with state and federal laws.

How to Open a Clinic Without Being a Doctor in California

Opening a clinic as a non-doctor in California is possible, but only if you follow the same rules that apply to all legally compliant medical practices. Due to California’s strict corporate practice of medicine doctrine, non-physicians must take special care to avoid practicing medicine unlawfully. 

Below is a step-by-step guide to help business people and entrepreneurs enter the healthcare industry safely and successfully:

• Define Your Clinic Type and Services:
  Decide whether your clinic will offer medical services (such as Botox, family medicine, or urgent care) or non-medical services like nutrition coaching, massage therapy, or yoga. This decision determines your clinic’s legal structure, licensing, and supervision requirements. Offering healthcare services without a license can lead to serious penalties, so it’s not just a matter of choosing what’s popular. But your scope must align with what licensed medical professionals are legally allowed to provide.
• Structure the Business Legally:
  As a non-physician, you cannot own a medical practice directly. Instead, form a Management Services Organization (MSO) to handle the business aspects of the clinic, such as billing services, human resources, and financial management. Partner with a licensed Professional Medical Corporation (PMC) that provides the clinical expertise. Working with a healthcare law firm is essential to avoid violating California state laws and the corporate practice of medicine ban. Our team at Cohen Healthcare Law Group can help ensure your entity is structured for legal compliance, fair market compensation, and long-term success.
• Hire Licensed Medical Professionals:
  To provide medical services, your clinic must employ or contract with licensed healthcare providers, including physicians, nurse practitioners, and other medical staff. You’ll also need a medical director to oversee all clinical operations, ensuring that medical decisions are made by those with proper medical training and licensing. Verifying credentials through the Medical Board or relevant state authority is mandatory for ensuring compliance and protecting your patients.
• Secure Premises and Licenses:
  Choose a physical location that meets zoning requirements and complies with building and fire safety regulations. You’ll also need to obtain a California business license, any required clinic permits, and a Fictitious Business Name filing if applicable. All in-house services must be conducted in a properly approved space to avoid interruptions from city or state inspections.
• Ensure Compliance Systems Are in Place:Implement systems that meet HIPAA and Health Insurance Portability and Accountability Act requirements, especially if you’re handling protected health information. Furthermore, draft legally sound contracts, including the MSO service agreement, and ensure your legal structure clearly separates the clinical side from the business side. It’s also wise to prepare for possible audits from regulators or insurance companies. This is where ensuring compliance becomes critical to maintaining a successful medical practice.
• Launch With Legally-Compliant Marketing: When promoting your new clinic, stay cautious with advertising. Avoid making medical claims or promoting medical care services unless reviewed and approved by your medical director or attorney. All messaging should be aligned with what your licensed professionals are authorized to provide. Misleading promotions can result in investigations, civil penalties, or complaints to the Medical Board.

Need Compliance Help Before Opening a Clinic?

Non-doctors can open clinics in California, but only if they follow strict legal and regulatory guidelines. The key is setting up the right legal structure, such as a Management Services Organization (MSO), and ensuring that all clinical operations remain under the control of licensed medical professionals. Without this, you risk violating California’s corporate practice of medicine laws, and it could lead to serious legal, financial, and reputational consequences.

You need experienced legal support to navigate complex healthcare laws, draft solid contracts, and ensure your business model doesn’t cross into unauthorized medical practice. Partnering with the right medical professionals and legal advisors ensures your clinic operates both legally and ethically from day one.

At Cohen Healthcare Law Group, we are leaders in healthcare compliance and legal structure. Contact us today to work with some of the best lawyers in the healthcare industry.

FAQ Section

Can I Hire Doctors and Nurses if I’m Not a Doctor?

Yes, you can hire licensed doctors and nurses through a legally structured Management Services Organization (MSO), but they must retain full control over clinical decisions and patient care.

Can a Non-Physician Own a Medical Practice?

In California, non-physicians cannot directly own a medical practice that delivers medical care, but they can operate the non-clinical side through an MSO while partnering with a licensed provider.

Can a Medical Practice Be an LLC?

A medical practice itself cannot be an LLC in California unless it is a Professional Medical Corporation. However, an MSO providing non-clinical support services can be structured as an LLC.

What Qualifications Do I Need to Open a Clinic?

You don’t need a medical degree to open a clinic. But you must have the proper business licenses, entity formation, and legal oversight from licensed medical professionals if you offer medical services.

Can I Open a Botox or Medspa Clinic Without a Medical Degree?

Yes, but only if you partner with a licensed medical director who supervises all treatments and ensures compliance with California healthcare law and scope-of-practice rules.

How Do I Protect Myself Legally as a Non-Doctor Owner?

Use a compliant MSO structure, separate business and clinical operations, have clear service agreements, and work closely with a healthcare attorney to avoid violating the corporate practice of medicine ban.