In today’s video, we look at a telehealth startup that has physicians prescribing remotely or digitally, and also gets solicited to become investors in the startup.

Hi everyone, I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients just like you, navigate healthcare and FDA legal and regulatory issues so you can launch or grow your healthcare business.

Let’s start by saying up-front, that what we just mentioned is a risky venture.  Some startup clients are more comfortable, they are a little bit more conservative and risk averse.  As for our Firm, we are not the most aggressive law firm in the books, so if you’re looking for “the pitbull,” I wouldn’t describe myself that way. But neither are we the most conservative, we’re hardly timid – we’re practical.  Personally, I’m from the Midwest, we tend to speak plainly and honestly. We also understand entrepreneurs, we embrace success—we let our clients know their legal exposures and some practical ways to manage risks.

These days, in healthcare, everyone is into anti-aging, longevity, bioidentical hormones, enhancing athletic performance, sexual performance, sleep medicine, addiction care, and lots of niche health and wellness areas.

The typical model involves a lot of marketing, trying to get the clinician hired as an independent contractor, and giving the doc or other healthcare licensee a stake in the venture, and then doing prescribing online as minimally as possible, maybe with some online questionnaires.

So, as we said, this kind of model is full of legal risk.  The physician ideally should be housed within a professional medical corporation, and that professional medical corporation would contract with an MSO under management services agreement for management and marketing services. We’ve done hundreds of those.

Giving the physician an equity stake in the venture is not uncommon but does pose risks of conflict of interest.  On the other hand, if the physician is providing consulting services (as opposed to clinical services), then there’s an argument that they should be paid fair market value for the consulting services under a separate consultant agreement.

Now how about Prescribing remotely? Digitally? Mobily? That carries risks.  Many States still require a good faith, in-person, prior exam before prescribing.  Even States that have liberalized their rules, could consider it violative of standard of care to prescribe without first seeing the patient, or having a Physician Assistant or Nurse Practitioner give the good faith prior in-person exam.  Standard of care can be a default bucket for administrative discipline.  And prescribing based on a questionnaire can be seen as a standard of care violation.

There’s a balancing act here in that 100% compliance with standards and rules means less profit, while more profit means less rigid adherence to risk mitigation.  So, titrating between these two requires nuanced and skilled legal advice and astute business judgment.

Thanks for watching. Please contact us with your questions. We have helped lots and lots of healthcare entrepreneurs grow their business, and we look forward to working with you soon to help you build your dream and toast in your success.