Our healthcare attorneys recently advised a business venture that wanted to brand a medical spa or anti-aging clinic in California, as the first of a nationwide series of medical clinics.
Entrepreneurs need to understand some of the quirky corporate practice of medicine and other legal rules in California, as well as how to structure ventures for a multi-state expansion.
In this series, we will explore:
- Part 1:
- Minimizing the risk of medical or osteopathic board investigation for an multidisciplinary, anti-aging, or longevity clinic, medical spa, or integrative care center.
- Properly structuring the operation (legal issues).
- Part 2: Branding & Marketing—Legal Issues
- Par 3: Medical Practices and Esthetitians—Legal Issues
Minimizing Risk of Board Investigation
Many of our medical spa and longevity medicine clients know that California has a strict corporate practice of medicine rule, which prevents non-physicians from owning a medical corporation and from hire an MD or DO. Both the Board of Medicine in California and the California Osteopathic Medical Board vigorously investigate reported violations of corporate practice of medicine rules.
Frequently, complaints are initiated by competitors. For example, you own a medi-spa and the dermatologist across the street calls the medical board. The next thing you know, an undercover investigator posing as a patient has a record and you receive an invitation to an “interview” from the board.
Often, entrepreneurs have an idea to brand a medical spa or clinic as many of these businesses have succeeded in other states. However, enforcement authorities at the California medical and osteopathic medical board are closing watching entities to ensure that their licensee physicians are not engaging in “rent-a-license” practices. Not only physicians, but also nurses, estheticians, and front desk staff have come under investigation for:
- Unlicensed medical practice
- Aiding and abetting the unlicensed practice of medicine
Properly Structuring the Operation: Legal Issues
When confronted with a request to interview a member of the Board’s investigative staff, it is helpful to have documentation in place, showing that the corporate practice of medicine rule is not being violated. Appropriate and helpful documentation can include:
- To show evidence of proper corporate structure:
- The Articles of Incorporation for the professional medical corporation, where the physician-shareholder is President. The idea is to show that a physician is operating his or her own medical practice, and that the corporate structure ensures a clear delineation between medical / clinical and administrative and management functions.
- Bylaws for the professional medical corporation, and any minutes or resolutions.
- Management agreement between management company (or medical services organization) and professional medical corporation.
- Employment agreements between professional medical corporation and professional nursing corporation or individual NP or RN, and with other providers (or their professional corporation).
- To show that medical procedures (such as Botox) are not relegated to non-licensed professionals:
- Collaboration agreement between MD and RN.
- Delegation of services agreement between MD and PA (physician assistant)
- Copy of license and documentation of fulfillment of continuing education requirements for each practitioner (MD, DO, NP, RN, PA, esthetician, LAc, etc.).
- Charts showing a good-faith, in-person, limited physical exam by the MD, DO, or NP; and appropriate diagnosis by the MD or DO.
- Written protocols for procedures to be performed by the NP (nurse practitioner) or RN (registered nurse), respectively, under physician supervision.
- Evidence of appropriate physician supervision (in name only is not sufficient).
- To show that patients are properly being seen by a physician:
- Physician’s name or fictitious name for physician practice on the door, on the website, on the marketing materials, and on the business card available at the front desk.
- Appropriate informed consent forms
- Other legal documentation
In Part 2, we’ll turn to branding and marketing, as well as legal issues that arise when physicians collaborate with estheticians.
Our Los Angeles healthcare attorneys regularly advise integrative care centers, medical spas, longevity clinics, anti-aging ventures, and clinical enterprises at the cutting edge of healthcare technology and care.
Contact our experienced legal team for legal advice to shape your healthcare venture.
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