Corporate Practice of Medicine (CPOM) Guide: Illinois
This guide provides a summary of Corporate Practice of Medicine (CPOM) laws in Illinois. The CPOM doctrine is a legal framework designed to prevent business interests from interfering with medical decision-making. These laws vary by state and generally prohibit corporations and non-physicians from owning or controlling medical practices.
Read on to learn about Illinois’ CPOM doctrine, compliant business structures, and practical steps for healthcare business owners to remain compliant while practicing medicine.
Illinois CPOM Summary
Illinois has a long-standing and strictly enforced Corporate Practice of Medicine doctrine. In short, only licensed physicians can own and control medical practices in the state.
Non-physicians—including corporations and business investors—cannot employ physicians or share in the control of medical services, with very limited exceptions. This principle is meant to protect patients by ensuring that medical decisions are made by physicians, not business entities.
What Is the CPOM Doctrine?
The Corporate Practice of Medicine (CPOM) doctrine is a legal principle that prohibits corporations and non-physicians from owning or controlling medical practices. In Illinois, these laws are strict to ensure that medical decisions remain solely in the hands of licensed physicians, not influenced by business interests.
The CPOM doctrine is designed to:
Protect patient care by keeping medical decisions with trained professionals.
Prevent conflicts of interest, ensuring financial motives don’t impact medical treatment.
Maintain physician independence in clinical decision-making.
This means non-physicians cannot own, control, or employ doctors to provide medical services. The goal is to prevent business interests from overriding patient care quality.
Staying CPOM Compliant in Illinois
To comply with CPOM laws in Illinois, medical practices must be 100% owned and controlled by licensed physicians. This includes:
Physicians owning all shares in the corporation
Only licensed physicians serving as directors and officers
No voting trusts or agreements that transfer control to non-physicians
Non-physician involvement is allowed only on the business side of operations, through a Management Service Organization (MSO) that provides non-clinical support like HR, billing, and office management. However, MSOs cannot share in medical revenue or influence care decisions.
Who Do These Laws Apply To?
CPOM rules in Illinois apply to:
Physicians and physician groups
Healthcare entrepreneurs and investors
Startups, medspas, and telehealth companies
Hospitals and HMOs (with narrow exemptions)
Essentially, anyone involved in offering, delivering, or supporting medical care in Illinois must ensure their business structure complies with CPOM laws.
Compliant Business Structures in Illinois
Approved structures for medical practices include:
Medical Corporations (MCs) or Professional Services Corporations (PSCs) formed under the Illinois Medical Corporation Act. These must be owned entirely by licensed physicians and can only engage in the practice of medicine.
Professional Corporations (PCs): A legal business entity specifically formed by licensed professionals—such as physicians—to provide their professional services.
Professional Limited Liability Companies (PLLCs) may be used in some cases, but must also meet certain physician ownership requirements based on which professional services are being offered through the PC or PLLC.
All such entities must register with the Illinois Department of Financial and Professional Regulation (IDFPR) and follow strict naming, filing, and documentation rules.
Non-Compliant Business Structures in Illinois
The following arrangements typically violate Illinois CPOM law:
Any corporation or business owned by non-physicians employing doctors to provide care
Revenue-sharing arrangements where an MSO receives a percentage of patient care income
“Friendly physician” setups, where a non-physician controls a practice through a nominal physician owner
Employment contracts between non-physician companies and doctors
Contracts that violate CPOM rules can be declared legally void and unenforceable.
Consequences of CPOM Violations
Violating the CPOM doctrine in Illinois can lead to:
Void contracts, meaning the business relationship has no legal standing
Civil penalties from the IDFPR, up to $1,000 per violation
Business shutdowns or enforcement actions
Loss of licensure or disciplinary action for physicians involved
Illinois courts have consistently upheld these consequences, reinforcing the seriousness of compliance.
Key Takeaways
Only licensed physicians can own and control medical practices in Illinois.
Non-physician ownership or employment of physicians is generally prohibited, except in specific cases like hospitals or HMOs.
Use Professional Corporations or PLLCs for compliant structures.
MSOs are allowed, but must not interfere with medical decisions or share in revenue.
Non-compliance can result in legal, financial, and professional consequences.
To stay compliant, healthcare businesses should work closely with legal counsel to ensure their structure meets Illinois CPOM standards. Let me know if you’d like help reviewing or planning a compliant model.
