Corporate Practice of Medicine (CPOM) Guide: New Jersey
This guide provides a summary of Corporate Practice of Medicine (CPOM) laws in New Jersey. 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 New Jersey’s CPOM doctrine, compliant business structures, and practical steps for healthcare business owners to remain compliant while practicing medicine.
New Jersey CPOM Summary
New Jersey enforces a strong Corporate Practice of Medicine (CPOM) doctrine, which means that only licensed physicians can own and control medical practices.
Non-physicians and general business corporations are not allowed to provide or direct medical care. These rules are set by the New Jersey Board of Medical Examiners and are meant to protect patients by ensuring that clinical decisions are made by qualified medical professionals—not influenced by business motives.
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 New Jersey, 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 New Jersey
To comply with New Jersey’s CPOM laws, medical practices must:
Be owned and governed entirely by licensed physicians or, in specific circumstances, closely allied professionals (e.g., chiropractors, nurses, dentists, optometrists, psychologists).
Ensure that non-clinical tasks (like billing, HR, and office management) are clearly separated from medical decision-making.
Avoid business arrangements where non-physicians have control over healthcare services or revenues.
Many practices use a Management Services Organization (MSO) to provide administrative support. While this is allowed, the MSO cannot interfere with patient care or clinical operations.
Who Do These Laws Apply To?
CPOM rules apply to:
Physicians and physician groups practicing in New Jersey.
Non-physician business owners, investors, and managers working with healthcare providers.
Healthcare startups, telehealth platforms, and medspas that offer or support medical services.
Hospitals, nonprofits, and educational institutions (with limited exceptions).
Anyone involved in providing or supporting medical care must follow CPOM guidelines.
Compliant Business Structures in New Jersey
Permissible practice models include:
Solo Practices – A licensed physician owns and operates the practice, employing other licensed or ancillary staff.
Partnerships, LLCs, or Professional Associations – All owners must be closely allied healthcare professionals, and physicians must retain majority control.
Associational Relationships – A licensed physician may work for another licensed provider, but supervision and control must stay within professional bounds.
Hospital or Health Facility Employment – Only allowed when the facility is licensed by the state or qualifies under narrow exemptions.
MSO Model – The practice remains physician-owned, while a separate company handles non-clinical functions under a management agreement.
Non-Compliant Business Structures in New Jersey
Structures that typically violate CPOM laws include:
General corporations owning or managing medical practices.
Physicians being controlled by non-physicians via contracts or revenue-sharing.
“Captive physician” arrangements that give real control to non-medical investors while using physicians as figureheads.
Mixing ownership between plenary licensed physicians and limited licensed professionals when it leads to improper control dynamics.
New Jersey courts have warned that sham arrangements—designed to skirt these laws—will not be tolerated.
Consequences of CPOM Violations
Breaking CPOM rules can lead to serious consequences, such as:
Civil and criminal penalties
Loss of a physician’s license
Invalidation of contracts or business agreements
Allegations of fraud or false claims
The New Jersey Supreme Court has made it clear: attempts to bypass CPOM laws through creative legal workarounds won’t hold up in court.
Key Takeaways
Only licensed physicians can own and control medical practices in New Jersey.
Non-physicians may offer administrative support but cannot be involved in patient care or profit-sharing.
Use structures like physician-owned LLCs or professional corporations to stay compliant.
MSO partnerships are allowed but must be carefully structured to protect physician autonomy.
Violations carry significant legal, financial, and professional risks.
Before forming or investing in a healthcare venture in New Jersey, it’s essential to consult legal experts and build clear agreements that preserve physician control over medical services. Let me know if you'd like help evaluating your setup.
