Corporate Practice of Medicine (CPOM) Guide: Pennsylvania
This guide provides a summary of Corporate Practice of Medicine (CPOM) laws in Pennsylvania. 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 Pennsylvania’s CPOM doctrine, compliant business structures, and practical steps for healthcare business owners to remain compliant while practicing medicine.
Pennsylvania CPOM Summary
Pennsylvania has long-standing laws that strictly limit who can own and operate a medical practice. These laws are designed to ensure that only licensed physicians are in charge of medical care and that corporations or non-physicians do not control clinical decisions. Businesses that want to support medical practices must do so through structures that carefully separate business functions from clinical ones.
The Corporate Practice of Medicine doctrine in Pennsylvania goes back to a 1938 court ruling that says licensed medical professionals cannot work under the control of unlicensed individuals or companies.
This principle is now part of Pennsylvania law under the Medical Practice Act of 1985 and has remained consistent for over 85 years.
What is CPOM Doctrine?
CPOM doctrine is a legal principle that prohibits corporations and non-physicians from owning or controlling medical practices. In Pennsylvania, these laws are strict to ensure that medical decisions remain solely in the hands of licensed physicians and are not influenced by business interests.
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 Pennsylvania
To comply with CPOM, medical practices must be fully owned by licensed physicians and formed as professional entities. If a non-physician wants to support a practice, they must do so through a Management Services Organization (MSO), which can provide non-clinical services like billing and staffing—but cannot have control over medical care.
A compliant MSO must:
Charge fair market value
Avoid influencing clinical decisions
Avoid taking a share of medical profits
Not hold authority over medical contracts
Who Do These Laws Apply To?
CPOM laws affect:
Physicians and physician groups who must retain full ownership and control of medical practices
Investors and entrepreneurs who want to support or invest in healthcare services
Medical service providers, including medspas and dental practices, that offer services requiring a licensed professional
Any person or business involved in delivering or supporting medical services in Pennsylvania must understand and respect these restrictions.
Compliant Business Structures in Pennsylvania
Permitted structures for physician-owned practices include:
Professional Corporations (PCs)
Limited Liability Partnerships (LLPs)
Restricted Professional Companies
In all cases, ownership and control must remain with licensed professionals. These structures ensure that medical decisions are made by those legally and ethically qualified to do so.
Non-Compliant Business Structures in Pennsylvania
Business models that cross legal lines often include:
Corporations or non-physicians owning or controlling medical practices
Management companies sharing in medical profits or directing clinical activity
Long-term MSO contracts that give too much power over clinical services
Disguised partnerships where a non-physician has de facto control
Consequences of CPOM Violations
Breaking CPOM rules can lead to serious outcomes, including:
Loss of medical licenses for physicians involved
Repayment of all revenues earned through the illegal structure
Fines and civil penalties
Possible criminal charges in more serious cases
Violations don’t just affect businesses—they can also put physicians’ careers and reputations at risk.
Key Takeaways
Medical practices in Pennsylvania must be fully owned by licensed physicians.
Non-physicians cannot control, direct, or profit from the delivery of medical care.
Management companies must avoid clinical influence and charge fair, reasonable fees.
Improperly structured arrangements can result in major legal and financial penalties.
Any healthcare business should consult legal experts and healthcare advisors to ensure CPOM compliance and protect their operations.
Healthcare providers and entrepreneurs operating in Iowa should seek guidance from legal experts and healthcare advisors to ensure their practice or partnership is fully compliant with CPOM regulations.
