Corporate Practice of Medicine Act

Policy Status

  • Type: Model Policy
  • Status: Draft
  • Date Introduced: July 29, 2016

Task Forces

  • Health and Human Services

    • Tags

  • 2016 Annual Meeting
  • Health and Human Services Task Force

    • Summary

    In order to salvage nonviable physician practices, hospitals have been purchasing physician practices and then employing the practicing physician and managing the medical practice, commonly referred to as the corporate practice of medicine.  While some suggest that this practice is more efficient due to hospital cost-saving management, the reality is that hospitals increase patient charges, often substantially. In addition to driving up the cost of healthcare for everyone, the corporate practice of medicine compromises physician independence, along with introducing the potential conflict of interest between the physician's employer and the physician's patient. This Act bans the corporate practice of medicine with certain exceptions.
    Draft

    Corporate Practice of Medicine Act

    Model Legislation

    Section 1. Short Title.  This Act shall be known as the “Corporate Practice of Medicine Act.”

    Section 2. Purpose.  The purpose of this legislation is to protect the patient from a potential conflict of interest in the delivery of medical care.

    Section 3. Definitions.  As used in this Act, the Corporate Practice of Medicine shall mean the ownership of a medical practice by anyone other than a physician.

    Section 4. Prohibition of the Corporate Practice of Medicine.

    The state of {insert state} prohibits the Corporate Practice of Medicine with the following exceptions:

    (A) Employment of physicians by charitable foundations or clinics if there is no charge for professional services rendered to patients.

    (B) A clinic operated primarily for the purpose of medical education by a medical school may charge for professional services rendered by physicians who hold academic appointments on the faculty of the medical school if the charges are approved by the physician in whose name the charges are made.

    (C) A narcotic treatment program may employ a physician and charge for professional services rendered, but the narcotic treatment program shall not interfere with, control, or otherwise direct the professional judgment of the physician.

    (D) A hospital owned and operated by a county may employ a physician and may charge for professional services provided that the county hospital provides free care to the indigent and a sliding scale of charges based on income to other patients, and only if the physician in whose name the charges are made approves the charges.  However, the county hospital may not control or otherwise direct the professional judgment of the physician.

    (E) A group of physicians may form a professional corporation provided that all members of the board of directors are physicians.  Such a physician owned professional corporation may employ physicians and charge professional services rendered by the physician.  Such a professional corporation may employ administrators who may be designated by various titles.  However, the administrative personnel shall not interfere with, control, or otherwise direct the professional judgment of the physician.

    Section 5. Severability. If a provision of this act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the act that can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.

    Section 6. Repealer. All ordinances or parts of ordinances not consistent or conflicting with the provisions of this Act are hereby repealed; provided that such repeal shall only be to the extent of such inconsistency and in all other respects this Act shall be cumulative of ordinances regulating and governing the subject matter covered in this ordinance. Any cause of action accruing prior to the passage of this ordinance shall continue as if this ordinance was not passed or any other ordinance has not been repealed.

    Section 7. {Effective Date.}