50-State CPOM Guide

CPOM Laws by State

A 50-State Guide to Corporate Practice of Medicine

What Is the Corporate Practice of Medicine (CPOM) and Why It Matters

Understanding the CPOM Doctrine

The Corporate Practice of Medicine (CPOM) doctrine refers to a collection of state laws, regulations, and enforcement interpretations that restrict who may own, control, or profit from a medical practice. While the doctrine originated to protect clinical independence, its modern application directly affects how healthcare businesses are structured, financed, and scaled.

CPOM laws matter because non-compliant ownership or control arrangements can invalidate contracts, trigger enforcement actions, expose investors to clawbacks, and place physician licenses at risk—often years after a business is already operating. CPOM compliance is especially critical for multi-state healthcare operators, management services organizations (MSOs), digital health companies, and private equity-backed platforms.

This guide is designed for healthcare operators, founders, MSOs, investors, compliance teams, and clinical leaders who need a clear, state-by-state understanding of CPOM laws and the most common compliant structures used across the United States.

Key CPOM Takeaways

CPOM compliance obligations vary significantly by state and are enforced unevenly.

Some states strictly prohibit non-physician ownership of medical practices.

Several states permit the provision of licensed professional services in a non-medical/professional-owned entity, but still regulate other aspects of clinical care and fee splitting.

Enforcement risk can increase when non-physicians influence clinical decision-making or physician compensation.

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Corporate Practice of Medicine by State: Summaries

How to read this guide

CPOM status describes each state’s general position on who may own a medical practice or employ physicians. Restricted means a statute, regulation, court decision, or official guidance generally prohibits non-physicians or lay corporations from owning a medical practice or employing physicians to practice medicine. Partial / Nuanced means some limits exist but are narrow, unsettled, or found only in medical board guidance. Not Restricted means the state has no general CPOM prohibition.

All entries focus on physicians and the practice of medicine. Other professions, such as dentistry, may have separate corporate practice rules. Even in states without a CPOM prohibition, licensing, fee-splitting, anti-kickback, and clinic licensing laws may still limit how a practice is owned, managed, or paid.

There is no single official national map of CPOM laws, and legal commentators classify some states differently. We are updating each state summary against state statutes, medical board guidance, and attorney general opinions, including recent changes such as Oregon’s SB 951 and California’s SB 351. Exceptions and enforcement can change quickly.

This guide provides general information, not legal advice or a complete statement of state law. Consult the linked official sources and qualified legal counsel before structuring or changing ownership, management, or compensation arrangements.

Alabama Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians.
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures.
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Interpreted through professional-entity rules; can be fact-specific

Alaska Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Interpreted through professional-entity rules; can be fact-specific

Arizona Corporate Practice of Medicine Summary

CPOM Status: Not Restricted
Who Must Own the Practice: Ownership generally permitted; medical services must be delivered by licensed clinicians
What Non-Physicians Can Do: Own/operate the business; avoid clinical control and improper fee-splitting
Common Compliant Structures: Direct ownership (where allowed); MSO support model; Medical director arrangement (as required)
Key Notes / Exceptions: CPOM prohibition not explicit; other rules still constrain control/compensation

Arkansas Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: CPOM doctrine generally recognized; entity and compensation design matters

California Corporate Practice of Medicine Summary

CPOM status: Restricted.
Legal basis: Business and Professions Code Section 2400 gives corporations and other artificial legal entities no professional rights, privileges, or powers. Section 2052 prohibits practicing medicine without a license, and licenses are issued only to individuals.
Who may own a practice: Generally, only physicians and other licensed health professionals, through a professional medical corporation. The Medical Board of California enforces the ban and describes California as more rigorous than most states.
Key exceptions: Teaching hospitals, some community clinics, narcotic treatment programs, and certain nonprofit organizations may employ physicians.
Recent changes: SB 351, effective January 1, 2026, bars private equity groups and hedge funds from interfering with physicians’ professional judgment or controlling specified clinical and business decisions of physician and dental practices. The Attorney General can enforce it.

Medical Board of California report on the corporate practice of medicine | California SB 351 (2025)

Colorado Corporate Practice of Medicine Summary

CPOM status: Restricted.
Legal basis: C.R.S. 12-240-138 states that corporations shall not practice medicine. Physicians may practice through a professional service corporation, limited liability company, or registered limited liability partnership organized under that section.
Who may own a practice: Owners must be actively licensed Colorado physicians or physician assistants, and a physician assistant may not own a majority of a medical practice. Lay directors and officers may not exercise any authority over a physician’s independent medical judgment.
Key exceptions: Hospitals may employ physicians under C.R.S. 25-3-103.7, which is not considered the corporate practice of medicine.

C.R.S. 12-240-138

Connecticut Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Professional-entity restrictions apply; avoid any de facto clinical control

Delaware Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Interpreted through professional-entity rules; can be fact-specific

Florida Corporate Practice of Medicine Summary

CPOM Status: Not Restricted
Who Must Own the Practice: Ownership generally permitted; medical services must be delivered by licensed clinicians
What Non-Physicians Can Do: Own/operate the business; avoid clinical control and improper fee-splitting
Common Compliant Structures: Direct ownership (where allowed); MSO support model; Medical director arrangement (as required)
Key Notes / Exceptions: Often treated as “no classic CPOM,” but other healthcare rules still apply

Georgia Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Grounded in professional entity + licensing frameworks; keep contracts conservative

Hawaii Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Limited public guidance; structure conservatively where risk exists

Idaho Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Interpreted through professional-entity rules; can be fact-specific

Illinois Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: CPOM supported by case law and regulation; strong emphasis on physician control

Indiana Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Maintain physician control over clinical operations and clinician employment decisions

Iowa Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Typically derived from professional entity and licensing frameworks

Kansas Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Grounded in professional corporation statutes; keep control provisions clean

Kentucky Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Traditional CPOM posture; preserve physician autonomy in agreements

Louisiana Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Entity and licensure rules drive CPOM posture; avoid fee-splitting issues

Maine Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Limited public guidance; facts and structure matter

Maryland Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Professional entity rules drive restrictions; ensure physician clinical control

Massachusetts Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Strong professional entity restrictions; conservative contract drafting recommended

Michigan Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Typically analyzed via professional entity and licensing rules; preserve physician autonomy

Minnesota Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Professional firm statutes often drive analysis

Mississippi Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Traditional CPOM posture; avoid control over clinical judgment and compensation

Missouri Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Professional corporation statutes commonly drive CPOM posture

Montana Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Limited public guidance; facts and structure matter

Nebraska Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Interpreted through professional-entity rules; can be fact-specific

Nevada Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Commonly treated as nuanced with carve-outs; structure conservatively

New Hampshire Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Limited guidance; preserve physician clinical control in agreements

New Jersey Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Higher-scrutiny CPOM environment; keep contracts conservative

New Mexico Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Often evaluated through professional entity statutes and licensure rules

New York Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: High scrutiny; avoid de facto control and improper compensation mechanics

North Carolina Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Preserve physician autonomy over clinical decisions and clinician oversight

North Dakota Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Professional entity rules often drive analysis; structure conservatively

Ohio Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Often treated as fact-specific; preserve clinical independence in contracts

Oklahoma Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Interpreted through professional entity rules; can be fact-specific

Oregon Corporate Practice of Medicine Summary

CPOM status: Restricted.
Legal basis: Oregon’s corporate practice of medicine doctrine dates to 1947. Senate Bill 951 (2025) codified and expanded it, making Oregon one of the most restrictive states.
Who may own a practice: Owners, directors, officers, and employees of a management services organization (MSO) may not own or control a majority of a medical practice the MSO manages.
MSO limits: MSOs may not control clinical decisions, physician hiring and compensation, coding and billing decisions, or the sale of practice ownership. Noncompete, nondisclosure, and nondisparagement agreements with medical licensees are largely void for contracts entered into or renewed after June 9, 2025.
Effective dates: January 1, 2026 for entities formed, and ownership transfers made, on or after June 9, 2025. January 1, 2029 for entities that existed before June 9, 2025.
Key exceptions: Certain telemedicine medical groups with no physical location in Oregon where patients receive care.

Oregon Legislature: SB 951 (2025)

Pennsylvania Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Widely treated as CPOM-restricted; friendly PC + MSO models are common

Rhode Island Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Evaluated through professional entity statutes; preserve physician clinical control

South Carolina Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Board-centric posture; keep control provisions clean and conservative

South Dakota Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Professional entity + licensing frameworks commonly drive restrictions

Tennessee Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Preserve physician autonomy; avoid de facto clinical control in agreements

Texas Corporate Practice of Medicine Summary

CPOM status: Restricted.
Legal basis: Texas Medical Practice Act (Texas Occupations Code, Title 3, Subtitle B). Only individuals can be licensed to practice medicine, and Texas has prohibited the corporate practice of medicine since the early 1900s.
Who may employ physicians: Corporate entities generally may not employ physicians. A physician who aids a corporation in practicing medicine can be disciplined by the Texas Medical Board under Section 164.052(a)(17).
Key exceptions: Nonprofit health organizations certified by the Texas Medical Board under Section 162.001, federally qualified health centers, migrant, community, and homeless health centers, private nonprofit medical schools, school districts, and certain hospital districts.

Texas Medical Board nonprofit health organizations | Texas Senate Research Center bill analysis

Utah Corporate Practice of Medicine Summary

CPOM Status: Not Restricted
Who Must Own the Practice: Ownership generally permitted; medical services must be delivered by licensed clinicians
What Non-Physicians Can Do: Own/operate the business; avoid clinical control and improper fee-splitting
Common Compliant Structures: Direct ownership (where allowed); MSO support model; Medical director arrangement (as required)
Key Notes / Exceptions: Often treated as not having a classic CPOM ban; other healthcare rules still apply

Vermont Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Limited public guidance; structure conservatively where risk exists

Virginia Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Often treated as nuanced; agreements should clearly preserve physician independence

Washington Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Higher scrutiny in certain contexts; preserve physician control over clinical operations

West Virginia Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: Traditional CPOM posture; keep control provisions clean and conservative

Wisconsin Corporate Practice of Medicine Summary

CPOM Status: Restricted
Who Must Own the Practice: Licensed physicians or physician-owned professional entities
What Non-Physicians Can Do: Provide non-clinical management services only; no clinical control
Common Compliant Structures: Friendly PC + MSO; MSO management services agreement; Medical director arrangement
Key Notes / Exceptions: May include carve-outs by service line

Wyoming Corporate Practice of Medicine Summary

CPOM Status: Partial / Nuanced
Who Must Own the Practice: Varies by entity type; clinical control must remain with licensed clinicians
What Non-Physicians Can Do: Provide management services; avoid de facto clinical control and prohibited compensation structures
Common Compliant Structures: MSO agreement; Entity separation (clinical vs. admin); Medical director arrangement
Key Notes / Exceptions: Limited public guidance; facts and structure matter

Common CPOM-Compliant Structures

Friendly Professional Corporation (Friendly PC)

A physician owns the clinical entity while a non-physician MSO provides management services. This structure is common in CPOM-restricted states and requires carefully drafted agreements to avoid improper control or fee-splitting.

MSO Management Services Agreements

An MSO provides administrative, operational, and business services while clinical decisions remain exclusively with licensed providers. MSO agreements must be commercially reasonable and avoid de facto clinical control.

Medical Director Arrangements

Physicians provide clinical oversight, supervision, and protocol development. Compensation must reflect fair market value and align with state-specific scope requirements.

Ownership Exceptions

Some states allow limited non-physician ownership for specific professions, hospital-affiliated entities, or statutorily defined models. These exceptions are narrow and state-specific.

Frequently Asked Questions

Which states have the strictest corporate practice of medicine laws?

California, Texas, New York, New Jersey, and Oregon are generally considered the strictest CPOM states. California enforces its prohibition more actively than most states, and Texas has prohibited the corporate practice of medicine since the early 1900s. Oregon passed SB 951 in 2025, adding some of the nation’s tightest limits on management services organizations (MSOs) for new arrangements starting January 1, 2026. See the California, Texas, and Oregon summaries below.

Which states do not have corporate practice of medicine laws?

About 18 states have no general corporate practice of medicine prohibition, including Florida and Utah, so non-physicians can generally own a medical practice there. Counts vary because legal commentators classify borderline states differently, and this guide labels several of those states “Partial / Nuanced.” Even in permissive states, clinic licensing, fee-splitting, and anti-kickback rules still apply, and only licensed clinicians can make clinical decisions.

Do CPOM laws apply to every type of healthcare provider?

No. CPOM laws mainly govern who can own and control the practice of medicine by physicians, and many states have separate corporate practice rules for professions such as dentistry. Most CPOM states also exempt certain entities. Texas, for example, allows nonprofit health organizations certified by the Texas Medical Board, federally qualified health centers, and private nonprofit medical schools to employ physicians. Check each profession and entity type in every state where you operate.

Do CPOM laws apply to telehealth companies?

Yes. CPOM rules generally follow the patient, so a telehealth company must comply with the CPOM laws of every state where its patients are located, not just the state where the company is based. Some newer laws include carve-outs: Oregon’s SB 951 exempts certain telemedicine medical groups with no physical location in Oregon from its MSO restrictions. Multi-state telehealth companies often use a physician-owned professional corporation (PC) paired with an MSO to operate in restricted states.

What happens if a business violates CPOM laws?

Consequences can include unenforceable contracts, discipline against the physicians involved, administrative penalties, and lost insurance reimbursement. Courts may refuse to enforce ownership or management agreements that violate CPOM. In State Farm v. Mallela (2005), New York’s highest court held that insurers can withhold reimbursement from medical corporations fraudulently controlled by non-physicians. Investors can also lose the value of the practice they funded.

Who enforces CPOM laws?

State medical boards are the main enforcers, usually by disciplining physicians who allow non-physicians to control their practice. State attorneys general and courts also play a role, and many cases surface through private disputes, such as insurer fraud suits or conflicts between business partners. In Texas, the Texas Medical Board certifies nonprofit health organizations that employ physicians and can penalize organizations that interfere with a physician’s medical judgment.

Compliance Disclaimer: This guide is provided for informational purposes only and does not constitute legal advice. CPOM laws and enforcement interpretations vary by state and change over time. Healthcare organizations should consult qualified legal counsel when structuring or modifying ownership and management arrangements.

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