Strengthening Prohibitions against the Corporate Practice of Medicine: Protecting the Medical Profession and Public Interest

George A

Hatched by George A

Jul 06, 2024

3 min read

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Strengthening Prohibitions against the Corporate Practice of Medicine: Protecting the Medical Profession and Public Interest

Introduction:

In recent years, the corporate practice of medicine has become increasingly prevalent, with corporate entities exerting control over clinical operations and decision-making. This trend raises concerns about the potential risks it poses to the healthcare system. Despite the existence of laws such as the corporate-practice-of-medicine (CPOM) doctrine, the expansion of corporatized medicine continues. This article explores the reasons behind this trend and proposes strategies to strengthen the CPOM doctrine for the benefit of both the medical profession and the public.

The Rise of Corporatized Medicine:

Today's corporate investors in the healthcare industry possess significant market power and pursue aggressive revenue models. With highly leveraged and multilayered deal structures, they are often insulated from risk. As a result, a significant portion of physicians in the United States are now salaried employees, and many practices are owned by hospitals or corporate entities.

The Concerns of Corporatized Medicine:

There are growing concerns that corporations are not only providing ancillary business support but also assuming control over critical aspects of healthcare delivery. This includes clinical operations, management and staffing decisions, billing and coding practices, and negotiations with insurers. This level of control may exert pressure on physicians to change their care delivery, compromising patient care quality.

The Risks of Corporatized Medicine:

Emerging empirical evidence highlights three primary risks associated with corporatized medicine. Firstly, market consolidation and exploitation of payment loopholes lead to increased healthcare prices and spending. Secondly, changes in practice patterns and pressures to reduce staffing can negatively impact patient care. Lastly, physicians may experience moral injury and burnout due to the increased administrative burden and loss of autonomy.

CPOM Laws and Loopholes:

Although CPOM laws exist in many states, they have not effectively prevented corporatization due to certain loopholes. Professional corporations (PCs) are allowed to deliver clinical services as long as the majority of their owners are licensed physicians. Additionally, management-services agreements are used to circumvent corporate-practice restrictions, granting corporate entities control over medical practices.

Strengthening the CPOM Doctrine:

To protect the medical profession and the public interest, it is crucial to strengthen the CPOM doctrine. Here are three actionable steps that can be taken:

1. Close Existing Loopholes:

State legislatures should review and amend existing CPOM laws to close any loopholes that allow corporate entities to deliver medical services without adhering to physician-ownership requirements. Allowing limited-liability companies and partnerships to operate without such requirements undermines the ultimate control by licensed professionals.

2. Regulate Management-Services Agreements:

Regulations should be put in place to ensure that management-services agreements do not enable corporate entities to exert undue control over clinical operations and decision-making. This includes monitoring stock-transfer agreements, oversight of staffing and compensation, coding decisions, payer contracts, and performance standards.

3. Strengthen Physician Protections:

Physicians should be protected from restrictive agreements that limit their professional autonomy and hinder their ability to provide high-quality care. Noncompete and nondisclosure agreements should be regulated to ensure they are fair and reasonable, allowing physicians the freedom to make decisions in the best interest of their patients.

Conclusion:

The corporate practice of medicine raises significant concerns about the future of healthcare delivery. By strengthening the CPOM doctrine and addressing existing loopholes, we can protect the medical profession and the public interest. It is essential that regulatory bodies, legislators, and healthcare professionals work together to ensure that patient care remains the top priority in a rapidly changing healthcare landscape.

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