A Doctrine in Name Only - Strengthening Prohibitions against the Corporate Practice of Medicine

A Doctrine in Name Only - Strengthening Prohibitions against the Corporate Practice of Medicine

In today's healthcare landscape, corporate investors hold more power and pursue aggressive revenue models compared to previous health maintenance organizations. This has led to a significant shift in ownership, with almost three-quarters of physicians in the United States now being salaried employees, and half of all physician practices being owned by hospitals or corporate entities. To address this growing trend, many states have adopted the corporate-practice-of-medicine (CPOM) doctrine, which aims to prevent unlicensed lay entities from owning or controlling medical practices. However, despite the existence of CPOM laws, the corporate land grab in healthcare continues. This raises the question of why these laws have not been effective in protecting the medical profession and the public interest, and how the CPOM doctrine can be strengthened.

One of the concerns surrounding the corporatization of medicine is that corporations are not only providing business support but are also assuming control over clinical operations, management decisions, billing practices, and negotiations with insurers. This can potentially exert pressure on physicians to change the way care is delivered. Empirical evidence suggests three primary risks associated with corporatized medicine. First, there is an increase in healthcare prices and spending due to market consolidation and exploitation of payment loopholes. Second, changes in practice patterns and pressures to reduce staffing can negatively impact patient care. Lastly, physicians may experience moral injury and burnout as a result of the increased corporate control over their work.

Despite the CPOM laws in place, certain corporate entities, such as professional corporations (PCs), are still allowed to deliver clinical services as long as the majority of their owners are licensed physicians. This creates a loophole that allows corporate entities to bypass the restrictions of the CPOM doctrine. Additionally, management-services agreements are used to further cement control over physician-owned PCs. These agreements require physicians to sign stock-restriction, noncompete, and nondisclosure agreements, limiting their ability to sell their interests or exercise certain rights without corporate approval.

To strengthen prohibitions against the corporate practice of medicine, there are several actionable steps that can be taken. Firstly, existing loopholes that permit corporate ownership should be closed. For example, in Oregon, limited-liability companies and partnerships can deliver medical services without being subject to physician-ownership requirements. By eliminating these loopholes, the requirement of ultimate control by licensed professionals can be upheld.

Secondly, enforcement of CPOM laws should be enhanced. Currently, there is a lack of oversight and enforcement mechanisms to ensure compliance with the doctrine. Strengthening enforcement efforts and implementing penalties for violations can serve as a deterrent and help protect the integrity of the medical profession.

Lastly, efforts should be made to educate physicians and the public about the implications of corporatized medicine. Many physicians may not fully understand the extent of corporate control and its potential impact on patient care. By raising awareness and providing resources, physicians can make informed decisions about their practice arrangements, and patients can advocate for their own healthcare needs.

In conclusion, the corporate practice of medicine continues to pose significant risks to the medical profession and the public interest. To address this issue, it is essential to strengthen prohibitions against corporate ownership, enhance enforcement efforts, and educate physicians and the public. By taking these actions, we can ensure that the practice of medicine remains focused on patient care and driven by the expertise of licensed professionals.