Corporate Practice of Medicine (CPOM) Guide: New York
This guide provides a summary of Corporate Practice of Medicine (CPOM) laws in New York. 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 New York’s CPOM doctrine, compliant business structures, and practical steps for healthcare business owners to remain compliant while practicing medicine.
New York CPOM Summary
New York has some of the strictest Corporate Practice of Medicine (CPOM) laws in the United States. Unlike some states where non-physicians can own medical practices or employ doctors, New York law mandates that only licensed physicians can own and operate medical practices.
This doctrine is rooted in New York’s Education Law, which reserves the practice of medicine exclusively for licensed professionals. It prohibits business corporations, investors, and non-physicians from hiring doctors, influencing medical decisions, or sharing in physician profits.
New York strictly enforces CPOM laws to prevent corporate interests from interfering with patient care. Violations can result in felony charges, loss of medical licenses, invalidated contracts, and significant financial penalties.
What Is CPOM Doctrine?
The Corporate Practice of Medicine (CPOM) doctrine is a legal principle that prohibits non-physicians and corporations from owning, controlling, or influencing medical practices.
These laws exist to:
Protect patient care by ensuring that medical decisions are made by licensed physicians.
Prevent corporate interference, keeping medical judgment separate from financial incentives.
Maintain physician independence and uphold the physician-patient relationship.
Simply put, only licensed physicians can own and control medical practices in New York. Non-physicians and business entities cannot employ doctors, dictate treatment, or take a financial stake in a medical practice.
Staying CPOM Compliant in New York
To legally operate a medical practice in New York, physicians must own and control all clinical aspects of the practice. Businesses that provide non-clinical services must ensure they do not cross into illegal territory.
Here are some recommended strategies for staying CPOM compliant in New York.
1. Use Physician-Owned Business Structures
Only licensed physicians can own medical practices in New York.Business entities must be structured as Professional Corporations (PCs), Professional Limited Liability Companies (PLLCs), or Professional Partnerships.
2. Separate Clinical and Administrative Functions
Physicians must retain full control over medical decisions. Non-medical entities can provide administrative services (e.g., billing, HR, facility management), but they cannot influence patient care.
3. Follow Fee-Splitting Rules
Doctors cannot share their medical service revenue with non-physicians. Business arrangements must avoid percentage-based compensation tied to medical earnings.
4. Use Proper Management Service Agreements (MSAs)
If working with a Management Services Organization (MSO), the agreement must clearly separate clinical services from administrative functions. The New York State Department of Health closely monitors MSO structures to prevent CPOM violations.
Who Do These Laws Apply To?
New York’s CPOM laws apply to any person, business, or entity involved in providing medical services, including:
1. Physicians and Medical Groups
Physicians must own their practices and cannot be employed by non-physicians. Medical groups must be structured as Professional Corporations (PCs) or similar legal entities.
2. Non-Physician Business Owners & Investors
Non-physicians cannot own medical practices or employ physicians. Private equity firms and corporations looking to invest in medical services must structure partnerships carefully to avoid CPOM violations.
3. Healthcare Businesses & MSOs
Hospitals and Health Maintenance Organizations (HMOs) are among the few entities legally allowed to employ physicians. Management Service Organizations (MSOs) can provide non-clinical business services, but they cannot influence medical care or physician compensation.
4. Insurance Companies and Managed Care Organizations
These entities can employ licensed professionals only for utilization review—not for direct patient care.
Compliant Business Structures in New York
New York allows several business structures for legally operating a medical practice:
1. Professional Corporations (PCs)
PCs must be 100% physician-owned. All shareholders must be licensed in the same profession. This is the most common and legally sound structure for medical practices.
2. Professional Limited Liability Companies (PLLCs)
PLLCs are similar to PCs but structured as LLCs. They must be entirely physician-owned.
3. Professional Partnerships
Two or more licensed physicians can form a professional partnership. Partners must share profits and liability.
4. Limited Exemptions
Hospitals and HMOs can legally employ physicians. Insurance companies can hire physicians only for utilization review.
Non-Compliant Business Structures in New York
Several business models violate New York’s CPOM laws and can result in serious legal consequences:
A non-physician or corporation owning a medical practice.
A business employing a physician to provide medical care.
An MSO exerting control over medical decisions or physician salaries.
A medical practice engaging in fee-splitting with a non-physician entity.
Any contract that allows non-physicians to have an ownership stake in a practice.
Even contracts that appear compliant on paper may still violate CPOM if they give non-physicians control over medical services.
Consequences of CPOM Violations
New York enforces its CPOM laws. Violating CPOM laws in New York can result in severe penalties, including:
Criminal charges and fines
Loss of medical license
Business closure and legal sanctions
Civil lawsuits and patient claims
Insurance reimbursement clawbacks
Key Takeaways
New York’s CPOM laws are among the strictest in the country. To legally operate a medical practice, physicians must have full ownership and control over all clinical decisions.
To stay compliant:
Use legally permitted business structures such as PCs, PLLCs, or Professional Partnerships.
Ensure physicians control all clinical decisions and avoid fee-splitting with non-physicians.
If using an MSO, clearly separate business and clinical functions.
Consult with a healthcare attorney before entering any business arrangement.
By structuring medical businesses correctly, healthcare providers and entrepreneurs can avoid severe penalties while ensuring compliance with New York law.
Zivian Health Helps Healthcare Business Owners Navigate CPOM Compliance
Zivian Health specializes in helping healthcare providers and businesses navigate CPOM compliance. Whether you’re a physician interested in becoming a PC owner or a healthcare business seeking a compliant business model, we’re here to guide you every step of the way.
Contact Zivian Health today to learn more about our PC ownership and CPOM solutions.
