Corporate Practice of Medicine (CPOM) Guide: Texas
This guide provides a summary of Corporate Practice of Medicine (CPOM) laws in Texas. 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 Texas’ CPOM doctrine, compliant business structures, and practical steps for healthcare business owners to remain compliant while practicing medicine.
Texas CPOM Summary
Texas has one of the strictest CPOM doctrines in the United States. The legal foundation of Texas’s CPOM laws is built on multiple provisions of the Texas Medical Practice Act and Texas Administrative Code, including sections 155.001, 155.003, 157.001, and 165.156.
Key CPOM Restrictions in Texas
Non-physicians cannot practice medicine.
Non-physicians cannot employ physicians.
Laypersons and corporations cannot own medical practices or hold a financial stake in them.
Non-physicians cannot control hiring, firing, salaries, or professional fees of physicians.
Clinical decisions—such as patient diagnosis and treatment—must be made solely by physicians.
Texas enforces CPOM laws strictly, meaning medical businesses must be structured carefully to avoid legal violations.
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 Texas. Non-physicians and business entities cannot employ doctors, dictate treatment, or take a financial stake in a medical practice.
Staying CPOM Compliant in Texas
To stay compliant with Texas CPOM laws, healthcare businesses must be structured so that physicians retain full control over all medical decisions and patient care.
Here are some recommended steps for staying CPOM compliant in Texas.
Ensure that only licensed physicians own and operate medical practices.
Use permitted business structures (see below) that comply with Texas law.
Clearly define roles in business agreements to separate clinical (physician-controlled) and non-clinical (business-controlled) functions.
Management Service Organizations (MSOs) can only handle non-clinical tasks, such as billing, HR, and administrative services.
Avoid revenue-sharing models where non-physicians benefit directly from medical services.
The Texas Medical Board actively enforces these laws, so working with a healthcare attorney is crucial to ensure compliance.
Who Do These Laws Apply To?
Texas’s CPOM doctrine applies to any person, business, or entity involved in providing medical services, including:
1. Physicians and Medical Groups
Only licensed physicians can own and operate medical practices in Texas. Physicians must avoid business arrangements that give non-physicians control over medical decisions.
2. Healthcare & Wellness Businesses
Medical spas, telehealth startups, urgent care centers, and concierge medicine providers must follow CPOM laws. Non-physician business owners cannot offer medical services directly—a physician must own and control the medical side of the business.
3. Non-Physician Business Owners & Investors
Entrepreneurs, corporations, and private equity firms cannot own or control medical practices. Non-physician investors must structure partnerships carefully to avoid violating CPOM laws.
4. Hospitals & Exempt Entities
Texas law allows certain exceptions where hospitals or institutions can employ physicians, including:
Children’s hospitals
Rural hospitals (counties with populations under 50,000)
School districts and state institutions
U.S. Government and military medical providers
If you are involved in healthcare business operations, physician employment, or medical practice investment, CPOM laws directly affect you.
Compliant Business Structures in Texas
Texas does allow certain legal business structures that keep physician ownership intact while still allowing non-medical business support.
1. Professional Limited Liability Companies (PLLCs)
A PLLC is similar to an LLC, but only for licensed medical professionals. Offers limited liability protection for members. All owners must be licensed professionals.
2. Professional Associations (PAs)
A PA is a unique entity structure designed specifically for Texas physicians. It allows medical practices to operate without violating CPOM laws. Ownership of a PA is restricted to licensed physicians.
3. Limited Liability Partnerships (LLPs)
Requires at least two licensed physician partners, which limits each partner’s liability to only the assets of the partnership.
4. Management Service Organizations (MSOs)
In an MSO arrangement, physicians own the medical practice, while a separate business entity provides non-clinical administrative support. The MSO handles billing, marketing, HR, and facility management, but cannot interfere with medical decisions. The MSO and physician practice must have a legally sound Management Services Agreement (MSA), and proper structuring is key to avoid CPOM violations and severe penalties.
Non-Compliant Business Structures in Texas
Many common business mistakes violate Texas’s CPOM laws, including:
A non-physician owning a medical practice.
A corporation or business employing a physician to provide medical services.
A spa, wellness center, or telehealth company offering medical services without a licensed physician owner.
An MSO controlling clinical decisions, physician salaries, or patient fees.
Revenue-sharing agreements that allow non-physicians to profit from medical services.
Note: If non-physicians or corporations control any part of medical practice operations or revenue, the business is likely illegal under Texas CPOM laws.
Consequences of CPOM Violations in Texas
Violating CPOM laws in Texas 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
Texas strictly enforces its CPOM laws, making compliance essential for any healthcare business operating in the state.
To operate legally, businesses must:
Ensure physicians own and control medical practices.
Use compliant structures like PLLCs, PAs, and properly managed MSOs.
Avoid business models where non-physicians influence medical decision-making or profit from clinical services.
Consult experienced healthcare advisors and attorneys to avoid costly mistakes.
By structuring medical businesses correctly, healthcare providers and investors can legally operate in Texas while avoiding severe legal risks.
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.
