No Corporate Practice of Medicine in Texas

The prohibition against the corporate practice of medicine doctrine isn't necessarily a law or passage in the Texas Constitution, but rather a legal doctrine. That is, it's a principle expressed as a set of rules or procedures that developed over multiple rulings.

This doctrine prohibits corporations from making or influencing medical decisions, and therefore from practicing medicine in any sense in Texas.

As the Texas Medical Practice Act puts it, the doctrine bans "aiding or abetting, directly or indirectly, the practice of medicine by any person, partnership, association, or corporation not duly licensed to practice medicine by the board."

A doctrine with unexpected consequences

It may be hard initially to imagine anyone objecting to such a principle. The accounting department should not oversee your triple bypass. But over the many decades since the doctrine emerged, applying it has led to sticky problems, sometimes strange-sounding solutions and questions that were hard to anticipate.

In Texas, for example, people who aren't doctors themselves aren't allowed to employ doctors, leading to the odd result that HMOs, hospitals or clinics can't usually employ doctors. As another example, the New Jersey Supreme Court recently clarified that practitioners of more limited scope (physical therapists, nurse practitioners, etc.) can't employ physicians of wider scope.

Doing business while practicing medicine

Typical arrangements involve forming professional associations or other groups wholly owned by doctors. The group then provides physicians to hospitals and other healthcare organizations on a contract basis.

Commonly, physicians form such an association specifically to create a long-term contract with a specific company while remaining doctor-owned and -operated. Other such associations are non-profit organizations that receive approval of the Texas State Board of Medical Examiners.

Unsurprisingly, forming and managing such an organization, and their ongoing interactions with corporations, are full of pitfalls. Liability for unexpected corporate influence on medicine is endless.

The long-lasting partnership between physicians and attorneys is, to some extent, a result of the subtle complexities of possible violations of the prohibition against the corporate practice of medicine.

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