PRACTICE MANAGEMENT
Integrated Private Practice
Jordan Saint John and Stephen D . Bittinger
Potential Pitfalls of an Integrated Practice
The possible pitfalls of an integrated practice that is either poorly structured or operated are many and potentially ruinous . As every practitioner surely knows , fraud in the healthcare arena can result in criminal liability at both the federal and state level . However , even well-intentioned practitioners can find themselves facing criminal charges , civil penalties , licensing board sanctions , and financial collapse . The following discussion presents the greatest areas of concern .
Legal Structure : The Corporate Practice of Medicine
Most states have some form of prohibition against CPOM 3 . This doctrine generally prohibits a business corporation from practicing medicine or employing a medical doctor to provide professional medical services . Even where a distinct law may not exist , this doctrine is often embodied in the prohibitions against practicing medicine without a license and against fee-splitting between someone with a medical license and someone without . It is this doctrine that generally disallows a non-physician from co-owning an entity with , or employing – even as an independent contractor – a medical doctor .
The basic public policy reason behind the prohibition against CPOM is the conflict between the interests of a corporation and the needs of a patient . However , most states make some exceptions to their CPOM doctrine , such as for hospitals , health maintenance organizations , and professional corporations . Thus , the first step in setting up an integrated practice is to understand the CPOM doctrine of the state where the entity will be formed and operate , and to structure the entity or entities accordingly .
An additional source of rules and regulations concerning the CPOM is state medical licensing boards . For example , California ’ s Medical Board finds problematic a number of scenarios that are foreseeable in an integrated practice 4 . In California , the following health care decisions would constitute the unlicensed practice of medicine if performed by an unlicensed person :
• Determining what diagnostic tests are appropriate for a particular condition .
• Determining the need for referrals to , or consultation with , another physician / specialist .
• Responsibility for the ultimate overall care of the patient , including treatment options available to the patient .
• Determining how many patients a physician must see in a given period of time or how many hours she / he must work .
Also , the following business or management decisions and activities , resulting in control over the physician ’ s practice of medicine , may not be made by an unlicensed person or entity :
• Selection , hiring / firing ( as it relates to clinical competency or proficiency ) of medical doctors , medical assistants , and allied health staff .
• Decisions regarding coding and billing procedures for patient care services .
• Approving the selection of medical equipment and medical supplies for the medical practice .
The Board states that these “ business ” or “ management ” decisions and activities cannot be delegated to an unlicensed person , “ including management service organizations ,” and that while they may consult with
3 http :// docplayer . net / 2325422-Physicians-and-hospitals-law-institute-february-2-4-2015-las-vegas-nevada . html .
4 Seewww . mbc . ca . gov / Licensees / Corporate _ Practice . aspx ( accessed August 18 , 2016 ).
23 TODAY ’ S PRACTICE : CHANGING THE BUSINESS OF MEDICINE