Who Can Really Own a Med Spa? Corporate Practice of Medicine (CPOM) Rules Explained
Owning and operating a medical spa comes with certain dangers for both physicians and potential partners. An experienced medical spa practice attorney at Innova Health Law can help you navigate the legal landscape in a way that can prevent issues with regulators.
The overall principle of the law in all states is that only physicians are allowed to practice medicine and make decisions regarding the actual care that a patient receives. However, physicians may seek to partner with other entities for management services. Any agreements with outside parties that involve a medical spa practice must closely follow the corporate practice of medicine rules, or else both parties to the agreement could face consequences.
Medical spa practice attorney Matthew R. Ludowig at Innova Health Law has a deep understanding of these rules and how they work. Schedule an appointment for a free case discovery session at 281-936-9904 to learn more about how he can assist you.
Not Everyone Can Own a Medical Spa
There is a common misconception that anyone is able to open a medical spa. There are strict regulations about who may actually own a medical spa. Each jurisdiction has its own variation of corporate practice of medicine rules. These regulations generally state that corporations, partnerships, or non-physician entities cannot own a practice in which they employ physicians. Accordingly, if these entities are going to be involved in a med spa, there must be a specific agreement that tightly restricts their role and compensation.
CPOM rules are intended to ensure that patient care decisions are not made with a financial motive in mind. A licensed physician is the one who is supposed to have full autonomy over providing care. They cannot be “answering orders” from a non-physician who has an ownership role in a practice. The theory behind these rules is that if non-physicians are able to dictate care, it may result in decisions that are made with regard to profit only and not considering the individual patient’s needs. Doctors should not be pressured to make decisions with the needs of anyone other than their patient in mind.
How CPOM Rules May Be Violated
Violations of these rules can result in fines, loss of license, and in some states, criminal prosecution. In some states, it is a medical board that enforces these rules. In other states, the attorney general has this responsibility. These Regulators may be looking for the following signs of violations of the CPOM rules:
- An MSO, private equity firm, or business manager who has control over clinical decisions
- The MSO exercises excessive authority over decisions to hire and fire Physicians or setting medical policies
- There is revenue-based compensation for a non-physician that depends on medical decisions
- A non-physician entity receives a percentage of medical fees that is not tied to legitimate management services
The exact restrictions on ownership depend on the individual state. It is the state medical board that issues these rules. Some of these rules become statutory law because they are enacted by the state legislature. Some states, including Texas, take a very strict view of non-physician ownership of a practice. In these states, only licensed physicians, professional corporations, or medical partnerships may employ physicians. Other states may allow Physicians to form professional corporations that can include non-physicians as investors. However, in these states, the non-physicians are strictly prohibited from interfering with medical decisions.
Medical Spa Practices May Benefit from a Management Services Organization Agreement
Depending on the size of the medical spa, it may cost upwards of a million dollars in startup investment. Individual physicians do not always have access to this type of money, requiring capital from other sources. At the same time, physicians may not have the management and administrative expertise that allows them to effectively run their practice. Accordingly, it is possible for a physician to enter into a management services organization (MSO) agreement with a non-physician.
The individual agreement will detail the exact scope of the services (and potentially capital) provided to the physician. When negotiating an MSO agreement, the exact details and language matter. It must be structured in a way that forecloses the possibility that a non-physician could exercise control over the medical aspects of the spa. An experienced medical spa lawyer can work on your behalf to negotiate and draft the agreement in a way that keeps your business arrangement in compliance with CPOM rules.
Contact a Medical Spa Practice Law Firm
To help stay on the right side of CPOM rules and other regulations that affect a medical spa practice, speak to Innova Health Law. You can schedule a free case discovery session with a medical spa practice lawyer by filling out an online contact form or by calling us today at 281-936-9904.