Ohio Corporate Practice of Medicine Doctrine

Health Care Law Update

Date: December 20, 2021

The corporate practice of medicine doctrine is a state-law prohibition on unlicensed or lay entities practicing medicine. The policy behind it bans lay organizations from practicing medicine, exercising undue influence over physicians’ medical decision-making, and splitting professional fees with physicians. The doctrine’s nature and scope vary by state but generally prohibit unlicensed entities from employing physicians, controlling a physician’s practice of medicine, or splitting professional fees or profits with physicians. In a time of growing investment in health care, these restrictions can impact how and to what extent business entities or investors may financially benefit from or share in the profits of physician practices.

Ohio once had a corporate practice of medicine doctrine that resulted in physician practices incorporating under Ohio Revised Code Chapter 1785 as professional associations, which could only be owned by licensed professionals. In 1998 the Ohio legislature changed the law, allowing physicians to practice through, and be employed by, business corporations, limited liability companies, and other entities. Based on these changes, the Ohio State Medical Board in 2012 issued a position statement concluding that Ohio no longer has a corporate practice of medicine doctrine, with the following exceptions:

  • Professional associations formed under Ohio Revised Code Chapter 1785 may be owned only by licensed professionals.
  • Pain management clinics must be owned and operated only by physicians.
  • In all cases, physicians must exercise professional judgment in rendering medical services based on patients’ best interests and within the minimal standards of care of similar practitioners under the same or similar circumstances. Physicians may not cede this judgment to a business organization.

Physicians should continue to be mindful of Ohio’s fee-splitting law that prohibits them from engaging in the division of fees for the referral of patients or receiving anything of value in return for a referral of a patient to utilize a particular service or business.1 This could be relevant if a physician engages a manager to provide services for which the manager will be paid a percentage of fees.

FOR MORE INFORMATION

For more information, please contact:

Cori R. Haper
937.443.6856
Cori.Haper@ThompsonHine.com

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1 Ohio Revised Code Section 4731.22(B)(17).