The Corporate Practice of Medicine (CPM) Doctrine is a set of laws enacted to protect the public and prohibits business corporations from practicing medicine or employing a physician to provide professional medical services. The aim is to prevent unscrupulous profiteers having an impact on patient care.

Corporations are in some cases able to improve the quality of care by providing significant capital and technological benefits to physician groups. Conversely, there is a risk that patient care may be negatively influenced when corporations are closely involved in the practice of medicine and control physicians' compensation.

Many states, including New York, New Jersey, Colorado, and Illinois, have passed state laws and regulations that exempt certain hospitals and other corporate employers from the CPM Doctrine.

The wide variety in CPM laws means that some states merely prohibit the practice of medicine without a license, while others fully prohibit the ownership of medical practices or employment of professionals by nonprofessionals. Still more states prohibit professional fee splitting between licensed medical professionals and non-licensed individuals or business entities.

The impact of CMP exemptions can be felt at times such as when physicians' instructions on patient care are denied. Insurance companies may deny payment for treatment, change medication without physician authorization, or deny diagnostic procedures. Hospitals may pressure physicians to discharge patients too early.

"Health care corporations, including hospitals as well as insurance and pharmaceutical companies, are wealthy special interest groups with swarms of lobbyists influencing state legislators," says Gene Uzawa Dorio, MD, an internal medicine physician at Henry Mayo Newhall Memorial Hospital, Valencia, CA.

Dorio says that protective CPM laws "have been whittled away distorted by health care corporations as 'archaic' and 'detrimental' to advancing patient care". "They want shareholders to benefit, while the public suffers," he believes.

One example of how doctor decision-making is affected is via the setting of harmful policies and procedures by hospital administrators. Another is the distorting of medical criteria and standards. "Medical care will only deteriorate as these health care corporations further erode protective CPM laws," states Dorio.

The process of hiring of physicians by hospitals varies widely by state, depending on the restrictiveness of CPM laws. Even in the most restrictive states, there are exceptions to the rules. For example, hospitals (and other licensed medical facilities) in New York may employ physicians to provide medical services. Although it may appear to be common sense for hospitals to be able to employ physicians, a few states such as California, Iowa, and Texas, have declined to create such an exception. Even among these states there are exceptions, however. Iowa hospitals may employ pathologists and radiologists, and Texas public hospitals and California teaching hospitals may employ physicians.

The CPM doctrine was originally developed by the American Medical Association at the turn of the 19th century. Its current policy states: "Our AMA vigorously opposes any effort to pass federal legislation preempting state laws prohibiting the corporate practice of medicine.

"At the request of state medical associations, our AMA will provide guidance, consultation, and model legislation regarding the corporate practice of medicine, to ensure the autonomy of hospital medical staffs. Our AMA will continue to monitor the evolving corporate practice of medicine with respect to its effect on the patient-physician relationship, financial conflicts of interest, patient-centered care and other relevant issues."

Some state medical associations have stepped in to assist physicians regarding the corporate practice of medicine. In 2011, for example, the Texas Medical Association urged the Texas Legislature to pass laws to protect physicians’ independent medical judgment.

The laws limit interference by hospital administrators or corporate officers and strengthened the rules on physician employment by protecting those employed by or linked to hospital-controlled healthcare corporations, rural county hospital districts, and large urban hospital districts.

"Texas is the first state in the country to take the critical step of protecting clinical autonomy," the Texas Medical Association website says. "The relationship between patient and physician is based on trust and gives rise to physicians' ethical obligations to place patients' welfare above their own self-interest and above obligations to other groups.

"Protecting the patient-physician relationship lies at the heart of Texas' legal doctrine banning the corporate practice of medicine."


Dorio GE. The corporate practice of medicine is overwhelming American health care. December 19, 2015. Accessed January 11, 2016.

American Medical Association. H-215.981 Corporate Practice of Medicine. Accessed January 11, 2016.

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