GLOSSARY · BUSINESS SETUP
Corporate practice of medicine, why a company cannot own a medical practice.
The corporate practice of medicine is a legal doctrine that bars companies not owned by licensed physicians from practicing medicine or employing doctors to do it.
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What it means
The doctrine is state law, so it varies. Some states enforce it strictly, including California, Texas, and New York; others barely enforce it or allow broad exceptions. Its purpose is to keep business owners from steering clinical judgment for profit. Where it applies, a company owned by non-physicians cannot own a medical practice, employ physicians to treat patients, or control clinical decisions.
The standard way to comply is a two-entity structure. A professional corporation owned by a licensed physician holds the medical practice, and a management services organization owned by the business runs everything non-clinical under a services contract.
02
Why it matters to a brand operator
Any brand that is not owned by a doctor and wants to treat patients in more than a handful of states runs into this doctrine. A national clinic has to satisfy the strictest states it serves, which in practice means structuring properly everywhere.
Getting it wrong has real costs: contracts a court may refuse to enforce, fee arrangements that count as illegal fee-splitting, and a regulator's finding that the company was practicing medicine without a license. Investors and acquirers check the structure in diligence, so a weak one also lowers what the company is worth.
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How Tessic Health handles it
Tessic Health drafts and maintains an MSO and friendly-PC structure for each client's ownership. Licensed clinicians own and run the medical practice, and the client's company owns the business and the brand, so the client does not need a medical license to own a Tessic Health clinic.
See the published termsRELATED TERMS
Words that come up next.
Friendly PC
A friendly PC is a physician-owned professional corporation that holds the medical side of a telehealth company and works with the business side under contract.
MSO
An MSO (management services organization) is a company that runs the business side of a medical practice, including the brand, software, marketing, billing, and staff, under a contract with the physician-owned practice.
Revenue share
A revenue share is a pricing term that gives a partner a fixed percentage of a brand's sales, so the partner's fee grows every time the brand's revenue does.