Corporate Practice of Medicine: How to Structure Your Med Spa Correctly

The corporate practice of medicine (CPOM) doctrine is one of the most important — and most frequently misunderstood — legal concepts affecting medical spa ownership and structure. Getting it wrong can result in regulatory action, loss of licensure, and significant liability.

This post explains what the CPOM doctrine is, which states have the strictest rules, and how to structure your med spa correctly.

The corporate practice of medicine doctrine holds that the practice of medicine can only be conducted by licensed physicians (or other licensed practitioners), not by corporations or non-physician entities. The doctrine is based on the principle that the physician-patient relationship must be free from commercial interference.

In practical terms, the CPOM doctrine means:

• A non-physician cannot own a medical practice in states with strict CPOM rules
• A corporation cannot employ physicians to practice medicine in states with strict CPOM rules
• Non-physician owners cannot direct or control clinical decision-making

The doctrine varies significantly by state — some states have strict CPOM rules, others have more permissive rules, and a few have no CPOM doctrine at all.

Medical spas occupy a unique position: they offer both medical services (requiring licensed practitioners) and aesthetic services (which may not require medical licensure). This hybrid nature creates CPOM complexity.

If your med spa:

• Is owned by a non-physician
• Has a non-physician making clinical decisions
• Has a physician employed by a non-physician entity

...you may be violating the CPOM doctrine in states with strict rules.

California has one of the strictest CPOM doctrines in the country. Key rules:

• Physicians cannot be employed by non-physician corporations to practice medicine
• Non-physicians cannot own a medical practice
• The "friendly PC" structure (see below) is required for non-physician-owned med spas

California's Medical Board has been active in enforcing CPOM rules against med spas.

Texas has a strict CPOM doctrine. Non-physicians cannot own or control medical practices. The Texas Medical Board has been active in enforcement.

New York has a strict CPOM doctrine. Non-physicians cannot own or control medical practices.

Florida has a more nuanced CPOM doctrine. Non-physicians can own certain types of healthcare entities, but there are restrictions on control of clinical decision-making.

The most common solution to CPOM restrictions is the "friendly PC" (professional corporation) structure, also called the "management services organization" (MSO) structure:

How it works:

1. A physician (or physician-owned professional corporation) owns the medical practice
2. A management services organization (MSO) — which can be owned by non-physicians — provides management, administrative, and business services to the medical practice
3. The MSO charges the medical practice a management fee for its services
4. The physician retains control of clinical decision-making

Key requirements for a compliant friendly PC structure:

• The physician must genuinely own and control the medical practice
• The physician must have genuine authority over clinical decisions
• The management fee must be at fair market value
• The structure must not be a sham designed to circumvent CPOM rules

Common mistakes:

• The physician is a nominal owner with no real authority
• The management fee is set at a level that effectively transfers all profits to the MSO
• The non-physician owner makes clinical decisions

For med spas that want to offer medical services without a physician owner, the medical director structure is an alternative:

How it works:

• A non-physician entity owns the med spa
• A licensed physician serves as medical director
• The medical director provides clinical oversight and supervision

Key requirements:

• The medical director must be genuinely involved in clinical oversight
• The medical director must be available for consultation
• The medical director must have authority over clinical protocols
• The supervision requirements vary by state and by the type of practitioners being supervised

Common mistakes:

• The medical director is a nominal figurehead with no real involvement
• The medical director is not available when needed
• The supervision requirements are not met

Telehealth GLP-1 prescribing adds another layer of CPOM complexity. When a telehealth platform prescribes across state lines, it must comply with the CPOM rules of each state where its patients are located.

This is one reason why telehealth platforms need legal counsel with multi-state healthcare expertise.

Our founding team includes mass-tort attorneys with healthcare law expertise. We can advise our clients on CPOM compliance and refer them to qualified healthcare attorneys in their state.

Contact us with compliance questions →

This content is for informational purposes only and does not constitute legal advice. CPOM rules vary significantly by state. Consult with qualified legal counsel in your state regarding your specific structure.