Chapter 28: The Corporate Practice of Medicine

INTRODUCTION

This chapter covers the various types of legal restrictions governing the corporate practice of medicine. The core of these restrictions is that the physician and patient relationship cannot be interfered with by nonphysicians. In particular, it cannot be interfered with by nonphysicians who stand to make more money by controlling the diagnosis and treatment given to the patient by the physician. These laws arose to protect patient safety and create trust in the medical profession. In the current environment, there is evidence of room for improvement in both of these aims. This chapter explores the powers and limitations of corporate practice of medicine legislation. It ends with evidence from social science that addresses the root cause of many problems that the corporate practice of medicine laws seek to remedy. The balance of legal restrictions and social science (alternative to legal restrictions) can blend to create the win-win scenario where patients receive excellent and safe care, physicians feel they are actuating excellent care in a long and fulfilling career, and administrators are able to balance budgets and keep hospitals financially viable into perpetuity.

Understanding the history and origin of corporate practice of medicine law is important because it still guides how courts will interpret the law and gives information regarding social and legislative trends of the past, which, as with much of history, portends the future. The concept of the medical corporate practice and its bans arose from a series of reforms endorsed and originated by the American Medical Association (AMA). Of note, the historical portion of this chapter focuses on the AMA, which could imply that the history of MDs is the history of physicians. This implication should not be read into this text. It is only because the recorded reports of the legislative history of corporate practice of medicine law specifically credit the AMA that it is the focus of the historical part of this chapter. The history of physicians extends far beyond that of the AMA and MDs. Additionally, this chapter does not address the discriminatory application and pretextual purpose of many regulations and legislative efforts. The history section of this chapter is focused on the historical context that the courts will apply to current law by way of legislative intent interpretation.

HISTORY

The origins of the corporate practice of medicine started with the earliest actions of the AMA. Before there could be concerns of interference within the physician-patient relationship, there first was the issue of defining physician and patient. About 150 years ago, the newly formed AMA had concerns about the landscape of medicine. It was an open market that ranged from untrained dangerous fraudsters to experienced and ...