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    Does involvement in a medical partnership inhibit obligations to patients?


    David Goldberg, M.D., J.D.
    Dr. Business has the opportunity to be the director of a series of dermatology offices in his jurisdiction. It is a seemingly wise business decision for him. He provides guidance on staff and treatment visits at each center every other month and is paid $1 million a year for his supervisory position. He plays no role in determining any business decisions — that is all done from the corporate office in New York City.

    Recently, lawsuits have been brought against the parent corporation for the corporate practice of medicine. With these legal corporate charges, ethics charges have been brought against Dr. Business as well. What is the "corporate practice of medicine?"

    Corporate practice

    Medical ethicists have long forewarned that the independent judgment of physicians can be compromised by private interests if left unchecked. To do so would risk interfering with the ethical obligation that a physician owes his or her patient: to provide objective and unbiased advice and treatment. Such private interests may take several forms.

    The traditional conception of for-profit entities exerting undue influence on medical professionals for financial gain is referred to as the "corporate practice of medicine." An obvious example of such an arrangement would be an entity — structured as a proprietorship, corporation or partnership — that allows individuals who have not been licensed to practice medicine to employ physicians or share in the profits of the practice of medicine.

    There is a long-standing debate among medical professionals and American legislators as to what extent it is necessary to restrict private influence from affecting decisions made by physicians regarding patients' treatment. The two most important ends that are weighed in this balancing test are (1) the preservation of the ethical obligation of a physician to his or her patient and (2) the reduction of the healthcare costs.

    The American Medical Association directly addressed the issue of the corporate practice of medicine in the first half of the 20th century, when it sought to deter the "commercialism" of the medical profession. One of the major concerns of the AMA was that such commercialism would lead to an emphasis on the practice of medicine for profit. The AMA felt that an emphasis on profit was anathema to the spirit of the medical profession.

    The Corporate Practice of Medicine Doctrine ("corporate practice doctrine") arose out of these AMA rules, state statutes and subsequent judicial interpretations of said statutes. In its modern form, those states that follow the corporate practice doctrine vary greatly in how and to what extent the relationship between for-profit corporations and physicians should be regulated. As of today, a majority of states have statutes or case law precedent regulating the corporate practice of medicine.

    Several states — Alaska, Delaware, Hawaii, Montana, New Hampshire, Rhode Island and Vermont — have no statutory or common law restriction on the corporate practice of law. Many other states rely upon opinions issued by state attorneys general and state licensing boards to regulate, to varying extents, the interactions with and influence which for-profit corporations may have upon physicians.

    Other states rely on judicial precedent to restrict the manner and types of relationships that for-profit corporations may have with physicians. Several states — California, Colorado, Indiana, Michigan, New Jersey, New York, South Dakota and Wisconsin — have statutes remaining that codify the prohibition of the corporate practice of medicine by regulating the relationships that for-profit corporations may have with physicians.

    Among those states that have statutes regulating the corporate practice of medicine, the extent to which they prohibit such relationships varies. New York is one such restrictive jurisdiction, stating outright that "only a person licensed or otherwise authorized under this article shall practice medicine or use the title 'physician.'"


    David J. Goldberg, M.D., J.D.
    Dr. Goldberg is Director of Skin Laser & Surgery Specialists of New York and New Jersey, Director of Mohs Surgery and laser research, ...

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