The Corporate Practice of Medicine

The general rule in Illinois, as well as in
many states, is that physician services may only be provided by physicians, and
not by business entities.  It is not
legal in this state for a non-licensee to own any portion, no matter how small,
of a physician practice.   This rule has traditionally been referred to
as the “Prohibition of the Corporate Practice of Medicine.”  The only permitted exceptions have been specifically
enacted into law, including a long-standing exception for licensed hospitals.
The law now also allows physicians to form medical corporations, professional
service corporations, and professional limited liability companies. Even those
entities, however, are nevertheless still subject to the rule that only
physicians (or, in the case of professional service corporations, licensees in
related professions) may own them.   

The ICS encounters lingering confusion about this issue, because the office still receives inquiries about medical or professional service corporations that are partly owned by non-physicians. Typically, the non-licensed co-owner is a practitioner’s spouse or a business associate who has provided funds to help with the clinic’s startup. In several cases, the ICS has encountered chiropractic services being provided by a general business corporation, an entity that is not exempted from the Corporate Practice Doctrine. Often these improper situations are caused by the well-meaning efforts of the chiropractic physician’s accountant or another person who knows the mechanics of filling out and mailing Illinois Articles of Incorporation but has little or no knowledge of the intricacies of health care law. Establishing a proper corporate health care entity and avoid the corporate practice of medicine involves a whole lot more than just filing papers with the Secretary of State.