You have built an app, raised a seed round, and assembled a team of engineers. Now you want to add clinical services — maybe a telehealth consultation, prescription management, or remote patient monitoring. At what point does your digital health company need a professional corporation? The answer, in most cases, is sooner than you think.
When a PC Becomes Necessary
Not every digital health company needs a professional corporation. If your product is purely a software tool that healthcare professionals use — like an EHR system, a scheduling platform, or an analytics dashboard — you are providing technology, not practicing medicine. No PC required.
But the moment your company crosses the line into delivering clinical services, you enter the territory of the Corporate Practice of Medicine doctrine. That line is crossed when:
- Your company employs or contracts with clinicians who provide patient care through your platform.
- You bill patients or insurers for clinical services rendered through your technology.
- Your platform facilitates prescribing medications as part of an integrated service offering.
- You make clinical decisions or direct the clinical judgment of providers, even indirectly through algorithms or protocols.
- You market clinical services to consumers as part of your product offering.
The key question is not what your technology does, but what service you are selling. If the end product includes a clinical encounter, diagnosis, or treatment, you are in CPOM territory.
Telehealth Platforms and CPOM
Telehealth companies are the most common digital health businesses that need a PC. If your platform connects patients with providers for virtual visits, and you are the entity billing for those visits, you need a compliant corporate structure. This is true even if the providers are independent contractors rather than employees.
The critical factor is control. If your company sets the pricing, manages the patient relationship, handles billing, and defines the clinical workflows, regulators in most CPOM states will view your company as practicing medicine through the providers on your platform. A PC owned by a licensed physician must be the entity that employs or contracts with the clinicians and bills for their services.
Common Telehealth Models That Require a PC
- Direct-to-consumer telehealth — Companies that market clinical services directly to patients and match them with providers (e.g., online dermatology, mental health, primary care).
- Prescription management platforms — Companies that offer medication management, including clinician evaluation and prescription issuance, as a core service.
- Chronic care management — Platforms that provide ongoing clinical monitoring and treatment adjustments for conditions like diabetes, hypertension, or weight management.
- Remote patient monitoring with clinical intervention — When monitoring data triggers clinical actions by providers employed or contracted through your company.
Clinical Services That Trigger CPOM
Beyond telehealth, there are several clinical activities that trigger the need for a PC:
- Diagnostic testing — If your company orders and interprets lab tests, genetic tests, or imaging studies.
- Clinical trial management — When your company provides clinical oversight for research participants.
- Care coordination with clinical judgment — If care coordinators on your platform make clinical recommendations rather than purely administrative referrals.
- Health coaching with clinical components — Programs that cross the line from general wellness coaching into clinical assessment and treatment recommendations.
Structuring Options for Digital Health Companies
Once you determine that a PC is necessary, you have several structuring options:
Option 1: MSO-PC with a Friendly Physician
The most common approach. Your company becomes the MSO, a physician owns the PC, and an MSA connects the two. This gives you operational control of the business while keeping clinical governance in the hands of a licensed professional.
Option 2: Physician Co-Founder Owns the PC
If you have a physician co-founder, they can own the PC directly. This simplifies the structure but introduces complexity around equity, control, and what happens if the physician leaves the company.
Option 3: Multi-State PC Network
For companies operating nationally, a network of state-specific PCs managed through a single MSO provides compliance in each jurisdiction. The MSO standardizes operations while each PC satisfies local CPOM requirements.
The Investor Perspective
Venture capital investors and institutional investors are increasingly sophisticated about CPOM compliance. They will review your corporate structure during due diligence, and a missing or poorly structured PC can delay or kill a funding round. Having your PC structure in place before you fundraise signals maturity and reduces investor risk, making your company a more attractive investment.
If you are building a digital health company and considering adding clinical services, do not wait until you have patients to think about your corporate structure. The time to set up your PC is before you deliver your first clinical encounter, not after a regulator asks why you have not done so.