CPOM Compliance for Pennsylvania Healthcare Startups
Pennsylvania’s corporate-practice doctrine is older than most state statutes. Neill v. Gimbel still frames why a lay LLC cannot employ Pennsylvania physicians, or psychologists, dentists, or counselors, to practice their profession.
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Key authorities (official text)
Neill v. Gimbel Brothers (1938) · Medical Practice Act · Professional Corporation LawMedical Practice Act of 1985 (63 P.S. §§ 422.1 et seq.) · 63 P.S. § 422.10 (unauthorized practice of medicine and surgery) · Professional Corporation Law of 1988 (15 Pa.C.S. §§ 2901 et seq.) · State Board of Medicine.
Pennsylvania CPOM begins with the 1938 Supreme Court case Neill v. Gimbel Brothers, Inc.: a lay corporation cannot practice a licensed health profession. The Medical Practice Act and Professional Corporation Law keep that rule current. Shares of a Pennsylvania medical PC must be held by licensed professionals. Behavioral health platforms are in scope, not just MD/DO practices.
In Neill v. Gimbel Brothers, Inc. the Pennsylvania Supreme Court held that a department store could not operate an optometry department through lay employees. The reasoning (licensed professional judgment is not a commercial product a corporation may own) was never overturned. Courts and boards have extended it to medicine, dentistry, psychology, podiatry, and other licensed health professions.
The Medical Practice Act of 1985 restricts the practice of medicine to licensed individuals. Section 10 (63 P.S. § 422.10) is the unauthorized-practice rule: no person other than a medical doctor may practice or purport to practice medicine and surgery except as authorized in the Act. A lay LLC that employs Pennsylvania physicians to deliver care is the corporate version of that problem. Official text: Pennsylvania General Assembly, 1985 Act 112 PDF. The Professional Corporation Law of 1988 requires that a professional corporation’s shares be held by individuals licensed to provide those services. There is no Pennsylvania mechanism for a non-licensee to own shares in a medical PC through a voting trust or “economic-interest-only” side letter.
- A Delaware LLC cannot be the employer of record for Pennsylvania physicians. The clinical employer is a Pennsylvania PC or PLLC owned by licensed professionals.
- Psychology, LCSW, and LPC practices sit under the same corporate-practice logic. Multi-discipline platforms often need more than one professional entity.
- The Bureau of Professional and Occupational Affairs and the constituent boards (Medicine, Osteopathic Medicine, Psychology) enforce against licensees in non-compliant arrangements. The Attorney General can seek injunctive relief.
- A medical-director title on a lay company does not satisfy ownership. Pair a physician PC owner with an FMV MSA.
How an MSO-PC works in Pennsylvania
The PC is formed under the Professional Corporation Law with 100% licensed-physician ownership for a medical practice. The MSO provides non-clinical services. Clinical protocols, credentialing, and clinician employment sit in the PC. Foundry forms the MSO-PC ($15,000) and matches a friendly PC owner ($3,000/mo) for the states you operate, not a plug-in Super PC.
Operational checklist: CPOM compliance. Setup: MSO-PC structure. Longer narrative: Pennsylvania CPOM blog guide.
Pennsylvania CPOM FAQ
What is the legal basis for CPOM in Pennsylvania?
Neill v. Gimbel Brothers, Inc. (1938), the Medical Practice Act of 1985, and the Professional Corporation Law of 1988. 63 P.S. § 422.10 is unauthorized practice of medicine and surgery. The doctrine applies across licensed health professions, not only physicians.
Can a Delaware LLC own a Pennsylvania medical practice?
No. The entity that employs physicians and delivers care in Pennsylvania must be a professional corporation or PLLC owned by licensed professionals. A Delaware LLC can own the MSO.
How does Foundry help with Pennsylvania CPOM?
MSO-PC formation is $15,000 one-time. A Pennsylvania-licensed physician PC owner is $3,000/mo. Foundry is not a law firm.