Compliance with CPOM goes beyond being a technical requirement; rather, it’s the basis for a sound and scalable medical spa or wellness clinic. So, if you’re opening a business or reviewing your business structure, either for a solo practice or a business, being aware of the Corporate Practice of Medicine, if you’re not a physician, is crucial if you’re planning to open a business involving medical practices such as injectables, IV, and weight loss.
This article dissects the ways and means of being in compliance with the law without relinquishing control and growth capabilities.
What Is the Corporate Practice of Medicine?
“The Corporate Practice of Medicine” is a legal concept that is recognized in most U.S. states that prevents anyone other than licensed physicians from owning or controlling a medical practice. The purpose of this concept is to maintain the autonomy of the practice of medicine and to ensure that decisions regarding this practice are made in the best interest of the patient.
Such are the jurisdictions of California, Texas, New York, and New Jersey, and these enforce the CPOM act fully, while the hiring and compensating of physicians are only in the capability of physicians and do not involve non-physicians either in the hiring or influencing any kind of medical decision in the daily operations of the concerned clinic or health care system.
The MSO-PC Model: A Proven Framework
For non-physician entrepreneurs and investors looking to legally participate in the booming med spa or concierge wellness market, the most reliable solution is the MSO-PC model (Management Services Organization and Professional Corporation).
Here’s how it works in practice:
- The Professional Corporation (PC) is owned by a licensed physician (or a group of physicians, depending on the state). This entity delivers the actual medical services, employs or contracts with providers like NPs, PAs, or RNs, and bills patients for care.
- The Management Services Organization (MSO) is the business entity that handles everything except the delivery of care, marketing, real estate, payroll (excluding providers), scheduling software, HR, branding, and administrative support.
A contract known as a Management Services Agreement (MSA) governs the relationship between the MSO and the PC. The PC pays the MSO a flat fee or a performance-based fee (with strict legal structuring) for those business services.
This separation allows the business to grow under non-physician ownership while keeping the clinical decision-making fully within the physician-owned PC, thereby maintaining CPOM compliance.
What CPOM Compliance Looks Like in Day-to-Day Operations
Even with the MSO-PC model in place, compliance isn’t a one-time task. It must be actively maintained through policies, behaviors, and written agreements that clarify who’s responsible for what.
For example, your Medical Director, not your CEO, COO, or marketing manager, must approve protocols for injectables, weight loss medications, or IV therapy. Providers should never be pressured into performing more procedures or meeting revenue quotas. These actions could be interpreted as business interference in clinical judgment.
Marketing campaigns should never promise outcomes that haven’t been reviewed or approved by the licensed medical professionals involved. And revenue from clinical services must flow into the PC’s bank account, not the MSO’s. The MSO can only be compensated for services agreed upon in the MSA.
Common CPOM Traps to Avoid
Each of the following examples can trigger regulatory red flags, particularly in competitive markets or during legal disputes. Violations often happen unintentionally. Here are a few situations where clinics drift out of compliance:
- Employing a physician as a W-2 under a non-physician-owned LLC. In CPOM states, this is usually not allowed unless the structure includes a PC and MSO.
- Having medical providers report directly to non-clinical managers. This confuses lines of authority and may imply business influence over care.
- Structuring bonuses around patient volume. Bonuses tied to medical output rather than business performance can suggest clinical coercion.
- Mixing funds between the PC and MSO. Co-mingling revenue creates major legal issues, especially during audits or lawsuits.
- Offering treatments like weight loss injections, Botox, or hormone therapy without a documented oversight protocol. If a nurse or mid-level provider is administering care under standing orders, those orders must come from the PC and supervising physician, not the MSO.
Building for Scalability Without Breaking the Law
If you’re planning to grow from a single med spa into a multi-location or even multi-state brand, your structure must be flexible and compliant. Here’s how:
- Start with strong agreements. The MSA should be drafted by a healthcare attorney and include performance benchmarks, fee structures, and termination clauses that protect both parties. Employment and supervision contracts for providers must also be tailored for CPOM jurisdictions.
- Maintain clear operational boundaries. The business team should handle branding, leases, marketing, and admin. The clinical team, led by the medical director, should handle hiring of providers, protocol development, and patient care.
- Invest in compliance audits. At least once a year, your legal or compliance partner should review your setup. If you add services like telehealth, GLP-1 weight loss programs, or remote providers, update your contracts and oversight protocols accordingly.
- Leverage local physician ownership. In some CPOM states, a physician must own 51% or more of the PC. Consider partnering with physicians in those regions to expand compliantly without creating risk for your business.
- Document everything. From medical protocols to consent forms, from provider supervision logs to scope of practice checklists, the more you document, the easier it becomes to prove compliance if questioned by regulators or insurers.
CPOM and Your Medical Director
Many clinics don’t realize how central the medical director’s role is to staying CPOM-compliant. The medical director’s role should not be that of a phantom presence; instead, they should be monitoring the protocols, the audits, and the providers.
It is even more important, especially if you provide weight loss services, injectable treatments, and/or IV therapies, which involve a need for standing orders and collaborating agreements regarding patient criteria, emergency procedures, and delegation criteria.
When working as a telemedicine medical director for out-of-state clients, one has to ensure that such practices are legal in one’s state of residency and that one is supervised accordingly. In high-risk states, one might not be able to supervise from a distance and thus would need a local physician to be either in-state or at least licensed to practice in that state.
CPOM Risk Is Real, But Manageable
The fear of laws regarding CPOM should not stop you from getting started or growing within the industry of wellness. It will help you to move forward with the proper structure, so you will end up growing, branding, and getting results.
At Wellness MD Group, we have assisted many med spas, concierge practices, and aesthetic clinics with structuring MSOs, forming “bullet proof” agreements, and launching multi-state brands that would “weather” regulatory challenges. Whether it is launch time or expansion time, regulatory compliance is a wise “return on investment.”
