Published in Action Report - Medical Board of California, July, 1998, Vol. 66, p. 3:


"Medical Board of California's Perspective to Provide Guidance on the Prohibition Against the Corporate Practice of Medicine."

"The Medical Practice Act, Business and Professions Code Section 2052, provides:

"Any person who practices or attempts to practice, or who holds himself or herself out as practicing ... (medicine) without having at the time of so doing a valid, unrevoked or unsuspended certificate ... is guilty of a misdemeanor."

"Business and Professions Code Section 2400, within the Medical Practice Act, provides in pertinant part:

"Corporations and other artificial entities shall have no professional rights, privileges, or powers."

"The policy expressed in Business and Professional Code Section 2400 against the corporate practice of medicine is intended to prevent unlicensed persons from interfering with or influencing the physician's professional judgment. From the Medical Board's perspective, the following health care decisions should be made by a physician licensed in the State of California and would constitute the unlicensed practice of medicine if performed by an unlicensed person:

  • Determining what diagnostic tests are appropriate for a particular condition.
  • Determining the need for referrals to or consultation with another physician/specialist.
  • Responsibility for the ultimate over-all care of the patient, including treatment options available to the patient.
  • Determining how many patients a physician must see in a given period of time or how many hours a physician must work.

    • The above represents only those issues addressed by the board to date and is not intended to be all-inclusive."

    "In addition, from the Medical Board's perspective, the following "business" decisions and activities involving control over the physician's practice of medicine should be made by a physician licensed in the State of California and not by an unlicensed person or entity:

  • Ownership and control of a patient's medical records, including determining the contents thereof.
  • Selection (hiring/firing as it relates to clinical competency or proficiency) of professional, physician extender, and allied health staff.
  • Set the parameters under which the physician will enter into contractual relationships with third-party payers.
  • Decisions regarding coding and billing procedures for patient care services.
  • Approval of the selection of medical equipment.

    • The types of decisions and activities described above cannot be delegated to any unlicensed person, including (for example) management service organizations. While a physician may consult with unlicensed persons in making the "business" decisions described above, the physician must retain the ultimate responsibility for, or approval of, those decisions."

    (Comment by John H. Frenster, M.D.):
    The above statement by the Medical Board of California is under severe attack by the Corporate Practice of Medicine Working Group, which appears intent on weakening or reversing each of these patient and physician safeguards. If you are interested in this issue (!), especially if you are a registered voter in the State of California, please convey your opinions as soon as possible to your California State Senator and to your State Assembly Representative, and to:
    John M. Puente
    Legal Counsel to the Medical Board
    1426 Howe Avenue, #54
    Sacramento, CA 95825
    Fax: 916/263-2387

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    Phone: 650/367-6483
    Fax: 650/364-1773

    clinicalfreedom: "the ability of the patient and the physician to do all that is medically necessary without interference."