Private equity and other nondoctor investment in U.S. health care has grown significantly over the past decade thanks to investors who have been keen on getting into a large market with potentially high returns. As business opportunities abound for both licensed physicians, dentists and other licensed and nonlicensed entrepreneurs and investors in the ownership and operation of medical and dental practices, ambulatory care facilities, drug treatment facilities, diagnostic testing facilities and other types of health care facilities, doctors and business individuals and entities must ensure that the structure of their businesses comply with their state’s corporate practice of medicine (CPOM) doctrine.

Under the auspices of protecting the public, the American Medical Association (AMA) promulgated the initial version of the CPOM doctrine. In simple terms, the CPOM doctrine generally prohibits nonlicensed persons, including individuals and business entities, from employing physicians to practice medicine (or dentists to practice dentistry) on their behalf. The intent of the doctrine was to ensure that only licensed medical professionals delivered medical care and that lay persons and entities not influence treatment decisions. The premise underlying the doctrine was that it would protect patients from potential abuses because commercialized medicine would ultimately divide a physician’s loyalty between profits and the delivery of quality patient care.