California - Wasting an opportunity

Here in California we hold ourselves out to be the last bastion of autonomous practice.  As one of only 7 states left in the union that do not allow hospitals to employee physicians directly we cling to a law written in 1930 that protects our physicians from interfering non-physician entities like CEO's, CFO's, COO, etc.  We do so in the face of the looming shortage of physicians (many say it already here) and at the detriment of all the Californians who don't live in suburban and metropolitan areas where access is not a problem.  Rural areas and the medically under served are left to find their own solutions, wallowing in Medicaid reimbursement or better yet indigent care that pays zero..


The state of California website states the following:

Business and Professions Code section 2400, within the Medical Practice Act, provides in pertinent part:
"Corporations and other artificial entities shall have no professional rights, privileges, or powers."

The policy expressed in Business and Professions 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. The decisions described below are examples of some of the types of behaviors and subtle controls that the corporate practice doctrine is intended to prevent. 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 overall 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.

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

• Ownership is an indicator of control of a patient's medical records, including determining the contents thereof, and should be retained by a California-licensed physician.
• Selection, hiring/firing (as it relates to clinical competency or proficiency) of physicians, allied health staff and medical assistants.
• Setting 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.
• Approving of the selection of medical equipment and medical supplies for the medical practice.

The types of decisions and activities described above cannot be delegated to an unlicensed person, including (for example) management service organizations. While a physician may consult with unlicensed persons in making the "business" or "management" decisions described above, the physician must retain the ultimate responsibility for, or approval of, those decisions.
The following types of medical practice ownership and operating structures also are prohibited:

• Non-physicians operating in a business for which physician ownership and operation are required: any business advertising, offering, and/or providing patient evaluation, diagnosis, care and/or treatment. These are services which can only be offered or provided by physicians.
• Physician(s) operating a medical practice as a limited liability company, a limited liability partnership, or a general corporation.
• Management Service Organizations arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician's medical practice (non-physician exercising controls over a physician's medical practice, even where physicians own and operate the business).
• A physician acting as "medical director" when the physician does not own the practice. For example, a business offering spa treatments that include medical procedures such as Botox injections, laser hair removal, and medical microdermabrasion, that contracts with or hires a physician as its "medical director."

"The Medical Practice Act" is not a static document and begs for updating and re-thinking.  It ties one hand behind the back of recruiters like me who simply want to serve their communities and serve their patients.  One interesting note:  Exemptions for direct hire exist in California for county facilities, the prison system, teaching institutions, and federal facilities like the VA.   Since we have these exemptions how about adding one more layer; rural/district hosptials!

Until next time...