The Corporate Practice of Nursing in Pennsylvania: An Emerging Question for Health Care Organizations
The health care sector in Pennsylvania is likely familiar with the Commonwealth’s restrictions on the corporate practice of medicine (CPOM). The CPOM doctrine, on a general level, prohibits non-physicians and non-professional entities from owning, controlling or improperly influencing licensed professionals and/or professional entities. CPOM restrictions frequently influence how physician and advanced practice provider relationships function in relation to management services organizations (MSOs) and other strategic health care ventures. A key related question persists: Do the same CPOM principles that apply to physicians also apply to registered nurses?
The continuing evolution of health care service delivery models makes this question more relevant than ever. Beyond fulfilling roles in hospitals and physician practices, nurses also perform services for care-management organizations, school districts, insurers and other businesses that are not themselves licensed professional entities (or otherwise owned or controlled by licensed professionals). The role of a registered nurse can vary from administrative and care-coordination functions to the provision of direct patient care, depending on the type of organization.
The chief CPOM case in Pennsylvania, Neill v. Gimbel Brothers, Inc., 199 A. 178 (Pa. 1938), involved optometry. The Pennsylvania Supreme Court had to address whether an unlicensed, non-professional corporation could employ a licensed professional, in this case an optometrist, to provide professional services to the public. In answering “no,” the court focused in part on the distinction between an individual professional who remains, at all times, subject to licensing requirements, professional regulation and potential discipline, and an entity that cannot possess professional qualifications. The court further reasoned that employment of a licensed professional by an unlicensed, non-professional corporation creates an inherent tension between the professional’s obligations to clients or patients and the professional’s obligations to the corporate employer.
Applying the analysis to registered nurses invokes some of those same concepts. Nursing is a licensed profession regulated by the Pennsylvania State Board of Nursing under the Professional Nursing Law. Interestingly, Pennsylvania’s nursing regulations expressly address the ability of registered nurses to form professional corporations with certain other licensed health care professionals. These concepts are foundational to a key rationale in support of CPOM the need to balance appropriate boundaries between business and profit motivations, and professional clinical judgment and patient care.
These considerations beg the question: To what extent are Pennsylvania’s CPOM restrictions binding on arrangements involving registered nurses?
This question has added significance in situations when a non-professional entity holds itself out as providing nursing services directly to patients or is engaged in contractual arrangements that could arguably affect a nurse’s independent professional judgment. In contrast, enterprises engaging registered nurses to perform administrative, utilization review, case management or similar functions present materially different considerations.
As organizations develop new health care business structures, the corporate practice of nursing is an issue worth keeping on the radar. The appropriate analysis may depend heavily on the nature of the nursing services, how those services are presented to patients and the public, and the degree of control retained by the employing or managing entity, especially with respect to clinical activities, judgement and decision-making. Our health care attorneys explore these issues regularly and in various contexts and can help assist you in determining whether CPOM restrictions apply to registered nurses in a particular venture.
