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Another Way to Operate a Health-Care Facility

Connecticut Law Tribune

May 24, 2010

Authors: John H. Lawrence, Vincenzo Carannante

For many years Connecticut, like most other states, has prohibited physicians and other health-care professionals from practicing medicine as an employee of a corporation. The legal doctrine was developed in the early days of the 20th century, before the adoption of professional corporation statutes, and is known as the prohibition on the “corporate practice” of medicine.

The Connecticut prohibition was originally expressed in two state attorney general opinions, one of which states that “[al]though not expressly stated in the [licensing] statute, the implication is clear that the practice of medicine and surgery is restricted to individuals and does not include corporations.” See Op. Conn. Atty. Gen. 248 (December 3, 1954). In other words, Sections 20-9 and 20-10 of the Connecticut General Statues prohibit any person from practicing medicine without a license, and the only persons who are qualified to obtain a license are individuals.

The corporate practice doctrine is rooted in the historic efforts of physicians to maintain their independence and avoid undue influence from large corporations, including hospitals, and to preserve the traditional doctor-patient relationship, free from the predations of Wall Street and the dominance of institutional health-care providers.

In his book, “The Social Transformation of American Medicine,” Paul Starr calls these efforts the preservation of the “sovereignty” of the medical profession, and he argues that it involved the “restriction of competition, the limiting of regulation by government and private organizations and the authority to define and interpret the standards and understandings that govern medical work.”

Needless to say, the economic and political forces that have transformed American medicine in the last 50 years have also rendered the corporate practice doctrine an odd artifact of a simpler age and philosophy. Noteworthy in this history is the fact that the American Medical Association no longer opposes the corporate practice of medicine. However, it is a doctrine that is still very much alive and something that must still be taken into account in planning health-care organizational structures because the consequence of a violation by a physician is the loss of his or her license. See Lieberman v. State Board of Optometry, 130 Conn. 344 (1943).

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