The state of California has specific guidelines for medical practice organizations forming business entities. Essentially the state requires medical corporations to be formed as a Professional Corporation (PC), the make-up of the corporation a must be at least 51% physician owned, and the corporation must use Fictitious Name in accordance with state law.

Prohibited operating structures include:

  • Non-physicians owning or operating a business that offers patient evaluations, diagnosis, care and/or treatment
  • Physicians operating a medical practice as a LLC, LLP, or a general corporation
  • Management service organization arranging for, advertising, or providing medical services rather than only providing administrative staff and services for a physician’s medical practice (non-physician control despite physician ownership and operation); and
  • Physician acting as medical director when the physician does not own the practice (e.g. Medi-spa owned by non-physician, offering medical services)

How Can Physicians Operate as a Corporate Structure?

  • Comply with Moscone-Knox Professional Corporation Act (Cal. Corp Code section 13400 et seq.), and BPC 2408
  • The make-up of a medical corporation is at least 51% physician owned and no more than 49% of the other professionals listed in the Corp Code section 13401.5, may be shareholders, officers, directors, or professional employees.
  • Use of Fictitious name in accordance with BPC sections 2285 and 2415

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nCred does not provide legal advice or assistance with setting up business entities. Before beginning the process of credentialing and contracting with health plans in California, be sure to consult legal counsel to ensure your have properly formed your medical corporation.