Corporate Practice of Medicine: The Legal Barrier That Keeps 99% of Operators Out of Telehealth
Why Most Entrepreneurs Can't Launch Telehealth Brands, And How Medstra's Compliant Infrastructure Changes That
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The telehealth market exceeds $15 billion annually, yet 99% of entrepreneurs hit an insurmountable barrier: the Corporate Practice of Medicine doctrine. This article explains CPOM, its consequences, and how Medstra's pre-built infrastructure lets qualified operators launch in 7 days instead of 18 months.
The telehealth market represents one of the most significant wealth-creation opportunities of this decade.
Demand for medical weight loss (GLP-1s like semaglutide and tirzepatide), testosterone replacement therapy (TRT), and peptide therapies is at an all-time high. Consumer spending on these services exceeds $15 billion annually and continues to accelerate.
Yet despite this massive market opportunity, 99% of entrepreneurs who want to enter this space hit an immediate, insurmountable barrier:
The Corporate Practice of Medicine (CPOM) doctrine.
This legal framework, enforced at the state level across most of the United States, makes it functionally illegal for non-physicians to own medical practices or employ doctors. It's the primary reason you can't simply "start a telehealth company" the way you might launch a software business or e-commerce brand.
The Traditional Barrier
For most operators, navigating CPOM compliance requires 12-18 months, $300,000-$700,000 in legal and infrastructure costs, and significant ongoing regulatory risk.
This article explains what CPOM is, why it's so complex, and how Medstra has built a compliant infrastructure that allows qualified operators to launch cash-pay telehealth brands offering GLP-1s, TRT, and peptides in 7 days or less.
$15B+
Annual market
99%
Hit CPOM barrier
7 days
Launch with Medstra
What Is the Corporate Practice of Medicine (CPOM)?
The Corporate Practice of Medicine doctrine is a state-level legal framework that prohibits business corporations and non-licensed individuals from:
- 1Practicing medicine or providing medical services
- 2Employing physicians to provide clinical care
- 3Controlling the medical decisions of licensed physicians
The Legal Foundation
CPOM isn't a single federal law. It's a patchwork of state statutes, regulations, and judicial precedents that vary significantly by jurisdiction.
The doctrine exists to protect a fundamental principle: a physician's medical judgment must serve the patient's best interests, not corporate profit motives.
As established in extensive legal analysis by healthcare law firms including Epstein Becker Green, Cohen Healthcare Law Group, and Hall Render, the doctrine creates a legal "wall" between business operations and medical practice. This separation ensures that clinical decisions (what to prescribe, when to treat, which diagnostic tests to order) remain under physician control, free from commercial pressure.
State-by-State Variations
CPOM enforcement varies dramatically by state:
Strict CPOM States
California, Texas, New York, New Jersey, Oregon
California (Cal. Bus. & Prof. Code § 2400 et seq.) is one of the strictest. SB 351 (2025) further tightened restrictions. Oregon SB 951 (2025) created the strictest framework in the nation, effective 2026.
Moderate CPOM States
Illinois, Ohio, Georgia, Pennsylvania
CPOM prohibitions exist but with certain statutory exceptions.
Minimal CPOM States
Florida, Delaware
Limited or no formal CPOM doctrine, though related statutes may achieve similar aims.
Critical for Multi-State Operations
If you're operating in all 50 states, you must structure your business to comply with California's and Oregon's stringent requirements, even if your company is headquartered in Florida.
What Triggers a CPOM Violation?
A CPOM violation occurs when a non-medical entity exerts control over the practice of medicine. This control can be explicit or subtle:
Direct Violations
- ·Employing physicians as W-2 employees (in strict CPOM states)
- ·Dictating clinical protocols physicians must follow
- ·Setting prescription quotas or volume targets
- ·Controlling hiring/firing of medical staff
- ·Financial incentives tied to clinical volume
- ·Interfering with medical judgment
Subtle Violations (Often Overlooked)
- ·Technology platforms that restrict physician decision-making
- ·Contracts with "approval rights" over clinical decisions
- ·Compensation that penalizes for not meeting business metrics
- ·MSO agreements granting control over clinical operations
Critical Point
Courts look at the substance of the relationship, not just the form of the contract. A contract that says "MSO has no clinical control" but then grants the MSO authority to "oversee clinical quality" or "approve treatment plans" is facially non-compliant.
The Consequences of CPOM Violations
CPOM violations aren't minor regulatory infractions. The consequences are severe and can attack a business from multiple fronts:
State medical boards can impose substantial civil fines. In many jurisdictions, unlicensed practice of medicine is a criminal offense with potential felony charges.
Physicians who participate in non-compliant arrangements risk license suspension or permanent revocation, a career-ending outcome.
State attorneys general can seek injunctions to immediately cease operations. Your business can be forced to shut down while violations are being litigated.
Courts can declare all related contracts void and unenforceable, including MSAs, physician agreements, and patient service agreements. You cannot collect accounts receivable.
Courts can order the business to return ALL revenues earned through the illegal practice. Imagine being forced to return every dollar you've collected.
Competitors, former employees, or other private parties can bring lawsuits alleging CPOM violations. Recent case: AAEMP v. Envision Healthcare.
Public enforcement action destroys credibility with patients, partners, and investors. Makes it impossible to attract legitimate business relationships.
The Enforcement Trend: Increasing Scrutiny
Legal analysis from firms including Nelson Mullins, Maynard Nexsen, and Kirkland & Ellis confirms a clear trend: CPOM enforcement is intensifying.
Recent Developments
- ·California SB 351 (2025): Strengthened CPOM prohibitions targeting private equity
- ·Oregon SB 951 (2025): Created the strictest CPOM framework in the nation
- ·Increased state medical board enforcement actions
- ·Growing number of private lawsuits using CPOM as basis for claims
The regulatory environment is tightening, not loosening.
The Traditional Solution: The MSO-PC Model
For decades, the healthcare industry has used a specific legal architecture to solve the CPOM challenge: the Management Services Organization - Professional Corporation (MSO-PC) model.
How It Works
The Professional Corporation (PC)
Physician-Owned Medical Practice
100% owned by licensed physicians. Employs or contracts with physicians who provide all clinical services. Bears full responsibility for patient care and medical decision-making.
The only entity practicing medicine
- ·Employs physicians
- ·Makes all clinical decisions
- ·Bears medical liability
- ·Maintains licenses and credentials
The Management Services Organization (MSO)
Administrative Infrastructure
Can be owned by non-physicians or business entities. Provides administrative, operational, and technology services to the PC.
Provides non-clinical support
- ·Billing and scheduling
- ·Marketing support
- ·Office space and IT infrastructure
- ·Technology platforms
- ·CANNOT control clinical decisions
The Management Services Agreement (MSA)
Contractually defines the relationship between MSO and PC:
- ✓Explicitly prohibits MSO from exerting control over clinical operations
- ✓Sets compensation at Fair Market Value
- ✓Ensures physician clinical autonomy
Legal Validation
This model has been validated through:
- ·30+ years of use in healthcare
- ·$150+ billion in private equity healthcare transactions
- ·Widespread use by hospital systems (Cleveland Clinic, Mayo Clinic partnerships)
- ·Retail healthcare (CVS MinuteClinic, Walgreens Healthcare)
- ·Federal regulatory approval (including OIG Advisory Opinions)
The MSO-PC model works.
It's legally sound. It's the industry standard. But building it yourself is prohibitively expensive.
The Problem: DIY CPOM Compliance Costs $300K-$700K
While the MSO-PC model solves CPOM from a legal perspective, building this infrastructure as an individual operator is prohibitively expensive and time-consuming.
The Real Costs of DIY CPOM Compliance
per year
Timeline: 12-18 months
The Opportunity Cost
Beyond direct expenses, there's a massive opportunity cost:
- ·18 months of lost revenue while building infrastructure instead of acquiring patients
- ·$500K+ in capital tied up in compliance instead of marketing and growth
- ·Regulatory risk of getting something wrong during the build process
- ·Complexity of managing ongoing physician relationships and corporate governance
For most operators, even those with significant capital, this barrier is insurmountable. The telehealth opportunity is real, but the path to market is blocked by legal and administrative complexity.
How Medstra Solves CPOM: Pre-Built Compliant Infrastructure
Medstra's approach fundamentally changes the equation.
Instead of requiring each operator to build their own MSO-PC structure from scratch, Medstra has built this infrastructure at scale and makes it available to Brand Partners through a compliant framework.
The Medstra Three-Entity Model
Brand Partner
Your Company
Medstra MSO
Infrastructure
IMG
Physician Group
You are two contractual steps removed from the practice of medicine
Brand Partner (You)
Independent Marketing Company
Your company functions as an independent marketing company. You own the brand, acquire patients, and handle non-clinical customer service.
What you do
- ·Brand ownership
- ·Patient acquisition
- ·Customer service (non-clinical)
- ·Coaching (non-medical)
- ·Service agreement with Medstra MSO
Medstra MSO
Infrastructure Provider
Medstra MSO provides the technology platform, HIPAA compliance, pharmacy coordination, and administrative services. We're the infrastructure layer.
What we provide
- ·Technology platform
- ·HIPAA compliance
- ·Pharmacy coordination
- ·Administrative services
- ·Management Services Agreement with IMG
Independent Medical Group (IMG)
Physician-Owned PC
Professional corporation owned 100% by licensed physicians. Employs all physicians, makes ALL medical decisions, provides all clinical services.
Independent entity
- ·Employs all physicians
- ·Makes all medical decisions
- ·Independent clinical judgment
- ·Medical liability
- ·Serves Medstra MSO clients
Critical Legal Protection
You are two contractual steps removed from the practice of medicine. You don't employ physicians. You don't control clinical decisions. You run a marketing company that has a service agreement with an MSO that provides infrastructure to a physician-owned medical practice.
Federal Validation: OIG Advisory Opinion 25-03
In June 2025, the U.S. Department of Health and Human Services' Office of Inspector General (OIG) issued Advisory Opinion No. 25-03, reviewing a multi-entity telehealth MSO arrangement with structural characteristics similar to Medstra's model.
What the OIG Reviewed
- ·A physician-owned professional corporation contracting with an MSO for administrative services
- ·MSO providing technology, billing, and operational support
- ·Healthcare professionals providing telehealth services
- ·All payments at Fair Market Value
- ·Outcome-independent compensation (physicians paid same amount regardless of prescription)
OIG Advisory Opinion 25-03 · June 2025
"Would not generate prohibited remuneration under the Federal anti-kickback statute"
The Principles the OIG Validated
Fees at FMV established by independent valuator. Market-rate, not inflated to induce referrals.
Same payment regardless of outcomes. Paid whether reimbursed or not. No volume bonuses.
Written, signed, 1+ year term, specifies services. Meets 42 C.F.R. § 1001.952(d)(1).
Fee methodology set in advance. Not determined by volume, prescriptions, or outcomes.
Medstra's payment structure follows these federally validated principles. Our IMG physicians are paid a flat fee per consultation ($25-$60, established at Fair Market Value). Same payment whether they prescribe or not. No bonuses for prescription volume. No penalties for declining patients.
This federal guidance, combined with 30+ years of MSO-PC precedent and recent legal analysis from firms including McGuireWoods, Reed Smith, Hall Render, and DLA Piper, confirms the legal soundness of our approach.
The 7-Day Launch: How Pre-Built Infrastructure Eliminates Timeline
Because Medstra has already built the compliant infrastructure, the launch process is transformed from construction to integration.
Traditional Approach
Total: 18 months minimum
Medstra Approach
Total: 7 days
What You Get Immediately
All of this exists before you sign your first patient.
You focus on what you do best: marketing, brand building, patient acquisition. Medstra handles everything else.
What Services Are Available Through Medstra?
Once launched, Brand Partners can offer a full suite of cash-pay telehealth services:
Medical Weight Loss
- ·Semaglutide (GLP-1 agonist)
- ·Tirzepatide (GLP-1/GIP agonist)
- ·Compounded formulations
- ·Physician consultations
- ·Lab monitoring
Testosterone Therapy (TRT)
- ·Injectable testosterone
- ·Topical formulations
- ·Physician-managed protocols
- ·Quarterly labs
- ·Ongoing optimization
Peptide Therapies
- ·BPC-157 (tissue repair)
- ·TB-500 (muscle recovery)
- ·CJC-1295/Ipamorelin
- ·Other therapeutic peptides
- ·Clinical oversight
Consultation Model
All services follow a compliant medical model:
- ·Initial physician consultation (20-30 minutes, telehealth)
- ·Medical evaluation based on symptoms, history, and lab work
- ·Independent clinical decision by IMG physician
- ·Prescription only if medically appropriate
- ·Quarterly follow-up consultations for ongoing patients
- ·Lab monitoring as medically indicated
Physicians make all clinical decisions independently. Brand Partners provide marketing, enrollment, and non-medical support.
Why Launch With Medstra vs. Building Your Own
The comparison is straightforward:
The Strategic Advantage
Speed to Market
Launch in 7 days instead of 18 months
Capital Efficiency
Deploy capital into marketing and growth, not infrastructure
De-Risked Compliance
Leverage Medstra's legal framework and ongoing monitoring
Operational Simplicity
No physician management, no technology builds, no pharmacy negotiations
Focus on Core Competency
You're an operator and marketer. Do what you do best.
Proven Infrastructure
30+ years of MSO-PC precedent, OIG-validated principles, Fortune 500 approach
Who Should Launch With Medstra
Medstra's infrastructure is designed for qualified operators who:
Ideal Brand Partners
- Existing audiences (50K-500K+ followers in health/fitness/wellness)
- Proven paid advertising systems ($50K-$200K+/month profitably)
- Email lists or communities in relevant niches
- Track record of customer acquisition
- Understand CAC/LTV economics
- Can deploy $150K-$400K for patient acquisition
- Want to build a brand with long-term value
Not For
- Beginners without marketing experience
- Operators who can't acquire patients profitably
- People without capital for growth
- Those wanting passive income without work
Medstra provides infrastructure. Brand Partners provide marketing execution. Success requires both.
The Regulatory Landscape: Why Now Is the Time
The telehealth market is at an inflection point.
Consumer Demand Accelerating
- ·GLP-1 demand at all-time high
- ·TRT market continues to grow
- ·Peptide therapy entering mainstream
Regulatory Scrutiny Intensifying
- ·California SB 351 (2025) tightened restrictions
- ·Oregon SB 951 (2025) strictest framework
- ·State medical boards increasing enforcement
- ·Private litigation growing
Two Paths Forward
Path 1: Non-Compliant Entry
- ·Short-term speed advantage
- ·Significant long-term risk
- ·Potential catastrophic enforcement
- ·Regulatory environment getting stricter
Path 2: Compliant Infrastructure
- ·Medstra reduces launch to 7 days
- ·Strong long-term foundation
- ·Regulatory-proof business model
- ·Sustainable competitive advantage
The smart operators are choosing Path 2.
As enforcement tightens, having an unimpeachable compliance structure isn't optional. It's a competitive moat.
Conclusion: Speed Through Compliance
The Corporate Practice of Medicine doctrine is the primary legal barrier preventing entrepreneurs from entering the telehealth market.
For most operators, solving this barrier requires 12-18 months, $300,000-$700,000 in capital, and significant ongoing complexity.
Medstra has solved this at scale.
By building a centralized, compliant MSO infrastructure with contractual relationships to a physician-owned Independent Medical Group, we've created a turnkey platform that allows qualified operators to launch cash-pay telehealth brands offering GLP-1s, TRT, and peptides in 7 days.
This isn't about bypassing regulations. This is about mastering them, using the same legal framework that hospital systems, retail healthcare giants, and private equity firms have used for 30+ years, adapted specifically for telehealth operators.
The opportunity in telehealth is massive.
The legal barriers are real.
The solution exists.
Medstra provides the compliant infrastructure.
You provide the marketing execution.
Together, you launch in 7 days.
Legal Disclaimer
This article is for educational purposes only and does not constitute legal advice. Healthcare laws vary by state and are subject to change. While Medstra provides a compliant legal framework based on established MSO-PC precedent and federal regulatory guidance, we recommend all Brand Partners consult with qualified healthcare attorneys to understand compliance requirements in their specific situation. The CPOM doctrine is a complex area of law, and this article provides a general overview for educational purposes. Individual circumstances may require specific legal analysis.
About Medstra
Medstra provides compliant MSO infrastructure for telehealth operators. Our three-entity model (Brand Partner, MSO, and Independent Medical Group) creates the structural separation required for CPOM compliance while enabling entrepreneurs to launch cash-pay telehealth brands in 7 days. Founded on 30+ years of MSO-PC precedent and aligned with OIG-validated Anti-Kickback principles, Medstra serves qualified operators who want to build telehealth brands without building infrastructure.
Ready to launch your telehealth brand with compliant infrastructure?
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