With the coming of regulations allowing doctors the tax advantages of corporate employees, the doctors will probably be more solidly behind the positions of the AMA in favor of the prohibition against the corporate practice of medicine. For example, at least one state group, the Tennessee State Medical Association, has recently adopted a resolution against practicing medicine in the corporate form, and there have been no recent reports of state associations taking the opposite position. The American Hospital Association which seems to lead the opposition to the corporate practice rule does not attack the rule as being intrinsically bad but takes the position that it is being incorrectly applied. It is insisted by this group that when a corporation receives payments for the professional services of a physician it does not necessarily follow that the corporation is engaging in the practice of medicine. This statement could very easily hold a solution to the problem which would be acceptable to both sides. The solution would not abolish the rule but limit and clearly define its application by a list of exceptions: First of all, it would seem possible to allow non-profit corporations and corporations managed and staffed entirely by doctors to engage in the practice of medicine since from all indications they do so in spite of the rule; and secondly there seems to be no valid agreement against allowing doctors to be "employed" by hospitals as long as the capacity in which they serve is that of an independent contractor. Thus the doctor would be a physician first with his first loyalty to his patient controlled by the rules of the American Medical Association, while the payments for the services of the doctor. This type of arrangement would have the same result as if the doctor simply paid the hospital for its essential facilities and services, but it would give the hospital the advantage of maintaining a staff of doctors with diversified qualifications on a reasonably certain basis. The problem is one which should be solved with the utmost haste for it affects every member of society, and the services of both the opposing camps are essential in the fight to improve public health standards. The problem could be solved through the legislatures of the states but these bodies are at times quite slow to act. It would seem therefore that the courts should recognize the problem and judicially modify or even change the rule to conform to the current needs of society.
Jerry B. Martin,
Tax and Other Legal Aspects of the Corporate Practice of Medicine,
13 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol13/iss3/10