aapa summary of physician assistant ownership

DLMR_628211.1

PHYSICIAN ASSISTANT OWNERSHIP OF MEDICAL PRACTICES

Introduction

While most PAs continue to deliver medical care in more traditional employment

relationships, the ability of PAs to have ownership interests in state-approved professional

entities is a growing trend throughout the country as the health care system evolves to find ways

to extend quality, cost-effective medical and surgical care to patients.

The physician assistant profession was created by physicians to train highly

skilled individuals to practice medicine with physician delegation and supervision. PAs have

embraced the concept of working under physician supervision. They count on physicians for

advice, direction, and intervention for complex patient conditions. It is this team-based approach

to health care delivery, with the physician as the head of the team, that is the tenet of the PA

profession. Physicians, on the other hand, trust PAs to provide high quality care within their

delegated scope of practice.

While physicians provide direction and oversight in clinical matters, changing

economics in the health care system have led to new roles for PAs in health care practices. In

addition to taking on greater administrative duties, some PAs also participate in the management

and ownership of practices. While the physician remains the clinical leader of the physician-PA

team, some PAs have become owners or co-owners of health care practices.

PAs’ adoption of these roles has often occurred due to very practical

considerations. A PA practicing in a rural area may assume ownership of a clinic from a retiring

physician when another doctor in a neighboring town agrees to take over supervision of the PA,

but does not wish to take on additional ownership responsibilities. This allows the practice to

remain open and ensures that the clinic’s patients do not have to drive for miles to access needed

health care. Another common scenario is that a PA may be willing to fund the start up of a

practice in a medically underserved community where no physician wants to do so, with a doctor

in a neighboring community serving as the supervising physician. Often, a PA will share

ownership in the practice with the supervising physician. In fact, the Medicare program has

provided reimbursement to practices in which PAs share ownership since 2003. PAs have been

authorized to own certified rural health clinics for over 30 years.

The business of owning a health care practice can be organized in a variety of

ways, depending on applicable state law and the needs of the practice’s owners. In order to

protect their personal assets from business debts, many practice owners form a corporation.

Many states require health care professionals who incorporate to use professional corporations

rather than general business corporations. Many states now also recognize professional limited

liability companies as a vehicle for owning a professional medical practice. Other less common

forms of ownership permitted in some states include partnerships or professional limited liability

partnerships. The differences between these types of entities are described in the “Choice of

Business Entity” section below.

2 DLMR_628211.1

Employment and Supervision. The concept of PA ownership or co-ownership of

a medical practice is not inconsistent with the role of the physician as clinical supervisor. Some

early PA practice acts linked the role of supervising physician with a PA’s employer (i.e., the

supervisor had to be the employer). This was understandable when almost all PAs worked in a

physician’s outpatient office. But today many PAs work for hospitals, group practices, or other

business entities. Often supervising physicians have separate business relationships with the

employers of PAs, rather than serving as the PAs’ direct employers themselves. Most states and

the Medicare program now recognize that employment and supervision are separate and

unrelated aspects of medical practice, freeing PAs to be supervised by physicians who are not

their employers. For example, a hospital-employed PA can provide first assisting services and

be supervised by a surgeon who is not employed by the hospital. This can allow for a wider

range of business relationships between corporations or other business entities, physicians, and

PAs.

Ultimate Responsibility of the Supervising Physician. In most cases where PAs

have assumed a role in practice ownership, the PA and supervising physician co-own a

professional practice entity that employs them both. It is less common for a PA to be the sole

owner of a practice that employs or contracts with a supervising physician. A few states prohibit

a PA from directly employing his or her supervising physician.1 However, in most states that

permit PAs to be the sole owners of a medical practice, a PA-owned practice entity can structure

its relationship with an employed or contracted supervising physician in a manner that preserves

the required role of the physician as clinical supervisor. PAs are the agents of their supervising

physicians and must always practice under the physician’s oversight. Regardless of the extent to

which ownership of a practice is vested in a PA, the supervising physician retains professional

authority over medical decisions and is ultimately responsible for the care provided by the PA to

patients. Some might question whether the physician’s judgment and oversight responsibility

could be compromised when the physician is employed by a PA-owned entity. The answer is a

resounding, “No.” A physician would not put his/her license and ability to practice medicine on

the line by allowing a PA to deliver care which the PA is not educated and trained to provide, or

without appropriate supervision. Moreover, in many states physicians are employed by

hospitals, HMOs or other lay entities and nevertheless maintain their clinical independence.

The American Academy of Physician Assistants supports laws that allow for

flexible and efficient utilization of PAs, consistent with physician supervision and the provision

of quality health care, and opposes laws that link supervision and employment (AAPA Policy

Manual HP-3400.2.1). While PAs are committed to practicing with physician supervision, under

some circumstances full or partial ownership of a professional practice may provide the best

avenue for them to meet patient needs.

Choice of Business Entity

One of the first decisions the founders of a medical practice must make is the

form of business entity they will utilize. Although a professional practice can be operated as a

sole proprietorship, without the use of an entity, it is preferable to establish an entity for two

1 These states include Maine, Oklahoma and Utah.

3 DLMR_628211.1

reasons. First, the use of certain types of entities can limit the personal liability of the entity’s

owners for certain debts and liabilities, other than malpractice liability. (In most states a

professional remains personally liable for his or her malpractice.) Second, there may be tax and

employee benefit advantages in establishing an entity.

State Law. State law determines which types of entities may own a medical

practice. These laws vary from state to state and frequently do not specifically mention PAs. In

many states, only licensed professionals and professional entities, such as professional

corporations, professional limited liability companies and professional partnerships or

professional limited liability partnerships, may own a medical practice. In these states, the law

strictly limits who may be owners of the entity. Some of these states limit ownership to a single

profession, while others permit ownership by two or more compatible professions. In some of

the states which limit ownership to a single profession, a professional entity may be owned 100%

by one or more PAs, or 100% by one or more physicians, but PAs and physicians may not be co-

owners. In some of the states which permit ownership by two or more compatible professions, a

professional entity can be co-owned by PAs and physicians. A few states that permit joint

ownership limit the percentage that a PA may own. For example, in California and Kansas, PAs

may only own up to 49% of the shares of a medical professional corporation while the physician

co-owner(s) must own at least 51%. A few states do not permit PAs to be either owners or co-

owners of professional entities.

There are also some states that do not limit practice ownership to licensed

professionals or professional entities, but permit general business corporations, limited liability

companies or other lay entities to own a practice. In these states, any combination of owners,

including non-professionals, is often possible. Usually, such states prohibit the lay owner from

unduly influencing the professional judgment of the professionals.

Appendix 1 summarizes the laws governing practice ownership in each state and

the District of Columbia. As the Appendix indicates, many state laws do not specifically address

either PA ownership or joint ownership, but simply state generally that professional entities must

be owned by licensed professionals, either within a single profession or within two or more

compatible professions, depending on the state. In states with general laws of this type, PA

ownership and/or co-ownership is arguably permissible, in the absence of a prohibition on such

arrangements. The state licensing boards in some of these states have adopted policies either

permitting or prohibiting such arrangements. In states where the law is unclear, AAPA State

Government Affairs staff, legal counsel or state regulatory authorities should be consulted before

proceeding.

Professional Corporations. The majority of professional practices are currently

owned through a professional corporation, also known as a professional service corporation in

some states. Corporations, including professional corporations, have two defining

characteristics.

First, a corporation’s shareholders are not liable for certain liabilities of the

corporation, such as obligations under office or equipment leases, supply contracts, or tort

liability for incidents such as “slip and fall” accidents that may occur on the practice premises.

In most states, however, this protection does not extend to liability of a shareholder for his or her

4 DLMR_628211.1

own professional malpractice. In other words, each individual shareholder is liable for any

damages resulting from his or her own professional negligence. For this reason, it is incumbent

upon PAs who practice in any type of business entity, including professional corporations, to

make sure they are adequately insured. Such insurance should cover both the entity and each

individual practitioner.

The second defining characteristic of a corporation, including a professional

corporation, is that it has an indefinite life and its shares are freely transferable, subject to

limitations under state law or any agreement between the shareholders limiting share ownership.

In most states, shares in a professional corporation can only be sold or transferred to other

“qualified persons,” which is typically defined as a practitioner who practices the profession for

which the professional corporation was formed, or (in some states) a related profession. The

shareholders of many professional corporations also enter into a “Shareholders’ Agreement”

which further limits the circumstances under which any of the shareholders may transfer their

shares to third parties. A Shareholders’ Agreement may also establish the price at which the

corporation or other shareholders may purchase shares from a departing shareholder, e.g., upon

retirement or termination.

One of the potential disadvantages of a corporation is that its profits, if any, can

be subject to “double taxation.” In other words, if the corporation has profit at the end of its tax

year, that profit is taxable to the corporation. The profit is taxed a second time when it is

distributed to its shareholders. This problem can be successfully addressed in either of two

ways. First, if a corporation pays out all of its income in the form of reasonable compensation or

pays other bona fide expenses prior to the end of the tax year, it will have no taxable profit.

Secondly, a corporation can make an “S” election. By electing to be treated as a “Subchapter S”

corporation, it is treated by the IRS as a “flow through” entity, which means that any profit at the

end of the tax year is treated as having been received directly by the shareholders, thereby

avoiding taxation at the corporation level. There may, however, be other consequences of

making an “S” election which may depend on the individual circumstances of the parties.

Therefore, whether to make an “S” election should be discussed with the practice’s accountant or

attorney.

Professional Limited Liability Companies. Professional limited liability

companies are a relatively new type of entity that are increasingly used as a vehicle for

ownership of a professional practice. A professional limited liability company is, in effect, a

hybrid between a corporation and a partnership (discussed below). The owners of a professional

limited liability company, who are known as “members,” enjoy limited liability from the

professional limited liability company’s business liabilities to the same extent as shareholders in

a professional corporation. In addition, a professional limited liability company is treated under

tax law similar to a partnership or a Subchapter S corporation, i.e., it is a “flow through” entity,

thereby avoiding double taxation. Most states permit a professional limited liability company to

be owned by a single member, but there are a few states where they must be owned by at least

two members. Because professional limited liability companies are a relatively new form of

professional entity, it remains more common to own a professional practice through a

professional corporation. However, the relative tax and other advantages and disadvantages of

the two types of entities should be discussed with the practice’s legal counsel or accountant to

5 DLMR_628211.1

determine whether, under the laws of a particular state, one type of vehicle may be preferable to

the other.

Partnerships. Some professional practices are formed as a partnership.

Partnerships have the potential disadvantage of exposing each of the partners to joint and several

liability for all of the debts of the practice. This means each partner is 100% liable for all

partnership-related debts. While this disadvantage can be mitigated by having each partner’s

ownership interest in the partnership held through the practitioner’s solely owned professional

corporation, this adds a level of complexity to the organization which is generally not desirable

or necessary in the context of a PA owned or co-owned professional practice. One favorable

aspect of a partnership is that the income of the partnership is treated as “flowing through” to the

individual partners, thereby avoiding double taxation for any profit remaining in the practice at

the end of the tax year. As noted above, this same characteristic can be achieved by a

corporation which elects Subchapter S status or a professional limited liability company.

A variation of the partnership form is a professional limited liability partnership

(“PLLP”). A PLLP consists of one or more general partners, who are jointly and severally liable

for the entity’s debts, and limited partners, who are protected from those debts similarly to the

shareholders of a corporation or the members of a professional limited liability company. Very

few professional practices are owned through a PLLP.

Issues that Arise in the Formation of a Practice Entity

Because most practices are owned by either a professional corporation or a

limited liability company, the following discussion focuses on those two types of professional

entities.

Organizational Steps. Formation of a professional corporation or professional

limited liability company is fairly simple. In most states, a professional corporation is deemed

formed upon the filing of “Articles of Incorporation” with the Secretary of State or similar state

official. In addition, it is necessary to draft and adopt Bylaws, which typically set forth the rules

prescribed by state law for the operation of the corporation. The Bylaws also set forth the

number of directors, when the entity will hold its annual shareholder and director meetings, etc.

The shareholders (or, if there is only a single owner, the sole shareholder) must also take and

document certain other organizational steps, such as issuing stock, electing the initial directors

and officers, authorizing the opening of a bank account, deciding whether to elect Subchapter

“S” status, etc. If there is only a single shareholder, he or she will usually also serve as the sole

director and officer.

If the founders choose to form a professional limited liability company instead of

a professional corporation, some of these issues are addressed in an “Operating Agreement”

which is signed by the founding owners, who are called “members”.

Shareholders’ and Operating Agreements. When a professional corporation or

professional limited liability company has more than one owner, whether the additional owner(s)

are other PAs or one or more supervising physicians, things become more complex than when

there is only a single owner. When there are multiple owners, it is necessary for the co-owners

6 DLMR_628211.1

to agree upon their respective rights and responsibilities on a variety of issues. In a professional

corporation, these issues are typically covered in a “Shareholders’ Agreement.” The

Shareholders’ Agreement must be signed by the founding shareholders, and must also be

executed by any new shareholder who is permitted to join the practice. In a professional limited

liability company, these details are typically covered in the Operating Agreement.

In many cases, the founding co-owners will agree in the Shareholders’ or

Operating Agreement that no additional co-owners will be permitted to buy into the practice

without their unanimous consent. In addition, as noted above, the co-owners frequently agree

upon the circumstances under which the corporation or the other shareholder(s) can buy back the

shares of a departing shareholder. Circumstances under which this is typically permitted include,

for example, the death, disability or retirement of a co-owner; the loss of a co-owner’s license to

practice as a PA or physician; loss of the DEA registration to prescribe controlled substances;

loss of Medicare or Medicaid certification; or termination of the co-owner’s employment.

In some states, such as California, where a medical professional corporation

requires at least one of the owners to be a physician, these so-called “buy-sell” rights may need

to be structured differently than in a state where PAs can own 100% of the practice entity. In

states requiring partial physician ownership, in lieu of a provision giving the remaining PA the

right to buy out the physician co-owner, the remaining PA may be provided with the right to

designate a physician to whom the selling physician co-owner will be obligated to sell his or her

interest. Even in a state where 100% PA ownership is permitted, the parties may want to use this

approach if the departing co-owner is a physician and there is a desire to retain partial physician

ownership. As discussed below, with the exception of rural health clinics, current law requires

at least partial physician ownership in order for the practice to receive Medicare reimbursement

and, in most states, Medicaid payment.

Finally, the co-owners will often agree upon certain actions that require either

unanimous or a super majority (e.g., 75%) agreement. Such actions typically include whether to

admit additional owners, the execution of managed care contracts for the practice, decisions to

incur debt in excess of a specified amount, the execution of office leases, the hiring or firing of

certain key personnel (e.g., employed practitioners or the office administrator) and a decision to

sell the practice.

Compensation Issues. Another key issue that should be addressed by the

founding co-owners at the inception of practice formation is how the practice revenues will be

divided. Although the parties may each own an equal share in the stock or membership units of

the entity, the parties should be clear regarding whether practice revenue will be distributed in

the same proportion as their ownership. Frequently, medical practices divide net revenue based

on the value or volume of the services each of the practitioners performs relative to the others,

instead of based on percentage of practice ownership. For example, if a PA and a physician each

own 50% of a practice, but the PA sees patients in the practice on a full time basis, whereas the

physician serves primarily as a supervising physician and only periodically sees patients there, it

will be inequitable for the physician to receive 50% of the = practice revenue. It is advisable to

clarify this issue at the inception, either in the Shareholders’ Agreement or Operating

Agreement, or in separate employment agreements entered into between the practice entity and

each of the individual practitioners.

7 DLMR_628211.1

Non-Competition or Non-Solicitation Provisions. As part of their Shareholders,

Operating or Employment Agreements, some practices require their practitioners to agree to non-

competition or non-solicitation restrictions that remain in effect after a practitioner’s departure

from the practice. A typical non-competition provision may preclude a practitioner from

performing medical services for a period of up to five years following departure from the

practice, within a specified area (e.g., the city, the county, or a radius of “x” miles around the

practice). A typical non-solicitation provision is more limited and simply prohibits the

practitioner from soliciting the practice’s patients or in some cases its payors, but does not

prohibit the departing practitioner from opening or joining another practice. The enforceability

of such provisions after departure varies from state to state and depends on the circumstances.

For example, in some states non-competition provisions are enforceable only against a co-owner

who sells his or her interest in the practice. When enforceable, both types of provisions protect

the remaining co-owners but can have a chilling effect on the departing co-owner’s ability to

practice. As a compromise, in some cases the parties may enter into a non-solicitation provision,

but agree to make an exception which permits the practitioner to inform his or her own patients

of the departure and the address and location of the practitioner’s new office. This permits the

departing practitioner to take her patients with her but precludes solicitation of other practice

patients.

Reimbursement Considerations

It is vitally important to consider reimbursement rules before deciding on an

ownership structure for a practice entity. Although the laws in many states permit PAs to own

100% of a professional corporation or other practice entity, current Medicare rules and Medicaid

rules in most states prohibit reimbursement to individual PAs or to any entity which is wholly

owned by PAs. The applicable Medicare rule is found in the Medicare Benefit Policy Manual

promulgated by the Centers for Medicare and Medicaid Services, which states as follows:

Employment Relationship

Payment for the services of a PA may be made only to the actual

qualified employer of the PA that is eligible to enroll in the

Medicare program under existing Medicare provider/supplier

categories. If the employer of the PA is a professional corporation

or other duly qualified legal entity (such as a limited liability

company or a limited liability partnership), properly formed,

authorized and licensed under State laws and regulations that

permit PA ownership in such corporation or entity as a stockholder

or member, that corporation or entity as the employer may bill for

PA services even if a PA is a stockholder or officer of the entity, as

long as the entity is entitled to enroll as a “provider of services” or

a supplier of services in the Medicare program. Physician

Assistants may not otherwise organize or incorporate and bill for

their services directly to the Medicare program, including as, but

not limited to sole proprietorships or general partnerships.

Accordingly, a qualified employer is not a group of PAs that

incorporate to bill for their services. Leasing agencies and staffing

8 DLMR_628211.1

companies do not qualify under the Medicare program as

“providers of services” or suppliers of services.

Medicare Benefit Policy Manual, Chapter 15, Section 190.D

The AAPA is working to change this rule, which is not based on any statute or

regulation. Many private plans follow Medicare’s lead and will not pay a practice entity that is

wholly owned by one or more PAs.

In light of these rules, in order for a practice entity to receive direct payment from

Medicare, Medicaid and many private plans, it is necessary that there be some physician

ownership in the practice entity. Notably, there is no required percentage of physician ownership

needed to qualify for reimbursement. Therefore, if state law permits a PA to co-own 99% of a

practice entity, a physician’s ownership of the remaining 1% will be sufficient to qualify the

entity for Medicare reimbursement.

Management Services Organizations

In some states, PAs are precluded from holding an ownership interest in a medical

practice. Even in states where such ownership is permitted, circumstances may arise where it is

not feasible for the PA to assume an ownership role in the actual practice entity. In such cases, a

PA may want to consider establishing a management services organization or “MSO” to provide

management and administrative services to a medical professional corporation (or other practice

entity) which is wholly owned by one or more physicians. All physician personnel are employed

by the practice entity, which functions as the provider of professional services. As described in

more detail below, the practice entity obtains some or all of its non-professional needs from the

MSO on a “turnkey” basis and also leases some or all of its non-physician personnel from the

MSO.

A MSO is typically established as a separate entity, such as a general business

corporation or a limited liability company. Because the MSO itself does not perform

professional services, it need not be organized as a professional corporation or professional

limited liability company. The MSO enters into a Management Services Agreement with the

practice entity. Pursuant to the Management Services Agreement, the MSO agrees to provide

some or all of the services and infrastructure the practice entity needs to support its delivery of

professional services. In the most comprehensive type of MSO arrangement, the MSO leases

office space from a landlord and subleases the space to the practice entity. The MSO also

employs non-physician personnel, including nursing personnel, medical assistants and

receptionists, and “leases” them to the practice entity. Depending on state law issues, the PA

may either be employed by the professional entity or may be employed by the MSO and also

leased to the practice entity. The MSO may also perform billing, financial, accounting and other

services for the practice entity, or may subcontract with outside vendors for those services.

The MSO is compensated for its services pursuant to a formula agreed upon by

the parties in the Management Services Agreement. A variety of formulas is used, ranging from

a percentage of gross collections to the MSO’s costs plus a percentage for profit. In general, the

formula must represent fair market value for the services the MSO provides. In some states, a

9 DLMR_628211.1

formula which is based on a percentage of net profits or similar profit sharing arrangement is

deemed to be illegal “fee splitting.” Some states also require that ultimate responsibility for any

business decisions that significantly impact clinical issues must rest with the professionals in the

practice entity. Because violation of these rules can result in criminal liability, it is important to

obtain the assistance of knowledgeable legal counsel in setting up a MSO.

APPENDIX

SUMMARY OF STATE LAWS ON PA OWNERSHIP OF MEDICAL PRACTICES

Alabama

A medical practice in Alabama may owned by a professional corporation, a

professional limited liability company or certain other types of entities. Alabama law does not

specifically address PA ownership of such entities, or co-ownership by PAs and physicians, nor

does it specifically prohibit such ownership or co-ownership.

Alabama law indicates that a professional corporation formed to perform

professional services “may only render professional services and services ancillary thereto within

a single profession.”2 Only qualified persons may hold shares in a professional corporation. A

“qualified person” means “an individual who is authorized by law . . . to render a professional

service permitted by the articles of incorporation of such professional corporation.”3 The same

rules that apply to a professional corporation apply to a professional limited liability company.4

Alaska

A medical practice in Alaska may be owned by a professional corporation, a

limited liability company or certain other types of entities. Alaska law does not specifically

address PA ownership of such entities, or co-ownership by PAs and physicians, nor does it

specifically prohibit such ownership or co-ownership.

A professional corporation may render one type of professional service only.5 A

professional corporation may issue shares of its capital stock to persons licensed by a regulatory

board of the state to render the professional service specified in the articles of incorporation.6

A limited liability company may be organized for any lawful purpose, including

the rendering of a professional service.7 If an activity of a limited liability company or the

2 Code of Alabama, Section 10-8A-1010; Section 10-4-383.

3 Code of Alabama Section 10-4-380.

4 Code of Alabama, Section 10-12-45.

5 Alaska Statute Section 10.45.010.

6 Id..

7 Id.

10 DLMR_628211.1

purpose for which a limited liability company is organized is subject to another provision of law,

the company shall also comply with the other provision of law.8

Arizona

A medical practice in Arizona may be owned by a professional corporation, a

professional limited liability company or certain other types of entities. Arizona law permits PA

ownership of such entities or co-ownership with physicians.

A corporation may elect professional corporation status for the purpose of

rendering professional services within two or more categories of professional service, unless the

combination of professional purposes is expressly prohibited by a licensing law of the state

applicable to one or more of the professions in the combination or by a licensing authority with

jurisdiction over one or more of the professions in the combination.9 No such limitation exists

precluding PAs and physicians from co-owning a professional corporation. Similar rules apply

to professional limited liability companies.10

Under recent revisions to Arizona corporate statutes, up to 49% of the shares of a

professional corporation or of the equity interests in professional limited liability companies may

be owned by non-licensed persons or entities.11

Arkansas

A medical practice in Arkansas may be owned by a professional corporation, a

limited liability company or certain other types of entities.

Under the Arkansas Professional Corporations Act, one or more persons duly and

properly licensed to render the same type of professional services may form a professional

corporation.12

With respect to medical practices, the Arkansas Medical Practices Act states that

“one or more persons licensed pursuant to the [Act] may associate to form a corporation pursuant

to the Arkansas Professional Corporations Act to own, operate and maintain a medical practice.”

PAs are not licensed under the Medical Practices Act, but are licensed pursuant to other

provisions of the Arkansas Code.13

A medical practice owned by a limited liability company in Arkansas must also

comply with the Medical Practices Act.14

8 Id.

9 Arizona Revised Statutes Section 10-2211.

10 Arizona Revised Statutes Section 29-841.

11 Arizona Revised Statutes Section 10-2220(A)(4).

12 Arizona Revised Statutes Section 4-29-201.



11 DLMR_628211.1

California

A medical practice in California may be owned by a professional corporation, a

professional partnership or certain other types of entities, but not by a limited liability company.

PAs are expressly permitted to own, or to co-own with certain other types of

licensed health care practitioners, a physician assistant professional corporation in California.

PAs must own at least 51% of the shares of the physician assistant corporation and the other 49%

must be owned by other specified types of licensed healthcare professionals. Further, the

number of non-PA shareholders may not exceed the number of PA shareholders.15

California law also expressly permits PAs (and other specified types of licensed

healthcare professionals) to own up to 49% of the shares of a medical professional corporation,

provided that 51% of the shares are owned by one or more licensed physicians. Further, the

number of non-physician shareholders must not exceed the number of physician shareholders.

PAs may not be partners with physicians in a partnership that owns a medical

practice.

Colorado

A medical practice in Colorado may be owned by a professional corporation,

professional limited liability company or certain other types of entities. All of the owners of

such entities formed to practice medicine “shall be persons licensed by the Board [of Medical

Examiners] to practice medicine in the State of Colorado.”16

PAs are licensed by that Board and

Colorado law provides that a physician “may delegate to a physician assistant . . . the authority to

perform acts that constitute the practice of medicine.” 17

The Board of Medical Examiners has issued a letter stating that “any person may

form a corporation to provide surgical assistant services.” This would include a person who is

licensed as a physician assistant.

Connecticut

A medical practice in Connecticut may be owned by a professional corporation, a

professional limited liability company or certain other types of entities. Connecticut law

expressly permits PAs to be owners of a professional corporation or to be co-owners of such an

entity with physicians.

A “professional corporation” means a corporation which is organized for the sole

and specific purpose of rendering professional services and which has as its shareholders only

individuals who themselves are licensed or otherwise legally authorized to render the same

15

California Corporations Code Sections 13401.5.

16 Colorado Revised Statutes Section 12-36-106.

17 Colorado Revised Statutes Section 12-36-106(5).

12 DLMR_628211.1

professional service as the corporation. It also includes a corporation which is organized for the

sole and specific purpose of rendering professional services by (i) physicians, and (ii) physician

assistants or advanced practice registered nurses, or both, and that has as its shareholders only

individuals who themselves are licensed or otherwise legally authorized to render one of the

professional services for which the corporation was specifically incorporated. 18

The law governing limited liability companies in Connecticut is less clear. A

limited liability company may be formed to render professional services, provided that each

member of the limited liability company must be licensed or otherwise authorized by law to

render such professional services; and (2) the limited liability company will render only one

specific type of professional services and services ancillary to them. Although limited liability

companies may be formed to render two or more types of professional services in certain

professions, unlike the law governing corporations, PAs are not included on this list.

Delaware

A medical practice in Delaware may be owned by a professional corporation,

limited liability company or certain other types of entities. Delaware law does not specifically


specifically prohibit such ownership or co-ownership.. However, Delaware law provides that

“[a] physician assistant may not maintain or manage an office separate and apart from the office

of the physician assistant’s supervising physician.” Further, “a physician assistant may not

independently bill a patient for services rendered at the request of the supervising physician.”19

The term “professional corporation” means a corporation which is organized for

the sole and specific purpose of rendering a professional service, and which has as its

shareholders only individuals who themselves are duly licensed or otherwise legally authorized

to render the same professional service as the corporation. “Professional service” means any

type of personal service to the public which requires a license or other legal authorization. One

or more persons, each of whom is duly licensed or otherwise legally authorized to render the

same professional services, may organize and become a shareholder or shareholders of a

professional corporation for the sole and specific purpose of rendering the same professional

services.20

A limited liability company may carry on any lawful business, purpose or activity,

whether or not for profit, with the exception of the business of banking.21

18

General Statutes of Connecticut Section 33-182a(2).

19 Delaware Code Annotated Title 24, Section 1772.

20 Delaware Code Annotated Title 8, Section 605.

21 Delaware Code Annotated Title 6, Section 18-106.

13 DLMR_628211.1

District of Columbia

A medical practice in the District of Columbia may be owned by a professional

corporation, professional limited liability company or certain other types of entities. District of

Columbia law does not specifically address PA ownership of such entities, or co-ownership by

PAs and physicians, nor does it specifically prohibit such ownership or co-ownership.

A “professional corporation” means a corporation organized solely for the

specific purposes of performing professional services, and which has as its shareholders only

individuals who themselves are duly licensed to render the same professional service as the

corporation. “Professional service” means any type of personal service to the public which may

be lawfully rendered only pursuant to a license.22

“Professional limited liability company” means a limited liability company

organized solely for the purpose of rendering professional services through its members,

managers, employees, or agents.23

Florida

A medical practice in Florida may be owned by a professional corporation, a

professional limited liability company or certain other types of entities. Florida law does not



A professional corporation is organized for the sole and specific purpose of

rendering professional services and its shareholders are individuals who are licensed or otherwise

legally authorized to render the same professional services as the corporation. One or more

individuals, professional corporations, or professional limited liability companies, in any

combination, duly licensed or otherwise legally authorized to render the same professional

services may organize and become a shareholder or shareholders of a professional corporation

for the sole and specific purpose of rendering the same and specific professional service.24

A professional limited liability company is organized for the sole and specific

purpose of rendering professional services and its members are licensed to render the same

professional services as the limited liability company. A group of professional service

corporations, professional limited liability companies, or individuals, in any combination, duly

licensed or otherwise legally authorized to render the same professional services may organize

and become members of a professional limited liability company for the sole and specific

purpose of rendering the same and specific professional service.25

22

District of Columbia Official Code Section 29-401.

23 District of Columbia Official Code Section 29-1005.

24 Florida Statutes Section 621.05 (2008).

25 Florida Statutes Section 621.051 (2008).

14 DLMR_628211.1

Georgia

A medical practice in Georgia may be owned by a professional corporation,

professional association, limited liability company or certain other types of entities. Georgia law

does not specifically address PA ownership of such entities, or co-ownership by PAs and

physicians, nor does it specifically prohibit such ownership or co-ownership.

A professional corporation may practice only one profession. “Profession” means

the profession of certified public accountancy, architecture, chiropractic, dentistry, professional

engineering, land surveying, law, pharmacy, psychology, medicine and surgery, optometry,

osteopathy, podiatry, veterinary medicine, registered professional nursing, or harbor piloting.

Shares in a professional corporation may only be issued to, held by, or transferred to a person

who is licensed to practice the profession for which the corporation is organized.26

“Professional association” means an unincorporated association organized for the

purpose of rendering one type of professional service. A professional association may issue its

capital stock if it is a stock-type association or accept as members of the professional association,

if a nonstock association, only persons who are duly licensed or otherwise legally authorized to

render the same professional service as that for which the professional association was

organized.27

A limited liability company may be formed for any lawful purpose. If the

purpose for which a limited liability company is formed makes it subject to a special provision of

law, the limited liability company shall also comply with that provision.28

Hawaii

A medical practice in Hawaii may be owned by a professional corporation,

limited liability company or certain other types of entities. Hawaii law does not specifically



A professional corporation may have the sole purpose of rendering professional

services and services ancillary thereto within a single profession. In addition, a professional

corporation may be incorporated for the purposes of rendering professional services within two

or more professions, to the extent that any combination of professional purposes or of

professional and business purposes is permitted by the licensing laws of the profession. A

“professional service” is defined as any service which lawfully may be rendered only by persons

licensed under certain specified chapters of the Hawaii Code, including the chapter governing

PAs and physicians, Chapter 453.29

26

Official Code of Georgia Annotated Section 14-7-2, 3, 4 and 5.

27 Official Code of Georgia Annotated Section 14-10-10 (2008).

28 Official Code of Georgia Annotated Section 14-11-201.

29 Hawaii Revised Statutes Section 415A-2, 3.

15 DLMR_628211.1

A limited liability company may be organized for any lawful purpose, subject to

any law of Hawaii governing or regulating business.30

Idaho

A medical practice in Idaho may be owned by a professional service corporation,

a limited liability company or certain other types of entities. According to the Idaho Board of

Medicine, it is proposing legislation that will permit PAs to be owners or co-owners with

physicians of professional service corporations or professional limited liability companies that

own medical practices. PA owners will need to have been in practice for at least two years.

Pending passage of such legislation, which the Medical Board says is likely to happen in either

the 2009 or 2010 legislative session, it is the policy of the Medical Board that PAs can own or

co-own such entities as provided in the proposed legislation.

Under current Idaho law, the term “professional corporation” means a corporation

organized for the sole and specific purpose of rendering professional service and which has as its

shareholders only natural persons who themselves are duly licensed or otherwise legally

authorized to render one or more of the same professional services as the corporation. The term

“professional service” means any type of service to the public which can be rendered by a

member of any profession within the purview of his profession. The professions covered by the

Idaho Professional Service Corporation Act include law, medicine, nursing, medicine, certain

other specified professions, and no others. PAs are not on the list. An individual or group of

individuals duly licensed or otherwise legally authorized to render the same or allied professional

services may organize and become a shareholder or shareholders of a professional corporation.

The term “allied professional services” means professional services which are so related in

substance that they are frequently offered in conjunction with one another as parts of the same

service package to the consumer.31

Illinois

A medical practice may be owned by a professional service corporation, a limited

liability company or certain other types of entities in Illinois. Illinois law does not permit PAs to

own a professional corporation for the purpose of owning a medical practice.

The Illinois Medical Corporation Act states that only “persons licensed pursuant

to the Medical Practice Act of 1987. . . may form a corporation . . . to own, operate and maintain

a medical practice.” Illinois law further states that all officers, directors and shareholders of a

medical corporation must be licensed pursuant to the Medical Practice Act. PAs are not licensed

under the Medical Practice Act; they are licensed under the Physician Assistant Practice Act. 32

A limited liability company may be formed for any lawful purpose or business,

except certain professions, unless all of the members and managers are licensed in that

30

Hawaii Revised Statutes Section 428-101.

31 Idaho Code Annotated Section 30-1303, 1304.

32 225 West’s Smith-Hurd Illinois Compiled Statutes Annotated Section 15/2.

16 DLMR_628211.1

profession. An limited liability company may practice medicine if all the managers and

members are either licensed to practice medicine under the Medical Practice Act of 1987 or are a

medical professional corporation.33

Indiana

A medical practice in Indiana may be owned by a professional corporation,

limited liability company or certain other types of entities. Indiana law does not specifically


specifically prohibit such ownership or co-ownership. However, PAs may not engage in

independent practice or receive payment directly from patients or third party payors.

One or more health care professionals may form a professional corporation to

render services that may legally be performed by a health care professional.” A “healthcare

professional” is defined as “an individual who is licensed, certified, or registered by a board (as

defined in IC §25-1-9-1).” This includes PAs.34

Additionally, “a professional corporation may

issue shares to individuals who are authorized by Indiana law or the laws of another state to

render a professional service permitted by the articles of incorporation of the corporation…”35

A limited liability company has the same powers as an individual to do all things

necessary or convenient to carry out its business and affairs, including practicing a profession.36

Administrative Rules of the Indiana Medical Board prohibit and will sanction a

PA who “has engaged in independent practice or has received remuneration for medical services

directly from the patient or a third party on his or her behalf…”37

Iowa

A medical practice in Iowa may be owned by a professional corporation, limited

liability company or certain other types of entities. Iowa law does not specifically address PA

ownership of such entities, or co-ownership by PAs and physicians, nor does it specifically

prohibit such ownership or co-ownership.

A professional service corporation may be organized only for the purpose of

engaging in the practice of one specific profession, or two or more specific professions which

could lawfully be practiced in combination by a licensed individual or a partnership of licensed

individuals, and for the additional purpose of doing all lawful things which may be incidental to

or necessary or convenient in connection with the practice of the profession or professions.38

A

33

805 West’s Smith-Hurd Illinois Compiled Statutes Annotated Section 180/1-20.

34 Indiana Code Section 23-1.5-2-3(a) (4).

35 Indiana Code Section 23-1.5-3-1(a).

36 Indiana Code Section 23-18-2-2.

37 844 Indiana Administrative Code Section 2.2-2-6 (9).

38 Iowa Code Section 496C.4.

17 DLMR_628211.1

“profession” is defined to include “medicine and surgery” and a number of other professions, but

does not specifically include PAs.39

A “physician” is defined by statute as “a person who is

currently licensed in Iowa to practice medicine and surgery . . .”40

A physician assistant is

defined by regulation as “a person licensed as a physician assistant by the medical board.”41

Legislation was proposed in Iowa regarding PA ownership of a medical practice but it was not

successful.

A professional limited liability company may be organized only for the purpose of

engaging in the practice of one specific profession, or two or more specific professions which

could lawfully be practiced in combination by a licensed individual or a partnership of licensed

individuals, and for the additional purpose of doing all lawful things which may be incidental to

or necessary or convenient in connection with the practice of the profession or professions. A

“profession” is defined to include “medicine and surgery” and a number of other professions, but

does not specifically include PAs.42

Kansas

A medical practice in Kansas may be owned by a professional corporation,

professional limited liability company or certain other types of entities. PAs are permitted to

own a professional corporation or limited liability company or to be co-owners of up to 49% of

such entities with physicians.43

A professional corporation may be organized only for the purpose of rendering

one type of professional service and services ancillary thereto, except that a single professional

corporation may be organized to render professional services in two or more of certain specified

professional categories, including physicians and PAs. However, when a PA is a co-owner with

a physician in a professional corporation, the PA may own only up to 49% of the shares in the

corporation.

A professional limited liability company may have and exercise all powers which

may be exercised by a Kansas professional corporation, which shall be limited to the practice of

one profession, except that a single limited liability company may be organized to render

professional services in two or more of certain specified professional categories, including

physicians and PAs. However, when a PA is a co-owner with a physician in a limited liability

39

Iowa Code Section 496C.2(3)(4).

40 Iowa Administrative Code Section 645.327.1.

41 Iowa Administrative Code Section 645.327.1.

42 West’s Iowa Code Annotated Section 490A.1501

43 Kansas Statutes Annotated Section 100-28a-18; 100 Kansas Statutes Annotated Section 17-2707 -28a-

18(b).

18 DLMR_628211.1

company, the PA may own only up to 49% of the membership equity in the limited liability

company.44

Kentucky

A medical practice in Kentucky may be owned by a professional service

corporation, professional limited liability company or certain other types of entities. Kentucky

does not specifically address PA ownership of such entities, or co-ownership by PAs and

physicians, nor does it specifically prohibit such ownership or co-ownership. However,

Kentucky law states that “[a] physician assistant shall not submit direct billing for medical

services and procedures performed by the physician assistant.45

Additionally, “a supervising

physician shall…prohibit a physician assistant from independently billing any patient or other

payor for services rendered by the physician assistant.”46

The Kentucky Professional Service Corporations Law provides that “one or more

individuals, each of whom is licensed to render the same professional service or who are licensed

to render related professional services . . . may incorporate and form a professional service

corporation . . .”47

This law defines a “professional service” as “any type of personal service to

the public which requires as a condition precedent to the rendering of such service the obtaining

of a license or other legal authorization . . .”48

The Kentucky Professional Limited Liability Law defines “professional limited

liability company” as “a limited liability company . . . organized. . . for purposes that include, but

are not limited to, the providing of one or more professional services.”49

Unlike the Professional

Service Corporations Law, the Professional Limited Liability Law does not define “professional

services” as including any services requiring a license. Rather, it defines “professional services”

as specifically covering only services performed by a list of specified types of practitioners,

which does not include PAs.

Louisiana

A medical practice in Louisiana may be owned by a professional corporation,

limited liability company or certain other types of entities. Louisiana law provides that “a

physician assistant may receive compensation, salary or wages only from his or her employer

and may neither render a statement or service directly to any patient nor receive any payment,

compensation or fee for services directly from any patient.”50

Further, Louisiana law provides

44

Kansas Statutes Annotated Section 100-28a-18; 100 Kansas Statutes Annotated Section 17-2707 -28a-

18(b).

45 Baldwin’s Kentucky Revised Statutes Annotated Section 311.858(5).





50 Louisiana Administrative Code Title 46, Section 4503.

19 DLMR_628211.1

that in order to qualify as a supervising physician, a physician may “not be employed by or serve

as an independent contractor to a physician assistant or be a party to any other or similar

employment, contractual or financial relationship.”

The Professional Medical Corporations Act provides that only individuals “duly

licensed to practice medicine . . . in the state may form a corporation . . . for the purpose of

practicing medicine or podiatry.”51

“Physician assistants” are defined as personnel who are

authorized to “perform medical services under the supervision of a physician or group of

physicians . . .”

A limited liability company may be organized and may conduct business for any

lawful purpose, unless a more limited purpose is stated in its articles of organization. “Business”

means any trade, occupation, profession, or other commercial activity, including, but not limited

to, professions licensed by a state or other governmental agency whether or not engaged in for

profit. A limited liability company that is subject to regulation under another provision of state

law may be formed if not prohibited by such other law, but is subject to all limitations of such

other law. 52

Maine

A medical practice in Maine may be owned by a professional corporation, limited

liability company or certain other types of entities. Maine law permits PAs to be owners of

professional corporations and limited liability companies or to co-own such entities with

physicians.

“Professional corporation” means a corporation formed to provide professional

services.53

A “professional service” means the professional services provided by certain

specified persons, which specifically includes physician assistants. A corporation may elect

professional corporation status solely for the purpose of rendering professional services,

including services ancillary to them, solely within a single profession. Alternatively, a

corporation may elect professional corporation status for the purpose of rendering professional

services within two or more professions, to the extent the combination of professional purposes

or of professional and business purposes is not prohibited by the licensing law of Maine

applicable to each profession in the combination.54

A “professional limited liability company” means a limited liability company

formed to perform a professional service. A “professional service” means the professional

service provided by certain specified persons, which specifically includes physician assistants.

51

West’s Louisiana Revised Statutes Annotated Section 12:902.

52 West’s Louisiana Revised Statutes Annotated Section 12:1303.

53 Maine Revised Statutes Annotated (West) Title 13, Section 723, Section 741(1) (A).

54 Maine Revised Statutes Annotated (West) Title 13, Section 732.

20 DLMR_628211.1

The Board of Medicine regulations state that “nothing in these rules shall be

construed to prohibit physician assistants from incorporating as a professional association or

being a principal in an incorporated professional association, so long as all applicable rules

contained herein are executed and followed.”55

Maryland

A medical practice in Maryland may be owned by a professional corporation,

limited liability company or certain other types of entities. Maryland law does not specifically



The Maryland Professional Service Corporation Act provides that a professional

corporation may be formed “solely for the purpose of rendering professional services within a

single profession,” or for the “purpose of rendering professional services within two or more

professions, if the combination of professional purposes is authorized by the licensing law of the

state applicable to each profession in the combination.”56

“Professional service” means a service

that may lawfully be rendered only by a person licensed or otherwise authorized by a licensing

unit in the state to render the service.57

A limited liability company may be organized and may conduct activities related

to any lawful business, except the business of acting as an insurer. Unless otherwise provided by

law or its articles of organization, a limited liability company has the general powers to perform

professional services.58

Massachusetts

A medical practice may be owned in Massachusetts by a professional corporation,

professional limited liability company or certain other types of entities. Massachusetts does not



In Massachusetts, “[a] professional corporation may be organized for the purpose

of rendering professional services within two or more professions, except to the extent expressly

prohibited by the licensing laws of the commonwealth applicable to such professions or the

regulations of any of the applicable boards.59

Practice as a PA qualifies as a “professional

service,” as defined by Massachusetts’ law.60

The relevant licensing laws do not prohibit

55

Board of Medicine Regulations; 02-373 Chapter 2; Board of Osteopathic Medicine Regulations 02-383,

Chapter 2(16).

56 West’s Annotated Code of Maryland, Corporations and Associations, Section 5-102.

57 West’s Annotated Code of Maryland, Corporations and Associations, Section 5-101(g)(1).

58 West’s Annotated Code of Maryland, Corporations and Associations Section 4A-203.1

59 Massachusetts General Laws Annotated (West), ch. 156A, Section 3(b).

60 Massachusetts General Laws Annotated (West), ch. 156, Section 2(b).

21 DLMR_628211.1

corporate rendering of the services of physicians and physician assistants in combination. A

professional corporation may issue shares to an individual licensed “to render professional

service permitted by the articles of organization of the corporation.”61

Massachusetts’ Limited Liability Company Act also provides for the provision of

multiple professional services. Mass. Gen. Laws ch. 156c, §6(c) mandates that a limited liability

company that is organized to render a professional service must indicate in its licensing

certificate “the specific professional services which it shall render” and be subject to “any

applicable regulating boards,” clearly implying that multiple professional services may be

provided.

Michigan

A medical practice in Michigan may be owned by a professional corporation,

limited liability company or certain other types of entities. Michigan law does not specifically

address ownership of such entities by PAs, or co-ownership by PAs and physicians, nor is there

any specific prohibition on such ownership or co-ownership.

Under Michigan’s Professional Service Corporation Act, if a professional

corporation renders a professional service that is included within the Public Health Code, then all

shareholders of the corporation shall be licensed or legally authorized in this state to render the

same professional service.62

Practice as a PA is a “professional service” as defined in Michigan

law and a license is required under the Public Health Code to perform it. This suggests that a

PAs may own a professional corporation so long as all other shareholders, if any, are also PAs.

It is less clear whether PAs may co-own a professional corporation with a

physician. Because physicians and PAs are licensed under different provisions of the public

health code, they may be considered to render “different professional services.” On the other

hand, Michigan law defines practice as a physician assistant as a “health professional subfield of

the practice of medicine.”63

Pursuant to a 1994 bulletin from the Department of Consumer and Industry

Services (formerly Department of Commerce; herein, the “Department”), the language of the

Professional Service Corporation Act does not necessarily require that shareholders in a

professional corporation possess the same license, but rather that the persons be licensed to

provide the same professional service.64

For professional services that are not listed in the

statute, the Department will accept a determination by the regulatory authority that the licensees

are authorized to render the same professional services although they hold different licenses.

The Department will defer to the judgment of the governing regulatory authority to make a

61

Massachusetts General Laws Annotated (West), ch. 156, Section 10(a)(1).

62 Michigan Compiled Laws, Section 450.224(3).

63 Michigan Code Section 333.17008

64 Department of Consumer and Industry Services (formerly Department of Commerce), Michigan

Corporation and Securities Bureau release 94-1a-C(March 14, 1994).

22 DLMR_628211.1

determination as to whether licensees with different licenses are authorized to perform the same

specific professional services.65

The Department has further stated that “a physician assistant does, in fact, provide

the same service as a medical doctor or doctor of osteopathic medicine and surgery. . . [The]

practice of a physician assistant is defined as the practice of medicine, or osteopathic medicine

and surgery, performed under the supervision of a physician.”66

One or more licensed persons may organize and become members of a

professional limited liability company. If a professional limited liability company renders a

professional service that is included within certain provisions of the Public Health Code which

include PAs and physicians, then all members and managers of the company shall be licensed or

legally authorized to render the same professional service.67

Minnesota

A medical practice in Minnesota may be owned by a professional corporation,

limited liability company or certain other types of entities. Minnesota law specifically permits

PAs to be owners or co-owners of a “professional firm” that provides medical services. A

“professional firm” includes a professional corporation, a professional limited liability company

or professional limited liability partnership.68

A professional firm may perform professional services, which are defined as

services required to be furnished by a professional under a license, registration or certificate

issued by the state to practice the listed profession. Physician assistants are included on the list

of professions for purposes of this provision. Ownership interests in a professional firm may be

held by professionals who, with respect to at least one category of the pertinent professional

services, are licensed.69

Individuals who furnish professional services pursuant to a license to practice

medicine or as a physician assistant are specifically authorized to practice in combination if the

individuals are organized as a professional firm.70

65

Michigan Department of Consumer and Industry Services (formerly Department of Commerce)

Memorandum to Ron Basso, Acting Director, Bureau of Occupational and Professional Regulations, to Carl L.

Tyson, Director, Corporation and Securities Bureau, dated February 9, 1996.

66 Michigan Department of Consumer and Industry Services (formerly Department of Commerce)

Memorandum or letter to Carl L. Tyson, Director, Corporation and Securities Bureau, from Acting Director, Bureau

of Occupational and Professional Regulations, from Robert D. Ulieru, Director, Health Licensing Division, dated

February 26, 1996.

67 Michigan Compiled Laws Annotated (West) Section 450.4904.

68 Minnesota Statutes Section 319B.02(5), (17), (19).

69 Minnesota Statutes Section 319B07.

70 Minnesota Statutes Section 319B.40(a).

23 DLMR_628211.1

Mississippi

A medical practice in Mississippi may be owned by a professional corporation,

limited liability company or certain other types of entities. Although Mississippi statutes and

regulations do not include any prohibition on the ownership or co-ownership of such entities by a

physician assistant, a policy statement by the Medical Board states that “shareholders of a

professional corporation rendering medical services shall only be licensed physicians.”71

This

appears to fly in the face of other provisions of Mississippi law, which appear to permit PAs to

be owners or co-owners of a professional corporation or a limited liability company. More

specifically, Mississippi statutes state that:

“A corporation may elect professional corporation status for the purpose of rendering

professional services within two or more professions . . . to the extent the combination of

professional purposes or of professional and business purposes is not prohibited by the

licensing law of this state applicable to each profession in the combination.” 72

“A limited liability company may elect professional limited liability company status for

the purpose of rendering professional services within two or more professions . . . to the

extent the combination of professional purposes or of professional and business purposes

is not prohibited by the licensing law of this state applicable to each profession in the

combination.” 73

Nothing in the Mississippi statutes governing the licensure of physicians or

physician assistants prohibits the combined practice of the two professions. Therefore, the

Medical Board policy appears to be inconsistent with the law.

Under the Mississippi Professional Corporation Act, a professional corporation

may issue shares only to “individuals who are authorized by law . . . to render a professional

service described in the corporation’s articles of incorporation.”74

Similar language is found in

the Mississippi Limited Liability Company Act.75

Further, it may be permissible for PAs and

physicians in Mississippi to be co-owners of a general business corporation or other entity.

Missouri

A medical practice in Missouri may be owned by a professional corporation,

general business corporation, limited liability company or certain other types of entities.

Missouri law does not permit PAs to be owners or co-owners of a professional corporation but

there is no such prohibition as to general business corporations or limited liability companies.

71

Section 3, Mississippi State Board of Medical Licensure Policies, Section 3.02.8.

72 West’s Annotated Mississippi Code Section 79-10-13(2).

73 West’s Annotated Mississippi Code Section 79-29-904(2).

74 West’s Annotated Mississippi Code Section 79-10-31(a).

75 West’s Annotated Mississippi Code Section 79-29-909(1)(a).

24 DLMR_628211.1

A professional corporation in Missouri may be owned by persons who are

authorized to render a “professional service” as defined by Missouri law.76

“Professional

service” is defined as the services performed by a list of specified professionals, which is

exclusive and does not include physician assistants.77

This interpretation is confirmed by the

Missouri Corporations Divisions website.78

Notwithstanding this apparent prohibition on PAs being shareholders in

professional corporations, it may be possible for PAs to be owners or co-owners of general

business corporations, limited liability companies or other non-professional entities. The

foregoing restriction does not apply to any of these entities, and there is no prohibition on

ownership of a medical practice by any of these entities in Missouri.

Montana

A medical practice in Montana may be owned by a professional corporation,

limited liability company or certain other types of entities. Montana law does not specifically



Professional corporations and professional limited liability companies in Montana

“may be organized for the purpose of rendering professional services within two or more

professions . . . to the extent that the combination of professional purposes or professional or

business purposes is permitted by the licensing laws and rules of this state applicable to the

professions.79

“Professional service” under Montana law means “any service that may lawfully

be rendered only by persons licensed under a licensing law of this state and that may not be

rendered by a corporation organized under the Montana Business Corporation Act.”80

Shares in

a professional corporation may be issued to, among other parties, natural persons authorized by

law to render a professional service permitted by the Articles of Incorporation of the

corporation.81

Similar rules apply under the Montana Limited Liability Company act, as applied

to professional limited liability companies.82

76

Missouri Revised Statutes Section 356.111.

77 Missouri Revised Statutes Section 356.021(5).

78 See “Professional Corporations,” www.sos.mo.gov\business\corporations\startBusiness.asp#entity

79 Montana Code Annotated Section 35-4-205, Section 35-8-1301.

80 Montana Code Annotated Section 35-4-109(5).

81 Montana Code Annotated Section 35-4-301.

82 Montana Code Annotated Section 35-8-102(25(26).

25 DLMR_628211.1

Nebraska

A medical practice in Nebraska may be owned by a professional corporation,

limited liability company or certain other types of entities. Nebraska law does not specifically


any specific prohibition on such ownership or co-ownership. However, Nebraska law appears to

permit it.

A “professional corporation” means “a corporation which is organized under the

Nebraska Professional Corporation Act for the specific purpose of rendering professional service

and which has as its shareholders only individuals who themselves are duly licensed or otherwise

qualified within the state to render the same professional service as the corporation.”83

“Professional service” is defined as “any type of personal service to the public which requires as

a condition precedent to the rendering of such service the obtaining of a license or other legal

authorization . . .”84

There is a long laundry list of different types of professions which does not

include PAs, but the list is not exclusive.

The Professional Corporation Act states that “[a] professional corporation shall

render only one type of professional service and such services as may be ancillary thereto and

shall not engage in any other profession.”85

However, the Act further states that “[f]or purposes

of the Act, those professions pertaining to the diagnosis, care and treatment of humans shall be

considered to be of the same profession . . .”

Similar provisions are found in the Limited Liability Company Act. That Act also

authorizes a limited liability company to provide professional service, so long as it provides only

one type of professional service and such services as may be ancillary thereto, and not any other

profession. Like the Professional Corporation Act, it states that “those professions pertain to the

diagnosis, care and treatment of humans shall be considered to be of the same profession.”86

Nevada

A medical practice in Nevada may be owned by a professional corporation,

professional limited liability company or certain other types of entities. Nevada law does not

specifically address ownership of such entities by PAs, or co-ownership by PAs and physicians,

nor is there any specific prohibition on such ownership or co-ownership. However, Nevada law

appears to permit it.

Nevada law provides for the formation of “professional entities,” which may

either be professional corporations or professional limited liability companies.87

A professional

83

Revised Statutes of Nebraska Section 21-2202(2).

84 Revised Statutes of Nebraska Section 21-2202(3).

85 Revised Statutes of Nebraska Section 20.1-2205.

86 Revised Statutes of Nebraska Section 21-2601.01(2).

87 Nevada Revised Statutes Section 89.020(8).

26 DLMR_628211.1

entity may be organized to render multiple types of professional services only in limited

circumstances, including an entity that is composed of persons engaged in the practice of

medicine as provided in chapter 630 of NRS, persons engaged in the practice of homeopathic

medicine as provided in chapter 630A of NRS and persons engaged in the practice of osteopathic

medicine as provided in chapter 633 of NRS.88

Like physicians and osteopathic physicians, PAs are licensed pursuant to Chapters

630 and 633 of Nevada Revised Statutes. Those statutes further provide that “[a] physician

assistant may perform such medical services as he is authorized to perform by his supervising

physician.”89

The same rules apply to professional limited liability companies.

Nevada law further provides that a professional entity may not “issue any of its

ownership interests to anyone other than a natural person who is licensed to render the same

specific professional services as those for which the professional entity was formed.”90

New Hampshire

A medical practice in New Hampshire may be owned by a professional

corporation, professional limited liability company or certain other types of entities. New

Hampshire law appears to permit the ownership or co-ownership of such entities by a PA.

New Hampshire law provides for the formation of professional corporations and

professional limited liability companies for the purpose of practicing a professional service. A

“professional service” is any service which may be rendered only by specified professionals,

including physicians and physician assistants, among others.91

A professional corporation may

be incorporated for the purpose of rendering multiple professional services “to the extent that the

combination of professional purposes or of professional and business purposes is permitted by

the licensing laws of this state applicable to such professions and rules adopted under those

laws.”92

The statutes governing the organization of a professional limited liability company and

the provision of multiple professional services by such entities employs the exact same

language.93

A professional corporation may issue shares to individuals authorized to render a

professional services permitted by the Articles of Incorporation. Similarly, membership in a

professional limited liability company is open to any individual who is licensed to render

professional services permitted by the Certificate of Formation.94

88

Nevada Revised Statutes Section 89.050(2).

89 Nevada Revised Statutes Section 630.271.1.

90 Nevada Revised Statutes Section 89.050.

91 New Hampshire Revised Statutes Annotated Section 294-A:1.

92 New Hampshire Revised Statutes Annotated Section 294-A:2.

93 New Hampshire Revised Statutes Annotated Section 304-D:2.

94 New Hampshire Revised Statutes Annotated Sections 294-A:8(i); 304-D:7.

27 DLMR_628211.1

New Jersey

A medical practice in New Jersey may be owned by a professional corporation,

limited liability company or certain other types of entities. New Jersey law does not specifically


any specific prohibition on such ownership or co-ownership. However, the New Jersey Board of

Medical Examiners has indicated that PAs may be owners of such entities or co-owners with

physicians.

Under New Jersey law, shares of a professional corporation may only be issued to

an individual who is duly licensed or otherwise legally authorized to render the same

professional service as that for which the corporation was incorporated.95

A “professional

service” is defined as “any type of personal service to the public which requires as a condition

precedent to the rendering of such service the obtaining of a license or other legal authorization

. . .”96

New Jersey law provides a list of personal services which does not include PAs, but the

list specifically indicates that it is not exclusive (“by way of example, and without limiting the

generality thereof”). “Professional corporation” is defined as a corporation which is organized

for the sole and specific purpose of rendering the same or closely allied professional service as

its shareholders. “Closely allied professional service” means and is limited to, among other

things, “any branch of medicine and surgery.”

In its meeting on July 18, 2003, the Physician Assistant Advisory Committee of

the State of New Jersey determined that a PA may be a joint shareholder in a professional service

corporation. Physician assistants (like physicians) are considered licensees of the Board of

Medical Examiners. See N.J. Admin. Code 13, §35-2B. As such, the scope of their ability to

practice is outlined by the provisions of N.J. Admin. Code 13 §35-6.16(f), which enumerates

“acceptable professional practice forms” for all Board of Medical Examiner licensees. These

include limited liability companies and partnerships, as well as professional service corporations.

The professional services offered by each practitioner, whether a partner, member or

shareholder, shall be the same or in a closely allied medical or professional health care field. For

the purpose of this rule, “closely allied fields” shall be deemed to include the health care

professions licensed by the State Professional Boards under the Division of Consumer Affairs,

which includes physician assistants.

New Mexico

A medical practice in may be owned by a professional corporation, limited

liability company or certain other types of entities. New Mexico law does not specifically



A “professional corporation” means a corporation which is organized under the

Professional Corporation Act for the sole and specific purpose of rendering professional services

95

New Jersey Statutes Annotated Section 14A:17-10.

96 New Jersey Statutes Annotated Section 14A:17-3.

28 DLMR_628211.1

and which has as its shareholders only individuals who themselves are licensed or otherwise

legally authorized within the state to render the same professional service as the corporation. A

“professional service” means any type of personal service to the public which requires, as a

condition precedent to the rendering of such service, the obtaining of a license or other legal

authorization. New Mexico law includes a non-exclusive list of the types of persons who render

professional services that does not specifically mention PAs.97

A professional corporation may be organized only for the purpose of rendering

one specific type of professional service and services ancillary thereto, and shall not engage in

any business other than the rendering of the professional service for which it was organized and

services ancillary thereto.

Although there are no specific provisions under New Mexico law governing

professional limited liability companies, there is a reference in a New Mexico statute indicating

that certain types of professions can organize themselves in a professional limited liability

company.98

New York

A medical practice in New York may be owned by a professional corporation, a

limited liability company or certain other types of entities. New York law does not specifically



A professional service corporation may issue shares only to individuals who are

authorized by law to practice in New York a profession which such corporation is authorized to

practice.99

With respect to a professional service limited liability company formed to provide

medical services, each member of such limited liability company must be licensed pursuant to

Article 131 of the Education Law to practice medicine in New York.100

PAs are also licensed

pursuant to Article 131. In addition, PAs “perform medical services” under physician

supervision.101

However, the New York Department of Health has recently opined that “[a]

physician assistant or physician assistant’s entity may not employ a physician supervisor or hire

a physician supervisor through an independent contractor or other mechanism.”102

97

West’s New Mexico Statutes Annotated Section 53-6-3 and 53-6-4.

98 West’s New Mexico Statutes Annotated Section 61-8-14.

99 New York Consolidated Law Service Bus. Corp. Section 1507.

100 New York Consolidated Law Service Limited Liability Company Section 1203.

101 McKinney’s Consolidated Laws of New York Annotated Section 6542.1.

102 Letter from Thomas G. Conway, General Counsel, New York Dept. of Heath, to Karen Bolan, R PA-C,

New York State Society of PAs, dated January 7, 2009.

29 DLMR_628211.1

North Carolina

A medical practice in North Carolina may be owned by a professional

corporation, limited liability company or certain other types of entities. North Carolina law

authorizes PAs to be owners or co-owners with physicians of such entities.

A professional corporation is a corporation engaged in rendering professional

services pursuant to a Certificate of Registration issued by the licensing board regulating the

profession or service. A professional service is any type of personal or professional service

which requires a license from a licensing board to render the service. Although a professional

service corporation may only render one specific type of professional service, North Carolina

law specifically states that a professional corporation may also be formed by and between or

among a physician and a physician assistant who is licensed, registered, or otherwise certified

under North Carolina law to render medical and related services.103

A limited liability company formed to engage in professional services in North

Carolina may do so only to the extent that a professional corporation acting pursuant to the

professional corporation law would be authorized to do so.104

Therefore, a professional limited

liability company is treated the same as a professional corporation for purposes of PA ownership

or co-ownership.

Legal counsel for the North Carolina Medical Board has opined that a practice

solely owned by PAs may pay medical doctors to serve as supervising physicians but they can

not employ a medical doctor to provide actual medical services. Furthermore, if for any reason

the supervising doctor needs to provide care for a particular patient (if the patient’s illness is

outside the scope of the PA scope of practice), the PA can not receive any fees from that

service.105

North Dakota

A medical practice in North Dakota may be owned by a professional corporation,

professional limited liability company or certain other types of entities. North Dakota law does

not specifically address ownership of such entities by PAs, or co-ownership by PAs and

physicians, nor is there any specific prohibition on such ownership or co-ownership.

Pursuant to the Professional Organizations Act, medical practices can be owned

by professional corporations, professional limited liability companies, and professional limited

liability partnerships.106

Owners must be licensed or “otherwise legally permitted to practice

within the state” to render the services the organization is providing.

103

General Statutes of North Carolina Section 55B-14(c).

104 North Carolina Administrative Code (West) Section 57C-2-01.

105 Marcus B. Jimison, NP and PA Ownership of Professional Corporations, The Forum (Volume 3, 2006).

106 North Dakota Century Code Section 10-31-04.

30 DLMR_628211.1

A “professional corporation” is a corporation incorporated “for the purpose of

rendering professional service and which has as its shareholders only individuals who themselves

are licensed or otherwise legally authorized . . . to render the same professional service as the

corporation . . .”107

Similar language is found in the laws governing professional limited liability

companies and professional limited liability partnerships.108

Ohio

A medical practice in Ohio may be owned by a general business corporation, a

professional association, a limited liability company or certain other types of entities. Ohio law

permits PA ownership of such entities and co-ownership with physicians.

Ohio specifically amended its general corporation statutes to permit general

business corporations to perform professional services. A general business corporation may be

formed for the purpose of carrying on the practice of any profession, including PA services.109

A

general business corporation may be formed under Ohio law for any purpose or combination of

purposes for which individuals lawfully may associate themselves, subject to any specific

limitations found in other provisions of law.110

There is no provision that would limit PAs from

owning or co-owning such an entity with physicians.

The law governing limited liability companies in Ohio is similar to the law

governing general corporations and permits them to practice a profession, including PA

services.111

Ohio’s limited liability company law also provides that if a limited liability company

is formed under Ohio law for the purpose of rendering a professional service, each manager,

member, employee, or other agent of the company who renders a professional service must be

licensed or otherwise legally authorized to render that service in Ohio.112

“Professional association” means an association organized for the sole purpose of

rendering one of the professional services authorized under several specified chapters of the

Ohio Code, including chapter 4730, which covers PAs, or a combination of the professional

services authorized under certain specified chapters, which do not include chapter 4730 or PAs.

“Professional service” means any type of professional service that may be performed only

pursuant to a license, certificate, or other legal authorization, specifically including PAs.113

A

professional association may issue its capital stock only to persons who are duly licensed,

107

North Dakota Century Code Section 10-31-01(6).

108 North Dakota Century Code Sections 10-31-01(7) and 10-31-01(8).

109 Baldwin’s Ohio Revised Code Annotated Section 1701.03(b).

110 Baldwin’s Ohio Revised Code Annotated Section 1701.03(a).

111 Baldwin’s Ohio Revised Code Annotated Section 1705.04.



31 DLMR_628211.1

certificated, or otherwise legally authorized to render within this state the same professional

service as that for which the association was organized.114

Oklahoma

A medical practice in Oklahoma may be owned by a “professional entity,” which

means a domestic corporation, limited partnership or limited liability company formed for the

purpose of rendering professional service.” Oklahoma law does not specifically address

ownership of such entities by PAs, or co-ownership by PAs and physicians, nor is there any

specific prohibition on such ownership or co-ownership.

A professional entity may be formed for the purpose of rendering one specific

type of professional service or related professional services and services ancillary thereto and

shall not engage in any other business. Except as otherwise provided, no person shall hold an

interest in a professional entity who is not duly licensed in accordance with the licensing laws for

the profession or related profession to render the same professional services or related

professional services as those for which the entity is organized”.115

“Professional service” means the personal service rendered by a number of

specified licensed professions, including “a physician, surgeon or doctor of medicine pursuant to

a license under Sections 481 through 524 of Title 59 of Oklahoma Statutes.” Although PAs are

not specifically mentioned in the verbiage of this statute, they are licensed under Sections 518

through 522 of Title 59, which are included in the referenced statutes. Although this provision is

ambiguous, one interpretation is that the legislature intended to include PAs within the

definition of “professional services.”

Similarly, “related professional services” means those professional services which

can be combined with each other and includes “a physician, surgeon or doctor of medicine

pursuant to a license under Sections 481 through 524 of Title 59 of the Oklahoma Statutes.”

Again, while PAs are not specifically mentioned in the verbiage, they are licensed under the

referenced sections 518 through 522.116

Regardless of whether PAs can actually own medical practices, they cannot

employ their supervising physician.117

It is unclear whether this prohibition would extend to an

entity wholly owned by PAs.

Oregon

A medical practice in Oregon may be owned by a professional corporation, a

limited liability company or certain other types of entities. Oregon law does not specifically

114

Baldwin’s Ohio Revised Code Annotated Section 1785.05.

115 Oklahoma Statutes (West) Title 18, Section 809.

116 Oklahoma Statutes (West) Title 18, Section 803.

117 Oklahoma Statutes (West) Title 59, Section 519.6.

32 DLMR_628211.1

address PA ownership of such entities by PAs, nor is there any specific prohibition on such

ownership. However, a PA may co-own a professional corporation with one or more physicians,

provided the physician(s) own a majority of each class of stock.

“Professional corporation” or “domestic professional corporation” means a

corporation organized for the specific purpose of rendering a professional service. Professional

service” means personal service or services rendered to the public which may be lawfully

rendered only pursuant to a license by a professional. “Professional” is defined to include

physicians and certain other practitioners, but does not include PAs.118

A corporation may elect professional corporation status for the purpose of

rendering professional service or services within two or more professions, and for the purpose of

engaging in any lawful business authorized by law, to the extent the combination of professional

purposes or of professional and business purposes is expressly authorized by the regulatory

board in Oregon applicable to each profession in the combination.

In a professional corporation organized for the purpose of practicing medicine,

the holders of the majority of each class of shares entitled to vote shall be physicians who are

licensed in Oregon to practice medicine.119

The Professional Corporation Act does not affect the right of persons licensed to

render professional service or services from doing so in any other business form permitted them

by law, rules and regulations of the regulatory board of their profession and standards of

professional conduct of their profession.

A medical practice in Oregon can also be owned by a professional limited liability

company or professional limited liability partnership. The laws governing those entities do not

expressly include the same limitations as are found in the law governing professional

corporations.120

Pennsylvania

A medical practice may be owned by a professional corporation, a professional

limited liability company (called a restricted professional company) or certain other types of

entities in Pennsylvania. Pennsylvania law does not specifically address ownership of such

entities by PAs, or co-ownership by PAs and physicians, nor is there any specific prohibition on

such ownership or co-ownership.

A professional corporation may be incorporated to render two or more specific

kinds of professional services, but only if the government agency regulating each profession

involved in the professional corporation has by rule or regulation expressly authorized the

118

Oregon Revised Statutes Section 58.015.

119 Oregon Revised Statutes Section 58.375.

120 Oregon Revised Statutes Section 58.375.

33 DLMR_628211.1

combined practice of the profession with the other profession.121

The Pennsylvania

Administrative Code states that physicians are allowed to practice with other health care

professionals, but only if they are licensed to practice “without the supervision of other health

care practitioners.”122

Multiple purpose corporations also are permitted if “the several

shareholders of the professional corporation, if organized as a partnership, could conduct a

combined practice of such specific kinds of professional services.”123

A restricted professional company shall not engage in any business other than

conducting the practice of the restricted professional service or services for which it was

specifically organized, except as otherwise provided.124

Except as otherwise provided by a

statute, rule or regulation applicable to a particular profession, all of the ultimate beneficial

owners of membership interests in and all of the managers, if any, of a restricted professional

company shall be licensed persons.” “Licensed person” is defined as a natural person who is

duly licensed or admitted to practice his profession by a court, department, board, commission or

other agency of the Commonwealth or another jurisdiction to render a professional service that is

or will be rendered by the association of which he is, or intends to become, a shareholder,

partner, owner, director, officer, manager, member, employee or agent.125

Rhode Island

A medical practice in Rhode Island may be owned by a professional corporation,

a professional limited liability company or certain other types of entities. Rhode Island law

allows PAs to own medical practices through corporations and limited liability companies.

Further, Rhode Island law appears to authorize PAs and physicians to be co-owners.

“Professional services” means the rendering of personal services by a person

authorized to practice one of the listed professions, including PAs. The practice of the following

combinations of professions is not prohibited: physicians, dentists, registered nurses, podiatrists,

optometrists and PAs.126

Rhode Island also permits the practice of medicine through limited

liability companies. The limited liability company statute cross-references the professional

corporation statute, thereby incorporating the same rules.127

South Carolina

A medical practice in South Carolina may be owned by a professional

corporation, a professional limited liability company or certain other types of entities. South

121

15 Purdon’s Pennsylvania Consolidated Statutes Annotated (West) Section 2903.

122 49 Purdon’s Pennsylvania Consolidated Statutes Annotated (West) Section 16.21.

123 15 Purdon’s Pennsylvania Consolidated Statutes Annotated (West) Section 2903(d).

124 15 Purdon’s Pennsylvania Consolidated Statutes Annotated (West) Section 8996.

125 15 Purdon’s Pennsylvania Consolidated Statutes Annotated (West) Section 102.

126 Code of Rhode Island Rules Section 7-5.1-2,-3.

127 Code of Rhode Island Rules 7-16-3.2.

34 DLMR_628211.1

Carolina law does not specifically address ownership of such entities by PAs, or co-ownership

by PAs and physicians, nor is there any specific prohibition on such ownership or co-ownership.

A corporation may elect professional corporation status under South Carolina law

solely for the rendering of professional services, including services ancillary to them, within a

single profession. In addition, a corporation may elect professional corporation status for the

rendering of professional services within two or more professions, to the extent the combination

of professional purposes or of professional and business purposes is authorized by the licensing

law applicable to each profession.128

Although South Carolina licensing law does not

specifically authorize PAs and physicians to practice in combination, the nature of the two

professions strongly suggests that this is permitted.

South Dakota

A medical practice in South Dakota may be owned by a professional corporation,

a professional limited liability company or certain other types of entities. South Dakota law

specifically provides for PA corporations and medical corporations. All the shareholders of a

medical corporation must be physicians.129

Similarly, all the shareholders of a PA corporation

must be PAs.130

PAs and physicians may also own medical practices through limited liability

companies. Again, however, it appears that each type of practitioner must be the sole owner of

its specific type of professional limited liability company.131

The following section creates some ambiguity: “One or more authorized

licensees may form a professional corporation for the purpose of rendering two or more kinds of

professional services and services ancillary thereto. A professional corporation may not employ

a person who is an authorized licensee unless at least one shareholder of the professional

corporation is an authorized licensee of the same profession.”132

This appears to permit

professional corporations owned by multiple types of practitioners, even though the provisions

described above do not.

Tennessee

A medical practice in Tennessee may be owned by a professional corporation, a

professional limited liability company, a general business corporation or certain other types of

entities. A PA may own shares in a medical professional corporation in combination with

licensed physicians, except radiologists, pathologists and anesthesiologists.133

Although the law

128

Code of Laws of South Carolina 1976 Annotated (West) Section 33-19-110.

129 South Dakota Codified Laws (West) Section 47-11-3.

130 Id.

131 South Dakota Codified Laws (West) Section 47-11 F-2, 3; 47-11 B-1.

132 South Dakota Codified Laws (West) Section 47-11 F-3.

133 Opinion of the Tennessee Attorney General, No. 07-116 (Aug. 8, 2007); see also Tennessee

Administrative Code Section 0880-2-.20.

35 DLMR_628211.1

is not clear, it may also be possible for a PA to own a medical practice through a general

business corporation or other lay entity.

The Attorney General has stated: “It is not lawful for a . . . physician assistant to

own and operate a professional corporation or professional limited liability company for the

provision of medical services. However, it is lawful for a physician assistant to form and own

shares in a medical professional corporation, but only in combination with licensed physicians or

licensed osteopathic physicians, except radiologists, pathologists and anesthesiologists . . . and/or

in combination with physician entities . . . Further, it is lawful for a physician assistant to be a

member of, or holder of financial rights in, a medical professional limited liability company, but

only in combination with a licensed physician or licensed osteopathic physicians, except

radiologists, pathologists and anesthesiologists . . . Otherwise, in so far as our research has

revealed no specific statutory prohibition against it, we anticipate that there could be certain

circumstances in which a . . . physician assistant legitimately might own and operate a practice

wherein medical services are provided, so long as such services are provided under the

“supervision, control and responsibility of a licensed physician . . .”134

The reference to PAs owning and operating practices wherein medical services

are provided suggests that a PA could be the sole owner of a non-professional entity, such as a

general business corporation. There is no prohibition in Tennessee on the operation of a medical

practice by a non-professional corporation, so long as the employment relation between the

professional practitioners and the corporation is evidenced by a written contract with a job

description and with language that does not restrict the physician from exercising independent

medical judgment in diagnosing and treating patients.135

To summarize, Tennessee law appears to permit PAs to own a medical practice

through an entity other than a medical professional corporation. In additional, a PA may be a co-

owner of a medical professional corporation or other entity, including a medical professional

limited liability corporation, with a physician.

Texas

A medical practice in Texas may be owned by a professional association, a

professional limited liability company or certain other type of entities. Texas law does not


nor is there any specific prohibition on such ownership or co-ownership.

Texas law appears to require that physicians who practice through a professional

entity do so either through a professional association or professional limited liability company.

A “professional association” means an association, as distinguished from either a partnership or a

corporation, that is formed for the purpose of providing the professional service rendered by a

physician and certain other types of medical professionals, not specifically including PAs.

“Professional limited liability company” is a limited liability company formed for the purpose of

134

Opinion of the Tennessee Attorney General, No. 07-116 (Aug. 8, 2007).

135 West’s Tennessee Code Annotated Section 63-6-204(c).

36 DLMR_628211.1

providing a professional service.136

A “professional corporation” is a corporation that is formed

for the purpose of providing a professional service, other than the practice of medicine by

physicians. A “professional service” means any type of service that requires, as a condition

precedent to the rendering of that service, the obtaining of a license in the state.137

A professional association may provide a professional service in Texas only

through owners or other persons who are professional individuals and licensed to provide the

same professional service as provided by the entity.138

A person may be an owner of a

professional entity only if the person is an “authorized person.” A person is an authorized person

with respect to a professional association if the person is a professional individual. A person is

an authorized person with respect to a professional corporation or professional limited liability

company if the person is a professional individual or professional organization.

Utah

A medical practice in Utah may be owned by a professional corporation, a

professional limited liability company or certain other types of entities, including general

business corporations. Utah law limits ownership in professional corporations to certain types of

listed professional persons, which does not specifically include PAs. The law is unclear

regarding the ability of PAs to be owners or co-owners of limited liability companies. It appears

that PAs may own general business corporations, or be co-owners with physicians in a general

business corporation, and such a corporation may engage in the practice of medicine, so long as

the physician is able to exercise independent judgment.

A professional corporation in Utah may be organized only for the purpose of

rendering one specific type of professional service and services ancillary thereto and shall not

engage in any business other than rendering the professional service which it was organized to

render and services ancillary thereto, subject to certain limited exceptions.139

A professional

corporation may issue its stock only to persons who are duly licensed to render the same specific

professional services as those for which the corporation was organized, or persons other than

those meeting such requirements to the extent and in the proportions allowed by the applicable

licensing act for the profession for which the corporation is organized.140

“Professional service” means the personal service rendered by a physician and

certain other types of practitioners which do not include PAs. A person may not be a shareholder

of a professional corporation unless that person is an individual licensed to render the same

specific professional services as those for which the corporation is organized, or qualified to be a

136

Texas Business Organizations Code Annotated Section 301.001.

137 Texas Business Organizations Code Annotated Section 301.001.

138 Texas Business Organizations Code Annotated Section 301.006.

139 West’s Utah Code Annotated Section 16-11-6.


37 DLMR_628211.1

shareholder under the applicable licensing act or the profession for which the corporation is

organized.141

Notwithstanding the foregoing, the Professional Corporation Act does not

preclude incorporation by professional persons under the revised Business Corporation Act,

where such persons would be permitted to organize a corporation and perform professional

services in the absence of the Professional Corporations Act.142

A physician licensed under Utah law may engage in practice only as an individual

licensee, but as an individual licensee he may be either an individual acting as a sole proprietor,

an employee of another person, a partner in a lawfully organized partnership, a lawfully formed

professional corporation, a lawfully organized limited liability company, a lawfully organized

business corporation or any other form of organization recognized by the state which is not

prohibited by a rule of the Medical Board.143

This suggests that an entity co-owned by a PA,

other than a professional corporation or limited liability company, may employ physicians as

well as PAs and other licentiates. Note, however, that “unlawful conduct” is defined to include

substantially interfering with the licensee’s lawful and competent practice of medicine by any

person or entity that manages, owns, operates or conducts a business having a direct or indirect

financial interest in the licensee’s professional practice, or anyone other than another physician

licensed under the Medical Practice Act, who is engaged in direct clinical care or consultation

with a licensee.144

Utah law provides for limited liability companies organized to render professional

services, and calls such entities “professional services companies.” A professional services

company may render only one specific type of professional services, and services ancillary to

them. “Professional services” is defined in the same way as in the Professional Corporation

Act.145

A professional services company organized to render professional services may

include members, managers and employees authorized to provide similar services; may include

members who are not licensed or registered by the state to render those professional services to

the extent allowed by the applicable licensing act relating to those professional services; and may

render professional services through its members, managers and employees.146

But another Utah

code provision states that except upon the death or incapacity of a member, a member of the

professional services company may sell or transfer the member’s interest in the company only to

141

West’s Utah Code Annotated Section 16-11-8.



144 West’s Utah Code Annotated Section 58-67-501(1)(c).

145 West’s Utah Code Annotated Section 48-2(c)-1507; 48-2(c)-1502.

146 West’s Utah Code Annotated Section 48-2(c)-1508.

38 DLMR_628211.1

an individual who is licensed or registered in the state to render the same type of professional

services as those for which the company was organized.147

Vermont

A medical practice in Vermont may be owned by a professional corporation,

professional limited liability company and certain other types of entities. Vermont law does not



A professional corporation may be formed for the purpose of rendering

professional services (including services ancillary to them) solely within a single profession. In

addition, a professional corporation may be formed for the purpose of rendering professional

services within two or more professions, to the extent the combination of professional services is

authorized by the licensing law of Vermont applicable to each profession in the combination.148

“Professional service” means a service that may be lawfully rendered only by a person licensed

or otherwise authorized by a licensing authority to render the service.149

Except for accounting corporations, a professional corporation may issue shares

only to individuals who are authorized by law to render a professional service described in the

corporation’s articles of incorporation, an employee stock ownership plan if a majority of the

voting trustees of the plan are professionals licensed to furnish the pertinent professional

services, or general partnerships in which all the partners are qualified persons with respect to the

professional corporation, and in which at least one partner is authorized by Vermont law to

render a professional service described in the corporation’s articles of incorporation.

A professional limited liability company may engage in rendering professional

services only to the extent that, and subject to the conditions and limitations under which, a

professional corporation may engage in rendering professional services under the Professional

Corporation Law. Further, the members of a professional limited liability company shall be

treated in the same manner as shareholders of a professional corporation and managers shall be

treated in the same manner as directors of a professional corporation.

PAs are not permitted to share ownership in a medical practice formed as a

business corporation. 150

Virginia

A medical practice in Virginia may be owned by a professional corporation, a

professional limited liability company or certain other types of entities. Virginia law appears to

147

West’s Utah Code Annotated Section 48-2(c)-1510.

148 Vermont Statutes Annotated, Title 11, Section 821.

149 Vermont Statutes Annotated, Title 11, Section 817.

150 Vermont Statutes Annotated, Title 11, Sections 806, 3012

39 DLMR_628211.1

permit PAs to be owners of their own professional corporations and to co-own a professional

corporation or other entity with a physician.

A “professional corporation” means a corporation that is organized for the sole

and specific purpose of rendering professional service (other than certain specified non-health

care services), and that has as its shareholders or members only individuals or professional

business entities that are duly licensed or otherwise legally authorized to render the same

professional service. In addition, a professional corporation may be organized for the sole and

specific purpose of rendering the professional services of one or more practitioners of the healing

arts, including PAs.151

“Professional services” means any type of personal service to the public that

requires as a condition of precedent to the rendering of that service or the use of a that

professional title, the obtaining of a license, certification or other legal authorization and shall be

limited to the personal services rendered by certain specified practitioners, including PAs. 152

An individual or groups of individuals duly licensed or otherwise legally

authorized to render the same professional service may organize a professional corporation for

the sole and specific purpose of rendering the same specific professional service. For purposes

of the Professional Corporation chapter, “practitioners of the healing arts,” including PAs,

physicians, nurse practitioners, optometrists, physical therapists assistants, and certain other

types of health care practitioners, are deemed to be rendering the same professional service.

Washington

A medical practice in Washington may be owned by a professional service

corporation, a professional limited liability company or certain other types of entities. PAs may

own professional service corporations or co-own them with physicians.

Washington law provides that “an individual or group of individuals duly licensed

or otherwise legally authorized to render the same professional services . . . may organize and

become a shareholder or shareholders of a professional corporation.”153

It further provides that,

notwithstanding any other provision of law, health care professionals who are licensed or

certified pursuant to certain specified chapters (including PAs) may own stock in and render their

professional services through one professional service corporation, and are to be considered as

rendering the same professional services.154

Similar statutes exist for professional limited

liability companies.155

151

West’s Annotated Code of Virginia Section 13.1-1103.

152 West’s Annotated Code of Virginia Section 13.1-1102.

153 Revised Code of Washington Annotated (West) Section 25.15.045.



40 DLMR_628211.1

West Virginia

A medical practice in West Virginia can be owned by a professional corporation,

professional limited liability company, or certain other types of entities. West Virginia law does

not appear to provide for the ownership or co-ownership of such entities by PAs.

West Virginia law provides for the formation of medical corporations owned by

one or more physicians duly licensed to practice medicine. It does not provide for the formation

of professional corporations by PAs or joint ownership of a medical corporation by a PA and a

physician.156

A professional limited liability company is a limited liability company organized

for the purpose of rendering a professional service. A “professional service” means the services

rendered by certain specified professions, which do not include PAs.157

One or more persons

duly licensed or otherwise legally authorized to render the same or compatible professional

services or to otherwise practice together within the state and become members of a professional

limited liability company for the purpose of rendering the same or compatible professional

services. Any one or more persons who, under applicable law or ethical rules or principals, can

collectively practice the same or compatible professions, can perform, own and operate, as

members, a professional limited liability company.158

Wisconsin

A medical practice in Wisconsin may be owned by a service corporation, a

limited liability company or certain other types of entities. PAs may be owners of a service

corporation or co-own a service corporation with physicians. It appears they may also own or

co-own a limited liability company.

One or more natural persons licensed, certified, or registered pursuant to

Wisconsin law, if all have the same license, certificate, or registration, or if all are health care

professionals, may organize and own shares in a service corporation.159

“Health care

professional” means an individual who is licensed, registered or certified by any of certain

specified boards, and includes PAs.

A limited liability company may be organized in Wisconsin for any lawful

purpose. A limited liability company engaging in a business that is subject to other provisions of

Wisconsin law may organize as a limited liability company only if not prohibited by, and subject

to all limitations of, the other chapter.160

156

West’s Annotated Code of West Virginia Section 30-3-15.

157 West’s Annotated Code of West Virginia Section 31B-13-1301.

158 West’s Annotated Code of West Virginia Section 31B-13-1302.

159 West’s Wisconsin Statutes Annotated Section 180.1903.

160 West’s Wisconsin Statutes Annotated Section 183.0102.

41 DLMR_628211.1

Wyoming

A medical practice in Wyoming may be owned by a professional corporation, a

professional limited liability company or certain other types of entities. Wyoming law does not



A professional practice corporation whose capital stock is owned exclusively by a

person or persons licensed to practice a profession by the state of Wyoming may, by and through

the person or persons of such licensed stockholder or stockholders, or licensed employees,

practice and offer professional services in such profession.161

The articles of incorporation of a

professional practice corporation shall contain language stating that all of its shareholders are

licensed in the profession for which the corporation is formed.

A business corporation organized under the Wyoming Business Corporation Act,

whose capital stock is owned exclusively by a person or persons licensed to practice a profession

by the state, may, by and through such person or persons of such licensed stockholder or

stockholders, or licensed employees, practice and offer professional services in such

profession.162

A limited liability company may be organized for any lawful purpose. Nothing in

the limited liability law shall be interpreted as precluding an individual whose occupation

requires licensure from forming a limited liability company if the applicable licensing statutes

and regulations do not prohibit it. No limited liability company may offer professional services

except by and through its licensed members or licensed employees.163

161

Wyoming Statutes Annotated Section 17-3-101.

162 Wyoming Statutes Annotated Section 17-3-101.

163 Wyoming Statutes Annotated Section 17-15-103.

aapa summary of physician assistant ownership

Documents

medical care

health care system

health care delivery

health care professionals

needed health care

physician supervision

ownership of practices

physicianpa team