--- title: "Minnesota Corporate Practice of Medicine Rules (2026 Guide)" description: "Minnesota corporate practice of medicine explained: the Isles Wellness rule, who can own a practice, fee-splitting limits, and telehealth registration." slug: minnesota-corporate-practice-of-medicine date: 2026-10-18 updated: 2026-10-18 author: MyOrbitHealth Compliance Team category: Compliance cpom: Moderate --- # Corporate Practice of Medicine in Minnesota: What Telehealth and Clinic Founders Need to Know Yes. Minnesota enforces a corporate practice of medicine (CPOM) doctrine, and it comes from the courts rather than a single statute. In *Isles Wellness, Inc. v. Progressive Northern Insurance Co.* (2005), the Minnesota Supreme Court confirmed the doctrine exists, with limited exceptions. A lay-owned business corporation generally cannot employ physicians, and the Professional Firms Act limits practice ownership to licensed professionals. As of October 2026, the bottom line for a non-physician founder is the friendly PC-MSO model: physicians own the practice entity and your company owns the management company. Plan for two Minnesota wrinkles: a detailed fee-splitting rule and a pre-closing notice law for larger deals. NP founders have more room than in most states, thanks to independent NP practice after a transition period and combined health professional firms. This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in Minnesota. *Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.* ## Key takeaways - Minnesota's CPOM doctrine is judge-made: the Minnesota Supreme Court reaffirmed it in *Isles Wellness* (2005), tracing it to *Granger v. Adson* (1933). - Under the Professional Firms Act (Minn. Stat. ch. 319B), ownership interests in a professional firm may be held only by licensed professionals and other qualifying professional firms. - Minn. Stat. § 319B.40 lets licensed physicians, physician assistants, registered nurses and several other health professionals practice together in one firm organized under chapter 319B. - Minn. Stat. § 147.091, subd. 1(p) treats fee splitting as grounds for physician discipline unless a fee division is proportional to services and responsibility and is disclosed. - Out-of-state physicians can treat Minnesota patients by telehealth through an annual interstate telehealth registration under Minn. Stat. § 147.032, but cannot open a Minnesota office under it. ## Does Minnesota have a corporate practice of medicine doctrine? Yes, and the leading case is unusual because it turned on chiropractors, not physicians. In [*Isles Wellness, Inc. v. Progressive Northern Insurance Co.*, 703 N.W.2d 513 (Minn. 2005)](https://law.justia.com/cases/minnesota/supreme-court/2005/opa040485-0915.html), a dispute between insurers and lay-owned clinics, the Minnesota Supreme Court held: - The CPOM doctrine exists in Minnesota, with limited exceptions. - It applies to chiropractic, so corporate employment of chiropractors is prohibited unless a statute expressly allows it. - It does not reach physical therapy or massage therapy. The court tied the doctrine to licensure: a corporation cannot meet the training and licensing requirements imposed on professionals, so it cannot practice through hired licensees for its own profit. It traced the doctrine to *Granger v. Adson*, 190 Minn. 23, 250 N.W. 722 (1933). A concurrence argued that *Granger*'s corporate language was dicta, but the majority treated it as settled law. The court also referred to an earlier Minnesota Attorney General opinion, reportedly concluding that a nonprofit corporation may employ physicians; confirm that opinion before relying on it. A later decision in the same litigation addressed what a violation of the doctrine means for the affected contracts; have counsel confirm its holding before relying on it. ## Who can own a medical practice in Minnesota? Minnesota's [Professional Firms Act, Minn. Stat. ch. 319B](https://www.revisor.mn.gov/statutes/cite/319B.40), is an overlay on the ordinary corporation, LLC and LLP statutes. Ownership interests in a professional firm may be held only by: - licensed professionals who are not disqualified, - certain general partnerships authorized to furnish at least one category of the firm's professional services, and - other professional firms authorized to furnish at least one of those categories. The firm must also file with each licensing board that oversees its services before it starts practicing. Minn. Stat. § 319B.40 is the provision that matters most for health care. It lets licensees in medicine, physician assistant practice, registered nursing, chiropractic, psychology, pharmacy and several other health professions practice in combination in one 319B firm, each within their own license. A lay investor cannot hold equity in that firm. Nonprofit corporations, under the earlier Attorney General opinion referred to in *Isles Wellness*, are reported to be the main path for direct employment of physicians outside a professional firm; confirm with counsel. ## Can nurse practitioners and physician assistants own a practice in Minnesota? **Nurse practitioners.** Minnesota is a full practice authority state, with a catch. Under Minn. Stat. § 148.211, a newly licensed NP must first complete a transition period of practice hours under a collaborative agreement. The [Minnesota Board of Nursing's summary of APRN practice changes](https://mn.gov/boards/assets/MN_APRN_Practice_Changes_8-21-26_tcm21-764513.pdf) describes 2026 legislation that changed how that requirement can be met, including where the hours may be completed and who may serve as collaborator, with a separate rule for NPs outside primary care or mental health. Confirm the current hour requirement, effective date, and setting rules with the Board of Nursing. Because registered nursing is a listed profession under § 319B.40, an experienced NP can generally own a professional firm. Whether an NP can co-own a combined firm with physicians under current Board of Nursing and Board of Medical Practice rules should be confirmed with counsel. An NP-owned firm should not employ physicians to practice medicine unless physicians hold ownership. **Physician assistants.** Since August 2020, Minnesota PAs no longer file supervision forms. Per the [Board of Medical Practice's 2020 notice](https://mn.gov/boards/assets/BMP%20Message%20-%20PA%20Practice%20Act%20Changes%20-%2007272020_tcm21-441988.pdf), a PA practices under a practice-level agreement produced to the Board on request. PAs licensed on or after August 1, 2020 must also complete 2,080 hours under a collaborative arrangement. PAs are a listed profession under § 319B.40, so they can hold equity in a combined health services firm. ## How does the friendly PC-MSO model work in Minnesota? The structure is the standard [friendly PC-MSO model](/blog/friendly-pc-mso-model): a Minnesota-licensed physician owns a 319B firm, and your company's MSO provides staff, software, marketing and billing under a management services agreement. Clinical decisions stay with licensed providers. Two Minnesota-specific rules shape the contract. **Fee splitting.** [Minn. Stat. § 147.091, subd. 1(p)](https://www.revisor.mn.gov/statutes/cite/147.091) makes fee splitting a ground for discipline. It bars remuneration for referrals and bars dividing fees with another physician or a professional corporation unless the division is proportional to the services provided and the responsibility each professional assumes, and the physician has disclosed its terms. Internal distributions of a group's own professional fees are excluded. Under Minn. R. ch. 5620, the Board may weigh the value of services, overhead and time when judging proportionality. We found no Minnesota authority squarely approving or condemning percentage-of-collections management fees. A flat or cost-plus fee tied to documented services is the more defensible design. **Transaction notice.** Under [Minn. Stat. ch. 145D](https://www.ag.state.mn.us/Health-Care/Transactions/), parties to certain covered health care transactions above revenue thresholds must give advance notice to the Attorney General, the Department of Health, or both before closing. The Attorney General's submission list includes related management contracts, but we did not confirm whether a management agreement alone can be a covered transaction. Confirm the current thresholds, timing, and coverage with counsel. A small MSO may fall below the thresholds; a roll-up or exit may not. For drafting points, see our [management services agreement guide](/blog/management-services-agreement-guide). ## What does this mean for a telehealth brand serving Minnesota patients? CPOM follows the patient. If you treat people located in Minnesota, Minnesota's doctrine applies wherever your company is based. Licensure is more flexible than in most states. Under [Minn. Stat. § 147.032](https://www.revisor.mn.gov/statutes/cite/147.032), a physician without a Minnesota license can treat Minnesota patients by telehealth after registering annually with the Board of Medical Practice. The physician needs an unrestricted license elsewhere and a clean disciplinary history, and cannot open a Minnesota office or see patients in person there. Narrow exemptions cover emergencies, very occasional care and consultations with a Minnesota physician. The pathway appears to be written for physicians. Confirm whether NPs or PAs have any comparable option; otherwise plan on full Minnesota licenses for them. A practical setup: a physician-owned PC, Minnesota-licensed NPs or PAs inside it, and a flat-fee MSA. Our [telehealth licensing by state guide](/blog/telehealth-licensing-by-state) compares Minnesota's registration with other states' options. ## Minnesota CPOM at a glance | Topic | Minnesota (as of October 2026) | |---|---| | CPOM enforcement | Moderate: recognized by the state Supreme Court, with exceptions for nonprofits and statutory carve-outs | | Primary legal basis | *Isles Wellness* (Minn. 2005); *Granger v. Adson* (Minn. 1933) | | Professional entity options | Corporation, LLC or LLP electing the Professional Firms Act (Minn. Stat. ch. 319B); combined health firms under § 319B.40 | | Fee-splitting rule | Minn. Stat. § 147.091, subd. 1(p) and Minn. R. ch. 5620: divisions must be proportional and disclosed | | NP practice authority | Full, after a transition period under a collaborative agreement | | Out-of-state telehealth licensing | Yes: annual interstate telehealth registration for physicians (Minn. Stat. § 147.032) | | Typical structure for non-physician founders | Physician-owned 319B firm plus lay-owned MSO under a flat-fee MSA | ## Frequently asked questions ### Can a non-physician own a medical practice in Minnesota? Not directly. Under *Isles Wellness* a lay-owned business corporation generally cannot employ physicians. A non-physician can own the MSO that manages a physician-owned practice. ### Is Minnesota's CPOM doctrine in a statute? No. It is case law from *Isles Wellness* (2005) and *Granger v. Adson* (1933), reinforced by the Professional Firms Act and the fee-splitting statute. ### Can a nurse practitioner open an independent practice in Minnesota? Yes, after completing a transition period of practice hours under a collaborative agreement; confirm the current hour requirement. Registered nursing is a listed profession under Minn. Stat. § 319B.40, so an NP can generally own a professional firm. Whether an NP can co-own a combined firm with physicians should be confirmed with counsel. ### Can out-of-state doctors treat Minnesota patients by telehealth? Physicians can, through the annual interstate telehealth registration under Minn. Stat. § 147.032. It does not allow a Minnesota office or in-person visits. ### Are percentage-based management fees allowed in Minnesota? We found no Minnesota rule that addresses MSO percentage fees directly. The fee-splitting statute requires proportional, disclosed divisions, so a flat or cost-based fee is the more conservative design. Have Minnesota counsel review the fee terms. ## Sources - [Isles Wellness, Inc. v. Progressive Northern Insurance Co., 703 N.W.2d 513 (Minn. 2005)](https://law.justia.com/cases/minnesota/supreme-court/2005/opa040485-0915.html) - [Minn. Stat. § 319B.40, Professional health services](https://www.revisor.mn.gov/statutes/cite/319B.40) - [Minn. Stat. § 147.091, Grounds for disciplinary action](https://www.revisor.mn.gov/statutes/cite/147.091) - [Minn. Stat. § 147.032, Interstate practice of telehealth](https://www.revisor.mn.gov/statutes/cite/147.032) - [Minnesota Attorney General, Requirements for Certain Health Care Entity Transactions](https://www.ag.state.mn.us/Health-Care/Transactions/) - [Minnesota Board of Nursing, Minnesota APRN Practice Changes (Aug. 2026)](https://mn.gov/boards/assets/MN_APRN_Practice_Changes_8-21-26_tcm21-764513.pdf) - [Minnesota Board of Medical Practice, PA Practice Act Changes (July 2020)](https://mn.gov/boards/assets/BMP%20Message%20-%20PA%20Practice%20Act%20Changes%20-%2007272020_tcm21-441988.pdf) For every other state, start with our [corporate practice of medicine 50-state guide](/blog/corporate-practice-of-medicine-50-state-guide). ## Launch in Minnesota on a structure that is already built MyOrbitHealth can form a PC-MSO structure for your brand, supply a physician PC owner or collaborating physician, or let you launch on its existing MSO / friendly-PC structure with 2,400+ licensed providers making every clinical decision. Explore [PC-MSO formation](/pc-mso-formation) and [physician PC owner services](/physician-pc-owner), or [book a call](https://myorbithealth.com/book). ```html ```