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North Dakota enforces a strong corporate practice of medicine rule, and it rests on an unusually direct attorney general ruling. In 1990 the North Dakota Attorney General concluded that state public policy prohibits a corporation, other than a professional corporation, from employing physicians to provide medical care. The Legislature has since carved out hospitals, and a 2023 bill would have added a narrow exception for nonprofit entities and charitable trusts providing hyperbaric oxygen therapy; check whether it was enacted. We found no later AG guidance superseding the 1990 ruling, but confirm it is still the controlling view.
For a non-physician founder, the bottom line is that you cannot own the entity that employs physicians in North Dakota. You can own a management company that serves a physician-owned professional entity.
For an NP founder, North Dakota grants full practice authority, so an NP-led nursing practice is workable. Employing physicians through an NP-owned entity likely runs into the same AG ruling.
This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in North Dakota. Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.
Key takeaways
- A 1990 North Dakota Attorney General advisory letter concluded that a corporation other than a professional corporation may not employ physicians to provide medical care.
- N.D.C.C. 43-17-42 creates a hospital exception, conditioned on a written contract protecting the physician's independent medical judgment; confirm the current text.
- A 2023 bill would have extended the employment allowance to nonprofit entities and charitable trusts, but only for hyperbaric oxygen therapy; check whether it was enacted.
- North Dakota grants nurse practitioners full practice authority.
- Non-physician founders serving North Dakota patients typically use a North Dakota physician-owned professional entity plus a management services organization.
Does North Dakota have a corporate practice of medicine doctrine?
Yes. The foundation is a 1990 advisory letter from the North Dakota Attorney General to a Cass County state's attorney. The letter concluded that North Dakota public policy prohibits a corporation, other than a professional corporation, from employing physicians to provide medical care. Its reasoning tied the rule to the licensing statute, which makes unlicensed practice a misdemeanor, and to the view that the licensing law treats a "person" practicing medicine as a human being. A business corporation cannot be licensed, so it cannot practice medicine through employees.
The Legislature responded with a statutory exception rather than a repeal. N.D.C.C. 43-17-42 allows hospitals to employ physicians, subject to a written-contract condition protecting the physician's independent medical judgment; confirm the current statutory text. A 2023 bill would have amended that section to let nonprofit entities and charitable trusts employ physicians for hyperbaric oxygen therapy, under the same written-contract condition. Check whether it was enacted and in what form.
That pattern is what makes North Dakota distinctive. The Legislature has opened the door one category at a time and attached a clinical-independence promise to each opening. If your business does not fit a confirmed statutory exception, assume the 1990 rule applies.
Who can own a medical practice in North Dakota?
- Physicians, through a professional entity. The 1990 letter expressly preserved the professional corporation as a lawful vehicle for medical practice. North Dakota's professional entity laws generally restrict ownership to licensed professionals; confirm the specific shareholder and member rules for medical entities with counsel.
- Hospitals. May employ physicians under N.D.C.C. 43-17-42 with the required written contract.
- Nonprofits and charitable trusts. Possibly, only for hyperbaric oxygen therapy, if the 2023 bill described above was enacted; confirm before relying on it.
A lay investor should not expect to hold equity in a North Dakota medical professional entity, and under the 1990 AG letter a general business corporation cannot employ physicians to treat patients.
Can nurse practitioners and physician assistants own a practice in North Dakota?
North Dakota is a full practice authority state for nurse practitioners. NPs can evaluate, diagnose, treat, and prescribe without a physician agreement, which makes NP-led primary care, behavioral health, and telehealth models practical.
The AG letter is about employing physicians. An NP-owned entity that delivers nursing care is a different question from an NP-owned entity that employs physicians. If your model needs physicians on staff, the physician services should sit in a physician-owned professional entity.
Physician assistants practice under North Dakota's PA licensing rules, and the AG letter's logic likely applies to them too: PAs should not expect to own a medical entity that employs physicians. Confirm current PA requirements with the North Dakota Board of Medicine.
How does the friendly PC-MSO model work in North Dakota?
It is the standard route for non-physician founders. A North Dakota-licensed physician owns the professional entity. A separate MSO, owned by anyone, provides technology, billing, marketing, staffing support, and capital under a management services agreement. Our friendly PC-MSO model explainer walks through the general mechanics.
North Dakota-specific drafting points:
- Borrow the statute's own test. Even though N.D.C.C. 43-17-42 applies to hospitals, its condition is a useful template: put a clear written promise in the MSA that the MSO will not interfere with the physician's independent medical judgment, and live by it.
- Fees. Use a flat or fair-market-value management fee. Fees tied to prescriptions or referrals raise board conduct issues and federal Anti-Kickback and Stark concerns.
- Control. The physician owner should approve clinical protocols, supervise clinicians, and control medical records.
- Don't drift into employment. If the MSO starts hiring, scheduling, and directing physicians as if they were its own employees, it begins to look like the corporate employment the 1990 letter prohibits.
What does this mean for a telehealth brand serving North Dakota patients?
Licensure follows the patient. North Dakota's pathway for out-of-state telehealth physicians appears limited, so plan on North Dakota licensure for physicians who treat North Dakota patients on an ongoing basis, and confirm the current Board of Medicine telemedicine rules. Check telehealth licensing by state for how North Dakota compares with neighbors such as Minnesota.
CPOM follows the patient too. A telehealth company headquartered elsewhere that employs physicians directly and treats North Dakota residents is doing what the 1990 letter says a non-professional corporation cannot do. Route North Dakota care through a physician-owned professional entity with North Dakota-licensed physicians, and keep your company on the management side of the line.
North Dakota CPOM at a glance
| Topic | North Dakota (as of October 2026) |
|---|---|
| CPOM enforcement | Strong |
| Primary legal basis | 1990 AG advisory letter; N.D.C.C. 43-17-42 (hospital exception; confirm 2023 changes) |
| Professional entity options | Professional corporation or professional entity owned by licensees (confirm shareholder rules) |
| Fee-splitting rule | No specific statute confirmed; board conduct rules and federal law apply |
| NP practice authority | Full |
| Out-of-state telehealth licensing | Limited (confirm current Board of Medicine rules) |
| Typical structure for non-physician founders | ND physician-owned professional entity plus MSO |
Frequently asked questions
Does North Dakota prohibit the corporate practice of medicine?
Yes. A 1990 North Dakota Attorney General advisory letter concluded that a corporation other than a professional corporation may not employ physicians to provide medical care. The Legislature has created only narrow exceptions.
Can a hospital employ physicians in North Dakota?
Yes. N.D.C.C. 43-17-42 allows hospitals to employ physicians, subject to a written-contract condition protecting the physician's independent medical judgment. Confirm the current statutory text.
What changed in North Dakota in 2023?
A 2023 bill would have amended N.D.C.C. 43-17-42 to let nonprofit entities and charitable trusts employ physicians, but only to provide hyperbaric oxygen therapy, under the same written-contract condition. Check whether it was enacted and in what form.
Can a nurse practitioner own a practice in North Dakota?
North Dakota grants NPs full practice authority, so an NP can run an NP-led practice without a physician agreement. An NP-owned entity that wants to employ physicians should get North Dakota counsel first, given the 1990 AG letter.
Can a telehealth company employ doctors to treat North Dakota patients?
Not directly, under the 1990 AG letter, unless it fits a statutory exception. Most telehealth brands contract with a North Dakota physician-owned professional entity through an MSO arrangement.
Sources
- North Dakota Attorney General, Advisory Letter to Robert G. Hoy (1990)
- North Dakota Legislative Assembly, 2023 bill text amending N.D.C.C. 43-17-42
Launch in North Dakota 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. Licensed providers make every clinical decision, and MyOrbitHealth does not practice medicine. See every state in our 50-state CPOM guide, or explore PC-MSO formation, physician PC owner services, or book a call.
