Pennsylvania CPOM Rules 2026: Who Can Own a Practice

Yes, Pennsylvania has a corporate practice of medicine (CPOM) doctrine, but no single statute states it. The doctrine traces to a 1938 Pennsylvania Supreme Court case, Neill v. Gimbel Brothers, and is reinforced by the Medical Practice Act and the professional corporation rules in the Business Corporation Law, which require every ultimate owner of a professional corporation to be licensed. Hospitals, licensed health care facilities, and HMOs are the main exceptions.

As of October 2026, the bottom line for a non-physician founder is the friendly PC-MSO model: a Pennsylvania-licensed physician owns the practice, and your company owns the management company. Enforcement against well-structured MSOs has been light, which is why we classify Pennsylvania as Moderate. NP founders face a harder path, because Pennsylvania still requires CRNP collaboration with physicians and does not clearly let a CRNP own a medical practice.

This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in Pennsylvania.

Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.

Key takeaways

Pennsylvania's CPOM doctrine began with Neill v. Gimbel Brothers (1938), where the state Supreme Court held that a department store could not employ optometrists to provide optometry services.
Under Chapter 29 of Pennsylvania's Business Corporation Law, all ultimate beneficial owners of a professional corporation must be licensed persons, and share transfers that break this rule are void.
Hospitals, licensed health care facilities, and HMOs may employ physicians in Pennsylvania.
Pennsylvania CRNPs must practice in collaboration with a Pennsylvania-licensed physician under a written agreement.
Act 42 of 2024 set Pennsylvania's telemedicine standard-of-care and coverage rules, but it did not create a license exemption for out-of-state clinicians.

Does Pennsylvania have a corporate practice of medicine doctrine?

Yes, built from several sources rather than one.

Case law. In Neill v. Gimbel Brothers (1938), the Pennsylvania Supreme Court held that a department store could not employ optometrists to furnish optometry to customers. Pennsylvania lawyers treat it as the root of the state's CPOM doctrine for physicians too. Lamb McErlane's overview notes that no single source of Pennsylvania law prohibits corporations from employing physicians. The doctrine draws on the Medical Practice Act of 1985, the Business Corporation Law of 1988, and related statutes.

Statutes. The professional corporation chapter of the Business Corporation Law requires every ultimate beneficial owner of a professional corporation's shares to be a licensed person, and voids share issuances or transfers that violate that rule. The Medical Practice Act limits the practice of medicine to licensed individuals.

Exceptions. Pennsylvania allows practice through professional corporations, LLPs, and restricted professional companies owned by licensed persons. Hospitals, licensed health care facilities, and HMOs may also employ physicians.

Enforcement has mostly come up in disputes over med spas and lay-owned clinics, not in board actions against properly built MSOs. Pennsylvania counsel have warned med spas that the doctrine applies to them.

Who can own a medical practice in Pennsylvania?

Only licensed persons, in the professional entity that delivers medical care.

Professional corporations. A Pennsylvania PC may generally be formed for one kind of professional service. A combined practice is allowed only where the shareholders could lawfully practice together or the licensing board expressly authorizes it, under 15 Pa.C.S. § 2903.
Restricted professional companies. Pennsylvania's LLC law offers a professional LLC form with similar licensed-owner limits.
Facility exceptions. Hospitals, licensed facilities, and HMOs may employ physicians directly.

A non-physician investor cannot hold shares in the clinical entity. The investor's equity sits in the MSO.

Can nurse practitioners and physician assistants own a practice in Pennsylvania?

AANP classifies Pennsylvania as Reduced practice.

CRNPs. A Pennsylvania CRNP diagnoses and prescribes in collaboration with a Pennsylvania-licensed physician under a written collaborative agreement, defined in 49 Pa. Code § 21.251. Prescriptive authority agreements must also name a substitute physician for when the primary collaborator is unavailable. Bills to grant CRNPs independent practice have been introduced repeatedly but had not become law as of this review.

CRNP ownership. A CRNP is a registered nurse, and Pennsylvania lets nurses form professional entities for nursing services. Whether a CRNP can own an entity that delivers medicine is unsettled. Stevens & Lee concluded the law does not expressly allow it but leaves room for it. Treat CRNP-owned medical practices as an open question for counsel, and remember ownership never removes the collaboration requirement.

PAs. Pennsylvania PAs practice under written agreements with supervising physicians, and Board of Medicine rules bar PAs from splitting fees for referrals. PA ownership of a medical practice is not clearly authorized.

For most NP-led brands, the cleaner route is a physician-owned PC with NPs as employees and a collaborating physician arrangement in place.

How does the friendly PC-MSO model work in Pennsylvania?

Pennsylvania lawyers often call it the "captive PC" model. A licensed physician owns the PC, and the MSO furnishes all non-clinical services under a management services agreement. Two Pennsylvania points matter:

Fee splitting. Pennsylvania's Board of Medicine rules do not contain a broad, MD-specific fee-splitting ban comparable to some states. A Manatt survey listed Pennsylvania among states without a statutory or regulatory fee-splitting prohibition. The Board can still discipline unprofessional conduct, so percentage fees remain a judgment call. Flat or cost-plus fees at fair market value are the safer default.
Transaction oversight is coming. The Pennsylvania House has advanced a bill (HB 1460) expanding the Attorney General's review of health care transactions, and another bill (HB 2115) would add pre-closing notice for deals including private equity affiliations. Check whether either has been enacted before you close an acquisition or recapitalization.

See our friendly PC-MSO model explainer and management services agreement guide.

What does this mean for a telehealth brand serving Pennsylvania patients?

Licensure follows the patient. Clinicians generally need a Pennsylvania license to treat a patient located in Pennsylvania. Pennsylvania has no telehealth-only registration. A narrow extraterritorial license exists for physicians in reciprocating border states.
Act 42 of 2024. Act 42, signed July 3, 2024, holds telemedicine to the in-person standard of care and requires commercial insurers that cover a service in person to cover it by telemedicine when the standard of care is met. It does not exempt out-of-state clinicians from licensure.
CPOM applies to your clinical entity. If your company is not physician-owned, Pennsylvania patients should be served through a Pennsylvania-compliant PC.

Neighbors: New York is stricter on ownership; Delaware is worth comparing if you serve the Philadelphia region.

Pennsylvania CPOM at a glance

Topic	Pennsylvania (as of October 2026)
CPOM enforcement	Moderate; doctrine is recognized, enforcement mostly through disputes rather than board actions
Primary legal basis	Neill v. Gimbel Brothers (1938); Medical Practice Act; Business Corporation Law ch. 29
Professional entity options	Professional corporations, restricted professional companies, LLPs (licensed owners only)
Fee-splitting rule	No broad MD-specific regulatory ban identified; general unprofessional-conduct authority applies
NP practice authority	Reduced; CRNP collaborative agreement with a PA-licensed physician
Out-of-state telehealth licensing	Limited; Pennsylvania license required; narrow border-state extraterritorial license
Typical structure for non-physician founders	Friendly (captive) PC owned by a PA-licensed physician plus MSO

Frequently asked questions

Can a non-physician own a medical practice in Pennsylvania?

Not the clinical entity. All ultimate owners of a Pennsylvania professional corporation must be licensed, and share transfers to non-licensees are void. A non-physician can own the MSO that manages a physician-owned PC.

Where does Pennsylvania's CPOM doctrine come from?

It traces to Neill v. Gimbel Brothers (1938), where the state Supreme Court barred a department store from employing optometrists. It is reinforced by the Medical Practice Act and the professional corporation rules in the Business Corporation Law.

Can a nurse practitioner open an independent practice in Pennsylvania?

Not without a physician. Pennsylvania CRNPs must practice under a written collaborative agreement with a Pennsylvania-licensed physician. Whether a CRNP can own an entity that delivers medicine is unsettled, so get counsel before structuring one.

Are percentage-based management fees allowed in Pennsylvania?

Pennsylvania has no broad physician fee-splitting regulation that clearly bans them, but the Board of Medicine can discipline unprofessional conduct and federal fraud-and-abuse rules still apply. Flat or cost-plus fees at fair market value are the conservative design.

Do out-of-state doctors need a Pennsylvania license for telemedicine?

Generally yes. Clinicians must be licensed where the patient is located. Act 42 of 2024 set telemedicine standards and coverage rules but did not create a license exemption.

Sources

For every other state, start with our corporate practice of medicine 50-state guide.

Launch in Pennsylvania 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 and physician PC owner services, or book a call.