South Dakota CPOM Rules 2026: Who Can Own a Practice

South Dakota is one of the few states that wrote its corporate practice of medicine (CPOM) policy into a statute, and that statute is unusually specific. A provision of the Medical Practice Act (SDCL chapter 36-4) declares it state policy that a corporation may not practice medicine. It then generally lets a corporation employ a physician only if the arrangement does not regulate the physician's independent judgment and does not let the corporation profit from the practice of medicine itself. We classify South Dakota as Moderate: the door to corporate employment is open, but the conditions are written down and enforceable.

For a non-physician founder, the safer play is still a physician-owned medical corporation plus a management company. For NP and PA founders, South Dakota is one of the friendlier states: NPs reach independent practice after 1,040 hours, and under 2025 legislation experienced PAs can reportedly practice without a collaborative agreement.

This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in South Dakota. Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.

Key takeaways

South Dakota's Medical Practice Act (SDCL chapter 36-4) states that, apart from medical corporations, a corporation may not practice medicine or osteopathy in South Dakota.
A corporation may generally employ a physician only if the arrangement does not interfere with the physician's independent judgment and does not produce profit from the practice of medicine beyond reasonable charges for facilities, equipment, and administration. Confirm the full current conditions with counsel.
Medical corporations under SDCL chapter 47-11 are formed by persons licensed under the Medical Practice Act.
Out-of-state clinicians generally need full South Dakota licensure to treat patients located in the state by telehealth.

Does South Dakota have a corporate practice of medicine doctrine?

Yes, in two layers.

Case law. In Bartron v. Codington County, 68 S.D. 309, 2 N.W.2d 337 (1942), a for-profit clinic corporation contracted with a county to provide medical care to indigent residents, using salaried physicians. The Supreme Court read the Medical Practice Act as not reaching corporations, but commentators, including the American Bar Association's Health Law Section, read the opinion as condemning profit-corporation practice on public policy grounds: commercialization of a learned profession.

Statute. The legislature later codified the policy in SDCL chapter 36-4. A provision of that chapter states that, apart from medical corporations, a corporation may not practice medicine or osteopathy. Sources differ on the exact section number, and we summarize rather than quote it. The provision then carves out employment. In summary, a corporation does not violate the rule by employing a licensed physician if the agreement, and the relationship it creates, does not:

Directly or indirectly interfere with or regulate the physician's independent judgment about the practice of medicine or the treatment of a patient; or
Let the corporation profit from the physician's medical services, for example by charging more than an independent physician would. Reasonable charges for facilities, equipment, and administration are allowed.

The statute may contain additional conditions. Confirm the full current text with counsel before relying on this summary.

That second condition is the one that matters for investors. It is close to a statutory ban on monetizing clinical revenue itself.

Who can own a medical practice in South Dakota?

Licensed physicians, through a medical corporation. Under SDCL 47-11-1, one or more persons licensed under the Medical Practice Act may form a medical corporation. Chapter 47-11 also appears to require medical licensure for a medical corporation's officers, directors, and shareholders; confirm the current text. South Dakota also has a separate chapter, 47-11F, for health care corporations, LLCs, and LLPs, which appears to address professional corporations that render more than one professional service. Confirm what it allows before relying on it.

Hospitals and other corporations can generally employ physicians under the statutory carve-out if they meet its conditions. But a for-profit telehealth company employing physicians directly would have to show it is not profiting from medicine itself, which is hard to square with a venture model.

Can nurse practitioners and physician assistants own a practice in South Dakota?

Nurse practitioners. South Dakota is a full practice state, with a transition period. The South Dakota Board of Nursing states that a CNP needs 1,040 hours of licensed practice, within the preceding five years, to practice without a collaborative agreement. Until then, the NP works under an agreement with a South Dakota-licensed physician or an experienced CNP.

Physician assistants. In 2025 the governor signed HB 1071, which, as reported by AAPA, lets experienced PAs who meet certification and practice-hour requirements practice without a collaborative agreement. PAs below the threshold still need one. Confirm the final terms, hour threshold, and effective date with the Board of Medical and Osteopathic Examiners.

Ownership. An experienced NP or PA can run a clinical practice without a physician agreement. Whether they can co-own an entity with physicians, or own one that employs physicians, depends on chapters 47-11 and 47-11F, which we have not confirmed. Get a South Dakota opinion before forming a mixed-license entity.

How does the friendly PC-MSO model work in South Dakota?

The friendly PC-MSO model fits South Dakota's statute well, because the statute tells you exactly what regulators care about: independent judgment and profit from medicine.

Independent judgment. The management services agreement should leave every clinical decision, protocol, and prescribing choice to the physician-owned medical corporation.
Profit from medicine. Pay the MSO a fee for its management services at fair market value. A percentage of clinical revenue looks like the corporation taking profit from the practice of medicine, which is what the statute targets.
Fee-splitting. SDCL 36-4-30's list of unprofessional conduct for physicians reportedly includes splitting fees and paying anyone for furnishing a patient; confirm the current provision. Keep marketing fees flat and unrelated to patient volume.

What does this mean for a telehealth brand serving South Dakota patients?

CPOM and licensure follow the patient. If the patient is in South Dakota, South Dakota law applies.

We did not find an out-of-state telehealth registration in South Dakota. State law, as summarized by the Center for Connected Health Policy, generally requires a health care professional treating a patient in the state through telehealth to be fully licensed in South Dakota (or employed by a qualifying licensed facility); confirm the current statute. We did not confirm South Dakota's participation in the Interstate Medical Licensure Compact. Where the Compact is available it can speed up physician licensure, but the end result is still a full South Dakota license.

The working structure: a medical corporation owned by a South Dakota-licensed physician, managed by your MSO, with South Dakota-licensed NPs and PAs. See telehealth licensing by state, the 50-state CPOM guide, and our neighboring North Dakota guide.

South Dakota CPOM at a glance

Topic	South Dakota (as of October 2026)
CPOM enforcement	Moderate: statutory ban with conditional employment exception
Primary legal basis	Corporate-practice provision in SDCL chapter 36-4; Bartron v. Codington County (1942)
Professional entity options	Medical corporation (SDCL ch. 47-11); health care corporations, LLCs and LLPs (ch. 47-11F)
Fee-splitting rule	Fee-splitting reportedly unprofessional conduct (SDCL 36-4-30); no corporate profit from medicine (ch. 36-4)
NP practice authority	Full, after 1,040 transition hours
Out-of-state telehealth licensing	No registration found; plan on a full South Dakota license
Typical structure for non-physician founders	Physician-owned medical corporation plus MSO on a fair-market-value fee

Frequently asked questions

Can a corporation employ physicians in South Dakota?

Yes, on conditions. Under South Dakota's corporate-practice statute, the arrangement generally must not regulate the physician's independent judgment or let the corporation profit from the practice of medicine beyond reasonable facility, equipment, and administrative charges. Confirm the full current conditions with counsel.

Can a non-physician own a medical practice in South Dakota?

Not as a shareholder of a medical corporation, which is formed by persons licensed under the Medical Practice Act. A non-physician can own an MSO that provides management services to a physician-owned corporation, as long as the MSO does not control clinical decisions or take profit from medicine itself.

Do nurse practitioners need a collaborating physician in South Dakota?

Only during the transition period. The South Dakota Board of Nursing requires 1,040 hours of licensed practice within the preceding five years before a CNP may practice without a collaborative agreement.

Can physician assistants practice independently in South Dakota?

Under 2025 legislation, experienced PAs who meet certification and practice-hour requirements can reportedly practice without a collaborative agreement. Newer PAs still need one. Confirm the final terms and effective date.

Can an out-of-state provider treat South Dakota patients by telehealth?

Generally not without a South Dakota license. State law, as summarized by the Center for Connected Health Policy, generally requires clinicians treating patients located in South Dakota through telehealth to be fully licensed in the state, subject to a limited facility-employment exception. Confirm the current statute.

Sources

Launch in South 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 PC-MSO formation, physician PC owner services, or book a call.