--- title: "Tennessee CPOM Rules 2026: Who Can Own a Practice" description: "Tennessee corporate practice of medicine works by listed exceptions: only named entities may employ physicians. What non-physician founders need to know." slug: tennessee-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 Tennessee: What Telehealth and Clinic Founders Need to Know Tennessee handles corporate practice of medicine (CPOM) differently from most states. Instead of a vague doctrine, the Medical Practice Act lists the entities that may employ physicians. As we summarize it, the list includes hospitals and their affiliates, physician-owned professional entities, certain nonprofits, federally qualified health centers, rural health clinics, and a handful of others. If your company is not on the list, assume it cannot employ physicians. We classify Tennessee as **Moderate**: the rules are clear, the exceptions are broad for hospitals, and they offer nothing to a lay-owned telehealth company. For a non-physician founder, the answer is a physician-owned professional corporation or PLLC managed by your MSO. For an NP or PA founder, Tennessee is a restricted practice state, so a physician relationship is part of the plan either way. This is general information, not legal advice. Confirm the current rules with a healthcare attorney licensed in Tennessee. *Last reviewed October 2026. State rules change often; statute and case references are summaries, not quotations.* ## Key takeaways - Tennessee's CPOM rule is built into Tenn. Code Ann. 63-6-204, which permits physician employment only by listed types of entities. - Every permitted employment arrangement must be documented in writing in a way that does not restrict the physician's independent medical judgment. - Hospitals may employ most physicians, but the statute has historically excluded radiologists, anesthesiologists, pathologists, and emergency physicians from hospital employment, subject to narrow exceptions that have changed over time; confirm the current list. - Tennessee Board of Medical Examiners Rule 0880-02-.20 addresses medical professional corporations and professional LLCs; confirm its current text. - Tennessee is a restricted NP practice state, and the site's data shows no out-of-state telehealth registration. ## Does Tennessee have a corporate practice of medicine doctrine? Yes, and it is codified by exception. [Tenn. Code Ann. 63-6-204](https://law.justia.com/codes/tennessee/title-63/chapter-6/part-2/section-63-6-204/) defines the practice of medicine and then sets out which entities may employ physicians without violating it. As we summarize it (confirm the full current list with Tennessee counsel), the permitted employers include: - **Hospitals and their affiliates.** Licensed hospitals may employ physicians, but may not restrict or interfere with medically appropriate diagnostic or treatment decisions. The statute has historically barred hospitals from employing radiologists, anesthesiologists, pathologists, and emergency physicians, with limited carve-outs. The legislature has adjusted those carve-outs over time, and a recent change was reported to affect hospitals in smaller counties; check the current statute before relying on either rule. - **Physician professional entities.** Professional corporations and PLLCs owned by physicians. - **Certain nonprofits and safety-net providers.** Nonprofit faculty practice plans, federally qualified health centers, rural health clinics, and charitable clinics. - **Nursing facilities**, under a conditional exception; confirm its current conditions. Across these exceptions, the employment must be evidenced by a written contract, job description, or other documentation that does not restrict the physician's independent judgment in diagnosing and treating patients. The logic runs one way. A Delaware C-corp running a telehealth brand is not a hospital, an FQHC, or a physician-owned entity. It is not on the list. ## Who can own a medical practice in Tennessee? Physicians, through a medical professional corporation or professional LLC. The Board of Medical Examiners' [Rule 0880-02-.20](https://www.law.cornell.edu/regulations/tennessee/Tenn-Comp-R-Regs-0880-02-.20) governs these entities. As we read it, the rule also contains a point that sophisticated founders miss: even physician owners of a medical PC or PLLC may exercise only the authority over diagnosis, treatment, and referral decisions that an employing entity may exercise. Ownership does not buy clinical control, for anyone. Hospitals, FQHCs, and the other listed entities can employ physicians directly. Everyone else contracts with a physician-owned entity. ## Can nurse practitioners and physician assistants own a practice in Tennessee? Tennessee is a **restricted** NP practice state on AANP's map. NPs have generally prescribed and practiced under physician supervision, so an NP-founded company should plan for a supervising physician in its clinical model. PAs in Tennessee have likewise generally practiced in a collaborative relationship with a physician. Confirm the current NP and PA requirements with Tennessee counsel. Can an NP or PA own the business? They can own an MSO. Whether they can own or co-own an entity that employs physicians is a different question, because 63-6-204 lists who may employ physicians and an NP-owned company is not obviously on that list. The safest structure for an NP or PA founder mirrors the lay-founder structure: own the MSO, and contract with a physician-owned PC. Our [collaborating physician guide](/blog/collaborating-physician) explains how those relationships are typically structured. ## How does the friendly PC-MSO model work in Tennessee? The [friendly PC-MSO model](/blog/friendly-pc-mso-model) is the standard answer. The MSO provides technology, staff, billing, and marketing under a [management services agreement](/blog/management-services-agreement-guide). The physician-owned PC or PLLC employs the clinicians and makes every clinical decision. Tennessee-specific drafting points: - **Write down clinical independence.** 63-6-204 makes written documentation of independent judgment a condition of permitted employment. Mirror that in the MSA and in clinician employment agreements. - **Mind Rule 0880-02-.20.** If even physician owners cannot direct diagnosis, treatment, and referral beyond what an employer can, an MSO certainly cannot. Keep protocols, formularies, and referral pathways under the PC's control. - **Price the management fee carefully.** We did not confirm a Tennessee statute that caps management fees. A fair-market-value fee for defined services is the conservative choice. Percentage-of-revenue fees raise fee-splitting and lay-control questions in most states. - **Watch restrictive covenants.** Tennessee law also addresses non-competes for employed physicians, and those provisions may have changed. Have counsel review any non-compete with your PC owner. ## What does this mean for a telehealth brand serving Tennessee patients? CPOM and licensure follow the patient. If the patient is in Tennessee, Tennessee law applies, wherever your company and your clinicians sit. Our state data shows **no** out-of-state telehealth registration in Tennessee, so plan on Tennessee licenses for every clinician who treats Tennessee patients, and check whether any telemedicine-specific license pathway is currently available. The clinical entity should be a Tennessee-qualified physician PC or PLLC, contracted to your MSO. See our [telehealth licensing by state guide](/blog/telehealth-licensing-by-state), the [50-state CPOM guide](/blog/corporate-practice-of-medicine-50-state-guide), and our neighboring [Kentucky guide](/blog/kentucky-corporate-practice-of-medicine). ## Tennessee CPOM at a glance | Topic | Tennessee (as of October 2026) | |---|---| | CPOM enforcement | Moderate: statute lists who may employ physicians | | Primary legal basis | Tenn. Code Ann. 63-6-204; Board Rule 0880-02-.20 | | Professional entity options | Physician-owned medical professional corporation or PLLC | | Fee-splitting rule | No specific percentage cap confirmed; written clinical independence required in permitted employment | | NP practice authority | Restricted | | Out-of-state telehealth licensing | No registration in our data; plan on a Tennessee license | | Typical structure for non-physician founders | Physician-owned PC or PLLC plus MSO under a management services agreement | ## Frequently asked questions ### Can a non-physician own a medical practice in Tennessee? Not as an owner of the clinical entity. Tennessee lets only listed entities, such as hospitals, FQHCs, and physician-owned professional entities, employ physicians under Tenn. Code Ann. 63-6-204. A non-physician can own an MSO that provides non-clinical services to a physician-owned PC or PLLC. ### Can hospitals employ physicians in Tennessee? Yes. Licensed hospitals and their affiliates may employ physicians, provided they do not interfere with medically appropriate diagnosis and treatment. The statute has historically excluded radiologists, anesthesiologists, pathologists, and emergency physicians from hospital employment, with limited exceptions that the legislature has adjusted over time. ### Do physician owners control clinical decisions in a Tennessee medical PC? Only within limits. As we read it, Board Rule 0880-02-.20 provides that physician owners of a medical PC or PLLC may exercise only the authority over diagnosis, treatment, and referral that an employing entity may exercise, which preserves each treating physician's judgment. ### Can a nurse practitioner open a practice in Tennessee? An NP can own a business, but Tennessee is a restricted practice state, so the NP should plan on physician supervision; confirm the current requirements. Owning an entity that employs physicians raises separate questions under 63-6-204, so most NP founders own the MSO and contract with a physician-owned PC. ### Do out-of-state telehealth providers need a Tennessee license? Plan on it. Our state data shows no out-of-state telehealth registration in Tennessee, so clinicians treating patients located in Tennessee should hold Tennessee licenses. Confirm the current licensure options with the Tennessee Board of Medical Examiners. ## Sources - [Tenn. Code Ann. 63-6-204, Practice of medicine defined (Justia)](https://law.justia.com/codes/tennessee/title-63/chapter-6/part-2/section-63-6-204/) - [Tenn. Comp. R. & Regs. 0880-02-.20, Medical professional corporations and medical professional limited liability companies](https://www.law.cornell.edu/regulations/tennessee/Tenn-Comp-R-Regs-0880-02-.20) - [Memphis Medical Society, Tennessee Medical Legislation Resources](https://www.mdmemphis.org/tennessee-medical-legislation-resources-for-physicians/) - [Lexology, Tennessee changes corporate practice of medicine to permit nursing facilities to employ physicians](https://www.lexology.com/library/detail.aspx?g=4e380e72-67d9-4d30-babf-4ccad705274f) ## Launch in Tennessee 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](/pc-mso-formation), [physician PC owner services](/physician-pc-owner), or [book a call](https://myorbithealth.com/book). ```html ```