Washington State’s Corporate Practice of Medicine Doctrine: A Minefield for Ketamine Management Services Organizations
Many ketamine clinics enter into management agreements with management services organizations (“MSO”). The MSO provides a litany of services to the professional entities (“PE”) that are owned by healthcare providers, including billing and collections, financial and accounting services, providing space to the clinic through a lease, strategic planning, marketing, and many other types of management and administrative services.
Given the corporate practice of medicine doctrine (“CPOM”), an entity owned by medical providers must be careful when entering into a management services agreement (“MSA”) with an MSO. In general, CPOM, which varies from state to state, prohibits laypersons from employing and/or co-owing a clinical entity with healthcare providers. The underlying premise is that a layperson should not dictate medical decisions by healthcare providers– which makes sense. No one would want their healthcare providers driven by one goal– profits. Among other things, this could sacrifice the quality of care.
While CPOM varies from state to state, some states have extremely strict CPOM doctrines. Washington is one such state. In fact, in our experience, Washington may be the strictest CPOM state. New York and California likewise have strict CPOM doctrines, but they pale in comparison to Washington state.
Washington’s CPOM doctrine has been