Can a Physician Assistant Own a Medical Practice in California?
This question seems straight-forward, but in reality physician assistants need to be careful with the nuances around type of ownership, defining the medical services provided, the role of a physician in their practice, and the evolving laws in California around Physician Assistant’s responsibilities.
Quick Answer
A physician assistant may be able to participate in certain healthcare business structures in California,
but ownership of a medical practice depends on California healthcare ownership laws,
professional corporation requirements, physician involvement, and the services being provided.
- Medical practice ownership is regulated differently than ordinary businesses.
- Professional corporations and medical corporations have specific ownership requirements.
- MSO structures may be used for management functions but cannot improperly control medical decisions.
- The correct structure depends on the practice’s services, ownership, and compliance requirements.
It is important to note that physician assistants can own professional physician assistant corporations, but these too carry their own requirements, rules, and structure.
Yes — in California, a physician assistant (PA) can own or co-own a medical practice, but not independently and not without physician oversight.
California follows the Corporate Practice of Medicine (CPOM) doctrine, which restricts who can own and control medical practices. While PAs are licensed professionals, they cannot independently own or control a medical practice in the same way a physician can.
Instead, ownership must be structured through a professional corporation and comply with strict rules around physician supervision, clinical control, and regulatory oversight set by California law.
Below, we break down exactly what physician assistants can and cannot do when it comes to owning a medical practice in California.
Key Questions to Ask Before a Physician Assistant Opens or Owns a Practice in California
The answers to these questions determine whether a physician assistant can participate in a particular healthcare business structure and whether a professional corporation, medical corporation, management services organization (MSO), or another entity may be appropriate for the proposed practice.
| Ownership Question | Why It Matters |
|---|---|
| What services will the business provide? | Clinical healthcare services are subject to additional ownership and regulatory requirements. |
| Will the business provide medical care or management services? | Medical practices and management companies (MSOs) are governed differently under California law. |
| Who will own the entity? | California places restrictions on ownership of certain healthcare entities. |
| Will a physician be involved? | Certain ownership structures may require physician ownership, supervision, or involvement. |
| What type of entity is being formed? | LLCs, corporations, professional corporations, and MSOs each have different legal considerations. |
Medical Corporation vs. Physician Assistant Corporation: Same Codes, Different Perspectives
Incorporation laws in the state of California can be complicated for licensed professionals who are new to running a business. Even corporate lawyers themselves can be misinformed. Here’s a perfect example:
Our client needed help writing a contract to hire a physician assistant as an independent contractor and act as supervising physician. She then consulted a lawyer who claimed that this was against California law, which states that only physicians can own medical practices. And that to conduct a medical business, physicians must own 51% of the business. The lawyer also stated that PAs could not run a medical practice and hire a physician as an employee or contractor.
In the context of a professional medical corporation, the lawyer is correct. Licensed physicians can own 51% of the shares, while the co-shareholders who are non-physicians can own up to 49%. Presumably, this is in reference to California Corporations Code 13401.5 (which we will also use to refute the lawyer’s claim). However, understand that a professional medical corporation is completely different from a physician assistant corporation–and so are the ownership regulations.
Can Physician Assistants Own Their Own Practice in California? Two Things You Need to Look At
First, we asked the client one of the important questions: “What are you trying to accomplish?” This is crucial in determining whether a physician assistant can act as a majority owner and hire licensed physicians as employees is permissible in the state of California.
In order to determine whether a physician assistant can own a professional corporation, and whether a physician assistant can hire licensed health professionals (i.e., doctors, surgeons, etc), we need to look at the type of corporation.
It’s important to note that no matter the corporation, if a “supervising physician” is required, a physician assistant cannot act in that role currently.
A. A Physician Assistant Corporation is Designated Under Corporations Code 13401.5
It is as simple as this: If you want to form a professional medical corporation, you need at least 51% physician ownership. On the contrary, you need at least 51% physician assistant ownership if you want to form a physician assistant corporation.
While the physician assistant can own at least 51% of the shares, the co-shareholders can own up to 49%. Among the licensed professionals who are allowed to be co-shareholders under the physician assistant corporation include:
- Licensed physicians and surgeons
- Registered nurses
- Licensed acupuncturists
- Naturopathic doctors
- Licensed midwives
B. A Physician is Duly Licensed Under Division 2 of the Business Professions Code
Are physicians duly licensed under the Division 2 of the Business Professions Code (BPC)? The answer is yes, and the details are found in the Business and Professions Code of 2011 California Code under Division 2 (Healing Arts [500 – 4999.122]) Chapter 7.7, Article 8 Here, it also authorizes physician assistant corporations to render professional services. You may check the following codes for further details:
- DIVISION 2. HEALING ARTS [500 – 4999.129] (Division 2 enacted by Stats. 1937, Ch. 399.)
- CHAPTER 5. Medicine [2000 – 2529.6] (Chapter 5 repealed and added by Stats. 1980, Ch. 1313, Sec. 2.)
- ARTICLE 1. Administration [2000 – 2028.5] (Article 1 added by Stats. 1980, Ch. 1313, Sec. 2.)
Chapter 2000 shall be known and may be cited as the Medical Practice Act. Whenever the provisions of any statute refer to the Medical Practice Act, it refers to the provisions of this chapter.
Who Can Own a Medical Corporation in California?
Medical professionals who are designated under the Division 2 of the Business and Professions Code and can own a medical professional corporation include:
- Doctors of podiatric medicine
- Licensed optometrists
- Registered nurses and licensed psychologists
- Licensed marriage and family therapists and clinical social workers
- Licensed physician assistants
- Licensed chiropractors and acupuncturists
- Naturopathic doctors
- Licensed professional clinical counselors, and physical therapists
- Licensed pharmacists
- Licensed midwives
We provide detailed steps on how to form a professional medical corporation in this article.
Can A Physician Assistant Hire a Licensed Healthcare Professional?
The California Corporations Code 13401.5. states that a professional corporation may employ any person duly licensed under Division 2 of the Business and Professions Code (BPC). Since physicians are among those duly licensed under Division 2 of the BPC, a professional physician assistant corporation may hire a licensed physician to render professional services.
In summary, physician assistants can hire licensed healthcare professionals as long as the physician assistant corporation is operating within its bounds and the professional you want to hire is covered under Division 2 of the BPC.
Working Legally with MSOs: Can a Physician Assistant Use an MSO Structure?
Some healthcare businesses use a Management Services Organization (MSO) structure to separate business operations from clinical healthcare services. While every situation is different, understanding how an MSO works can help physician assistants evaluate potential ownership and business structure options.
What Is an MSO?
A Management Services Organization (MSO) is a business entity that provides administrative and management services to healthcare practices. Depending on the arrangement, an MSO may assist with functions such as billing, staffing, marketing, scheduling, office management, technology, and other non-clinical business operations.
Unlike a medical practice, an MSO generally focuses on the business side of healthcare operations rather than providing patient care directly.
If you’re interested in learning more about MSO’s and how they work, check out our article here.
Why Do Some Healthcare Businesses Use an MSO?
Healthcare businesses often use MSO structures to improve operational efficiency,centralize administrative functions, and separate management responsibilities from clinical responsibilities.
For healthcare entrepreneurs, an MSO may provide flexibility when evaluating ownership arrangements, investment opportunities, business management, and practice growth strategies. The structure can also help clarify which entity is responsible for administrative functions versus clinical services.
What Is the Difference Between Management Control and Clinical Control?
One of the most important concepts in healthcare business structuring is the difference between management control and clinical control.
Management functions typically involve business operations such as accounting, marketing, staffing, scheduling, facilities, technology, and administrative support.
Clinical functions involve patient care decisions, diagnosis, treatment,medical judgment, and other healthcare services that require professional licensure and clinical oversight.
Healthcare businesses must be careful to maintain an appropriate separation between business management activities and clinical decision-making. The entity providing management services should not improperly control clinical care, medical judgment, or professional healthcare decisions.
Why Does the Setup Matter?
The way a healthcare business is structured can affect ownership rights,compliance requirements, liability considerations, tax planning, operational control, and future growth opportunities.
For physician assistants evaluating practice ownership opportunities, the proposed business structure should be reviewed carefully before formation.
Choosing the wrong entity or combining management and clinical functions incorrectly can create legal and operational challenges that may be difficult to correct later. Check out an example of a sticky situation one of our clients ran into trying to run a medical practice when they needed an MSO.
Because healthcare ownership rules can be complex, many healthcare professionals evaluate professional corporations, medical corporations, and MSO structures together before deciding how a business should be organized.
| Medical Practice | Management Services Organization (MSO) |
|---|---|
| Provides patient care | Provides administrative and management services |
| Makes clinical decisions | Supports business operations |
| Responsible for healthcare services | Responsible for non-clinical functions |
| Clinical oversight required | Administrative oversight |
Entity Options for Physician Assistants in California
Physician assistants exploring practice ownership often discover that there is no single entity that works for every healthcare business. The appropriate structure depends on the services being provided, who will own the business, whether clinical services will be offered, and how California healthcare ownership rules apply to the proposed practice.
| Entity Type | Typical Use | Ownership Considerations |
|---|---|---|
| LLC | General business activities | Often not appropriate for licensed professional healthcare services. |
| Corporation | General business operations | May not satisfy professional practice requirements. |
| Professional Corporation | Licensed professional services | Must comply with California professional ownership rules. |
| Medical Corporation | Clinical medical services | Additional healthcare ownership and regulatory considerations may apply. |
| Management Services Organization (MSO) | Administrative and management functions | Cannot improperly control clinical decisions or patient care. |
Choosing the right entity is one of the most important decisions when forming a healthcare-related business. Before filing formation documents, physician assistants should evaluate ownership restrictions, professional corporation requirements, medical practice regulations, and whether a management services organization (MSO) structure may be appropriate.
Attorney Review
This article is periodically reviewed and updated by Andy Gale, a California business formation attorney who has helped licensed professionals evaluate business entities, professional corporations, ownership structures, and compliance requirements for decades.
Gale & Vallance assists California professionals with matters involving professional corporations, business formation, ownership structures, corporate maintenance, and regulatory compliance.
Because healthcare ownership laws can be highly fact-specific and shift with slight law changes, physician assistants and other licensed professionals should evaluate their proposed ownership structure carefully with a lawyer before forming an entity or purchasing an ownership interest in a healthcare-related business.
The information in this article is not considered legal advice, and we recommend always consulting with an experienced lawyer about your situation for legal advice.
Frequently Asked Questions About Physician Assistants Opening Their Own Medical Practice
What is the Corporate Practice of Medicine (CPOM) doctrine?
Corporate Practice of Medicine (CPOM) is a legal doctrine restricting ownership/control of non-physicians in medical practices. It ensures that clinical decisions remain under the authority of licensed physicians.
Can a physician assistant open their own practice in California?
Not independently. A PA may participate in opening a practice, but it must be structured under a physician-led professional corporation and comply with supervision and regulatory requirements.
Can a physician assistant fully own a medical practice in California?
No. A PA cannot independently control a medical practice. Under CPOM rules, clinical control must remain with a licensed physician, and PAs must operate under physician supervision.
What entity type is required for a medical practice that involves physician assistants?
Medical practices in California must generally be formed as a Professional Corporation (PC) owned by licensed physicians, with any PA involvement structured in compliance with CPOM and supervision rules.
Related California Healthcare Ownership Resources
Still Confused If Physician Assistants Can Own Their Own Practice or Have Ownership in a Medical Practice in California? We’ll Help!
If you are a PA looking to start your own medical practice, there’s hope with a physician assistant professional corporation. Knowing the laws that cover this brings you closer to your dream of running your own clinic in California. We understand how the codes for California corporate practice of medicine for a physician assistant can be confusing but things become clearer with the help of experienced corporate lawyers.
Incorporation Attorney offers legal services that can help you set up your physician assistant corporation or medical professional corporation. We have helped numerous start-ups over the years and we continue to offer guidance on legal matters whenever necessary. If you need our corporate expertise, call us right away +1 (714) 634-4838 or explore our website for more information.
