Resurrection of the Prohibition on the Corporate Practice of Medicine: Teaching Old Dogma New Tricks

The corporate practice of medicine doctrine was a creature of the organized medical profession, state legislatures, and the courts in an effort to both protect the physician-patient relationship and help physicians operate as fiduciaries. It aimed at improving the reputation of the medical profession by prohibiting entanglements between a physician’s professional judgment and the profit-making endeavors of lay organizations. The doctrine found its genesis in ethical codes promulgated by the American Medical Association (AMA), which essentially prevented physicians from taking salaried positions, or splitting professional fees, with lay organizations. The rationale was that such a doctrine was necessary in order to prevent lay profit motives from “corrupting medical judgment.” However, due to its anticompetitive consequences, the federal government implemented policies that undermined the doctrine. The abandonment of this doctrine has created an environment in which the financing of health care is accomplished by Machiavellian techniques, which are dangerous, if not dishonest. These techniques are dangerous due to their potential to influence the physician’s behavior and alter the physician-patient relationship. They are dishonest because they create a hidden subsidy for the private insurance industry—a subsidy that compromises the integrity of the patient-physician relationship. Resurrection of the corporate practice of medicine doctrine would prevent exportation of the costs of doing business in the health financing field, and engender public trust in the profession