A medical franchise business may provide patients with health and wellness services ranging anywhere from in-home care to walk-in clinics. Of note, you may have heard of common medical franchise businesses like MedExpress, Miracle-Ear, or even GNC. However, if you are considering franchising your medical practice, you must be made aware of any state-specific laws that may prohibit the corporate practice of medicine. Read on to discover whether you can franchise your medical practice and how one of the seasoned franchise law attorneys at FortmanSpann, LLC can help you navigate this.
What are state-specific laws regarding medical franchise businesses?
To reiterate, depending on which state you are looking to franchise your medical practice, there may be legal barriers in your way. The following are states in which you may not be allowed to open a medical franchise business:
- California (CA).
- Colorado (CO).
- Illinois (IL).
- Iowa (IA).
- New Jersey (NJ).
- New York (NY).
- Ohio (OH).
- Texas (TX).
Further, these states believe the corporate practice of medicine must be prohibited so that corporate entities cannot maintain control over a licensed physician’s delivery of medical services. In other words, they do not want non-physicians to profit from or interfere with a physician’s independent medical judgments. It is important to notice that a violation of this statute may create serious consequences for you, like hefty fines and jail time.
With that being said, other federal and state-specific laws you should be made aware of include the following:
- The Anti-Kickback Statute: this statute prohibits healthcare providers from providing or receiving anything of value in exchange for referrals compensated by federal programs. So, your franchise may need to apply for safe harbor protection.
- The HIPAA and Data Protection Statute: this statute requires the protection of individually identifiable patient information. So, your franchise may need additional safeguards or specialized arrangements for sharing data.
- The Stark Law and Self-Referral Statute: this statute prohibits physicians from referring patients to certain designated health service providers that are compensated by Medicare and with whom they have a financial relationship. So, your franchise may need to make specialized arrangements for referrals.
Should I franchise my medical practice?
Once you confirm that you are allowed to open your medical franchise business in a specific state, you may still be wondering about its benefits. For this, you may want to ask yourself the following questions:
- Does your franchise model incorporate franchisees who are also licensed physicians?
- Does your franchise model incorporate a marketing plan for the franchisee physicians?
- Does your franchise model incorporate a branded system for the franchisee physicians’ services?
- Does your franchise model incorporate a fixed fee royalty structure that does not influence the franchisee physicians’ revenues?
- Does your franchise model exclude third-party payers for the franchisee physicians’ services?
If you are ready and willing to franchise your medical practice, then you must employ one of the competent franchise law attorneys today. We are looking forward to working alongside you.