There is a quiet difference between a rule a regulator could enforce and a rule a regulator actively collects information about. Massachusetts is in the second category.
The Board of Registration in Medicine regulates physician ownership at 243 CMR 2.11, headed “Physician Ownership Interests”. It requires the physician to hold majority ownership of the medical practice entity. And physicians report their ownership interest and percentage biennially, at licence renewal.
What that changes in practice
Your structure is not a private commercial matter in Massachusetts. It is described to the regulator, by your own medical director, under their signature, on a recurring schedule.
- A physician who is not comfortable attesting to the arrangement will notice that discomfort at renewal, not at a deposition.
- A structure that has drifted — equity moved, a new investor added, a percentage quietly changed — produces an attestation that no longer matches last cycle’s.
- A physician who genuinely does not know the ownership percentage is being asked to certify something they cannot verify.
- Violations carry fines, suspension or revocation of the physician’s licence.
Massachusetts has believed this for a long time
The corporate practice doctrine here is not a recent legislative reaction to private equity. It traces to McMurdo v. Getter, decided in 1937, and Massachusetts is described by healthcare counsel as among the most rigorously enforced corporate practice jurisdictions in the country. Lay persons and business corporations may not own a medical practice, employ physicians to practise medicine, or exert operational control over clinical decisions.
The permitted forms are a closed list
Professional medical services may be offered only by an individual licensed practitioner, a professional partnership, a professional corporation, a professional limited liability partnership, or a professional limited liability company. An ordinary business corporation is not on that list, and no amount of drafting puts it there.
What to do before your next renewal cycle
- Establish the actual, current ownership percentages — not the ones in the original formation documents.
- Confirm the physician holds a majority, and that they know they do.
- Reconcile the management agreement against the ownership: economic control that contradicts the equity is what makes an attestation uncomfortable.
- Tell the medical director the renewal question is coming, and give them the numbers before they are asked for them.
- Keep the clinic licence side separate in your head: the Department of Public Health handles that, the Board of Registration in Medicine handles the physician.
Related reading
Frequently asked questions
What is 243 CMR 2.11?
The Board of Registration in Medicine’s regulation on physician ownership interests. It requires physician majority ownership of the practice entity and biennial reporting of the ownership interest and percentage at licence renewal.
Who has to report?
The physician, as part of licence renewal. It is their attestation, about your structure.
What are the consequences of getting it wrong?
Violations are subject to disciplinary action including fines, licence suspension or revocation.
Does a management company solve it?
A separately owned management company may provide administration, but it cannot hold a controlling interest in the medical entity or employ physicians to practise medicine.
General information about Massachusetts practice structure, not legal advice. Board regulations change. Confirm your obligations with healthcare counsel licensed in Massachusetts.