There is a version of the medical director offer that circulates in every state. A physician is approached by a med spa. The fee is a flat monthly amount. They are assured they will not need to be on site. The business is owned and run by someone without a licence.
In North Carolina, you do not have to guess how the regulator views that arrangement. The North Carolina Medical Board has described it — in its own newsletter, through its disciplinary committee, under the heading of aiding the unlicensed practice of medicine. The fee in the board’s example was $2,000 a month.
Two documents worth reading before you sign anything
The first is the NCMB’s position statement on the Corporate Practice of Medicine, numbered 10.1.2, which sets out the board’s expectations for practice ownership and discusses the situations exempt from the requirements of the North Carolina Professional Corporation Act.
The second is the board’s published disciplinary commentary, which is unusually direct about what it calls straw practices — arrangements where a licensee’s name provides cover for a business controlled by someone who could not lawfully own it.
Why the fee is the giveaway
A flat monthly fee is not itself a problem; fixed fair-market fees are the correct way to pay for medical direction, and we use them in every state. The problem is a fee that is obviously not priced for the work.
Ask what $2,000 a month buys at a realistic hourly rate for a physician. Now list what the role actually requires: protocol approval, delegation documents per licence, chart review at a defined cadence, availability during treatment hours, adverse-event response, and re-approval every time the menu changes. The two numbers do not meet. When they do not meet, the arrangement is not a service contract; it is a name rental, and the pricing is the evidence.
The pattern, stated plainly
- The physician does not attend, and it was agreed up front that they would not.
- The business is owned and directed by a non-licensee.
- The physician has no practical control over clinical staffing, protocols or the service menu.
- The compensation is fixed at a level unrelated to the hours the role would take.
- Nobody can produce chart reviews, because none happened.
Any one of those is survivable. Together they are the thing the board wrote up.
What a defensible North Carolina arrangement looks like
- An entity owned entirely by active North Carolina licensees, with the MSO separate.
- A physician who attends, reviews, and can describe the clinic’s protocols from memory.
- A fee that reflects the hours, agreed in writing in advance.
- Documented chart review on a schedule, and documented protocol approval when the menu changes.
- An arrangement you would describe to the board in the same words you used to sell it internally.
That last one is the whole test, and it is free to apply.
Related reading
Frequently asked questions
Is a paid medical directorship legal in North Carolina?
Yes, when the physician genuinely performs the role and the entity is lawfully owned. What the board objects to is a paid but absentee directorship providing cover for a business a non-licensee could not own.
Does the medical director have to be on site?
The board’s concern in the published example was that the physician was assured he would never need to attend. Treat genuine involvement, not a fixed number of hours, as the standard, and document it.
What is a straw practice?
An arrangement in which a licensee’s name is used to satisfy an ownership or supervision requirement while the real control sits with someone who could not lawfully hold it.
Where can I read the board’s position?
The NCMB publishes position statement 10.1.2 on the corporate practice of medicine, alongside disciplinary commentary in its Forum newsletter.
General information about North Carolina practice structure, not legal advice, and not a substitute for the board’s own materials. Confirm your obligations with healthcare counsel licensed in North Carolina.