Med Spa Regulation and the Corporate Practice of Medicine
Updated: Sep 18
If you’ve ever felt confused trying to navigate your state’s medical spa regulations, you are not alone. Physicians, physician’s assistants (PAs), nurse practitioners (NPs), injectors, estheticians and even dentists across the nation who have ventured to hang their medical spa shingle have undoubtedly found themselves with a lack of clarity around the legal requirements. Despite the fact that medical spas emerged more than thirty years ago, it seems that regulatory bodies have been slow to adapt and interpret exactly what a medical spa is and who can own one. What’s worse is that there are a number of sources, generally believed to be reliable, publishing inconsistent or downright wrong content around what is or is not legally compliant. The case law is rapidly evolving, forcing some states to attempt to define a medical spa, but for now, let’s hone in on the Corporate Practice of Medicine doctrine (CPOM) and its effect on med spa ownership. Please note that we use the terms “medical spa” and “med spa” interchangeably.
Why So Much Confusion?
As stated above, med spas caught major attention in the early 1990’s, though some believe the true origination to be as early as 1970. In either case, med spas have been on the scene for a number of decades, which makes states’ lack of clarity around regulation all the more curious. It seems that many governing bodies have struggled to classify what exactly med spas do, and as such, how heavily to regulate them. The ambiguity is compounded by two factors: (i) a number of states recognize the CPOM, which allows only properly-licensed physicians to own and operate a medical practice, and (ii) some states have been deemed “independent practice states,” wherein nurse practitioners (sometimes referred to as “Advanced Practice Registered Nurses” or “APRNs”) may operate a medical practice without the need for physician oversight. These legal principles effectively create three buckets of med spa ownership: (i) anyone can own, (ii) NP’s and physicians, or (iii) physicians only.
Should CPOM Apply to Med Spas?
Let’s take a step back. You may be wondering why states care if a non-medical provider owns a medical practice. The underlying theory behind CPOM is that medical boards and regulating bodies do not want the medical opinions of licensed providers to be influenced by unlicensed individuals or organizations. Clearly, there could be a conflict of interest if providers are being incentivized to perform medical procedures on patients who may not otherwise need treatment. However, this still does not answer the question of why CPOM should apply to practices such as med spas, where the overwhelming majority of procedures performed are elective. If a patient opts to receive cosmetic treatment that is not medically-necessary, the argument in support of CPOM is invalid. Nonetheless, the term “medical” keeps many states bulking practices into one category regardless of procedure types. Lobbyists on both sides continue to fight for or against the application of CPOM in the med spa industry, but as it stands today, all we have to go off of are the existing statutes.
How Do States Differ in the Application of CPOM?
Let’s now consider a few example states. In our home state of Connecticut, the law dictates that, notwithstanding a number of exceptions, medical practices may only be owned by duly-licensed providers. However, those exceptions include statutes that allow both professional corporations (PCs) and limited liability companies (LLCs) to practice medicine as long as all shareholders (or “members” in the case of an LLC) are appropriately licensed medical providers. These seemingly contradictory regulations paint the picture as to why some argue CPOM does not apply in Connecticut, while others believe the doctrine is alive and well. Going further down the rabbit hole, we find that Connecticut is an independent practice state, allowing NPs to practice independently of doctor oversight after maintaining a license for three years and having completed at least two thousand hours under the supervision of a collaborating physician. This then raises a scope of practice issue. Is an NP qualified to independently practice med spa procedures? According to a 2014 bill defining medical spas in Connecticut, the answer is yes. The bill did not speak to ownership, leaving many to believe that, as long as a physician, PA, or NP is contracted with or employed by the med spa, the practice is operating in compliance. We will go further into NP scope of practice regulation in upcoming articles.
Let’s contrast the above with Colorado, another somewhat ambiguous state. Colorado follows a similar path to that of Connecticut in that, while it follows the CPOM doctrine, it too allows duly-licensed providers to form “professional service corporations” for the purpose of practicing medicine. However, in the Colorado statutes, there is a specific carve-out that allows PAs to be shareholders of the corporation, as long as a physician retains the majority share. What’s interesting is that, while Colorado CPOM regulations allow for PAs to participate in ownership and make no mention of NPs, Colorado is also a clear-cut independent practice state. Does this mean that NPs can own a med spa practice as long as it is not in the form of a professional services corporation? It is certainly a grey area. Even our inquiry to the Colorado Department of Regulatory Agencies (DORA) was met with a contradictory response. We were told that the Nurse Practice Act grants NPs the authority to practice autonomously, without the need for physician oversight. Amazingly, the very next sentence stated, “[NPs] are not authorized to serve as Medical Directors because [NPs] are not authorized to practice medicine in Colorado.” In other words, this indicates even the regulatory bodies don’t truly know. As an anecdote, for those Colorado NPs considering med spa ownership, it may still be a best practice to have a physician Medical Director contracted.
In sticking with our “C” states, let’s briefly examine California. Historically one of the most notorious states for enforcing CPOM prohibitions, California maintains ample statutory restrictions. However, even California allows for medical corporation to practice as long as the majority shareholders hold physician or surgeon certificates. Minority ownership is limited to an enumerated list of other licensed professionals. Of note, California is not an independent practice state, thus solidifying the need for physician involvement in a med spa.
Clearly fifty different states (and the District of Columbia) bring varying degrees of CPOM enforcement. The only consistent is the fact that legal counsel must be sought before attempting to hang a med spa shingle. As noted above, in coming blogs we will further discuss scope of practice concerns, as well as fee-splitting prohibitions, Medical Director requirements, initial exam policies and Delegation Agreements. In the interim, if you have questions about interpreting your state’s CPOM or med spa guidelines, please call us at (860) 552-7770 or email firstname.lastname@example.org.