Corporate practice of medicine rules decide whether you, a non-clinician, can legally own telehealth revenue. Roughly 33 states restrict it. The fix is not a workaround. It is a structure: a physician-owned practice makes the clinical calls, and your brand owns the storefront, the pricing, and the customer.
You can start a telehealth business nationwide in days without holding a medical license. What you cannot do is own the clinical decision. Those two sentences are the entire doctrine, and they explain why two operators selling the identical peptide program can sit in very different legal positions. Most founders find that out six months in, when a payment processor asks who employs the clinician and there is no clean answer.
What the doctrine actually blocks
Corporate practice of medicine says a business corporation cannot practice medicine, employ physicians to practice it, or control how they practice it. It exists so a spreadsheet does not decide a dose.
Notice what it leaves alone. You can own a brand, set prices, run ads, keep the customer, and sell peptides online through a storefront you control. What you cannot own is the clinical judgment inside the program.
That line is the business model. Operators sell programs. Licensed providers review intakes and prescribe. Pharmacies fulfill.
A second rule rides alongside it: fee-splitting. Corporate practice of medicine governs who may own a practice. Fee-splitting governs how the money is divided, and a structure can clear one while breaking the other. Management fees must be service-justified, set at fair market value, and commercially reasonable. New York expressly bars percentage-of-patient-revenue compensation, Florida restricts it around referrals, and California permits it only when the fee matches services delivered.
The 50-state picture, in three tiers
Roughly 33 states have corporate practice prohibitions keeping non-professional entities from employing physicians, enforced to varying degrees. No agency publishes an official count, so treat the tiers below as shorthand, not legal categories.
Robust enforcement regimes. California, Texas, New York and North Carolina. The North Carolina Medical Board handles an estimated 30 to 40 corporate practice cases a year, mostly non-public, looking for straw ownership inside professional corporations.
Restrictions on the books. Most states. Real prohibition, complaint-driven enforcement.
Little or no restriction. Florida and Ohio are among the states that do not bar practicing through a corporate structure. Ohio surprises people, since secondary guides keep listing it as strict.
Three states rewrote the rules recently. Oregon's SB 951, signed June 9, 2025 and amending ORS 58.375 and 58.376, is the strictest of its kind. Physicians must hold a majority of each voting class of shares, management companies lose final say over clinical hiring, compensation and payer contracting, and providers get a private right of action. It applies to new arrangements from January 1, 2026 and existing ones from January 1, 2029. A partial exception survives for telemedicine entities with no physical Oregon location where patients receive clinical services, though it reaches only some restrictions. Not a free pass. Proof the rules now turn on structure.
California moved on enforcement power instead. SB 351, effective January 1, 2026, lets the Attorney General seek injunctions directly rather than wait on board complaints. Vermont's Act 133 followed on July 1, 2026.
The structure that actually works
Corporate practice of medicine compliance comes down to two entities and one contract.
The professional entity. A physician-owned professional corporation holds the clinical side. It contracts the providers, owns the protocols, and makes every prescribing decision. Because a clinician generally must be licensed in the state where the patient is sitting, nationwide coverage means licensure mapped across all 50 states, not one prescriber with one license.
Your entity. You own the brand, the storefront, pricing, marketing and the customer. You buy administrative services, telehealth infrastructure and fulfillment coordination.
The agreement. It defines what is delegated and what is not. Clinical hiring, protocol authorship and the prescribe-or-decline call stay on the clinical side.
Here is an ordinary Tuesday. A customer lands on your storefront, picks a program, completes a clinical intake. That intake routes to a licensed provider in the customer's state, who reviews it asynchronously and approves, requests more information, or declines. Approved orders route to a 503A or 503B pharmacy. Refills follow the same path. You never touch a clinical decision, and every step leaves an audit trail.
That is the storefront-first model. Once you see the telehealth workflow drawn out, it stops being a legal maze and starts being operations.
What regulators went after in 2026
In June 2026 the California Attorney General announced a settlement he called first-of-its-kind: Carbon Health Technologies paid $4.4 million and its co-founder paid $100,000 personally. The issue was not patient harm. It was that the management company could replace physician-owners and directed staffing, advertising and insurance negotiations. A month earlier Aspen Dental Management settled a corporate practice of dentistry case for $2 million plus $300,000 in restitution and was barred from basing service fees on revenue.
The telehealth case is sharper. In November 2025 a federal jury convicted the founder of Done Global and its clinical president on controlled substance distribution and health care fraud conspiracy charges, in what the Justice Department called its first criminal drug distribution prosecution related to telemedicine prescribing through a digital health company. The evidence included sub-30-minute consults, automatic refills without clinical interaction, restricted prescriber access to patient records, and pay tied to prescription volume.
Read that list again. Those are product decisions. Someone configured them in a platform, and the platform became the evidence.
Your clinician map is not your ownership map
Two maps, and operators keep merging them. Corporate practice of medicine tells you who may own the entity. Scope of practice tells you who may treat the patient. As of 2026, 27 states plus Washington D.C. grant nurse practitioners full practice authority, 12 require a collaborative agreement, and 11 require physician supervision. California, Texas, Florida and Georgia sit in that last group.
So a state can be permissive on ownership and expensive on staffing, or the reverse. That is also the honest answer to whether med spas can sell semaglutide. The product is not the question. The prescriber and the structure are.
What holds when volume arrives
Launching is easy. Structures fail at scale, in four places.
Payments. Prescription-adjacent commerce is underwritten differently. LegitScript certification is the practical gate for paid acquisition, and processors ask for it.
Data. Every intake is health data. HIPAA compliant telemedicine means executed business associate agreements, a documented risk analysis, and retained audit logs. The Office for Civil Rights brought 21 enforcement actions in 2025, its second highest total, and 18 were Security Rule or risk analysis cases.
Formulary. Product legality moves. In April 2026 the FDA removed 12 peptides from Category 2 of the interim 503A bulks list, and its advisory committee recommended six of them in July 2026. Neither step authorized compounding, and an advisory vote is not an agency action. A platform that cannot update a formulary in a week becomes a liability.
Provider capacity. Volume-based clinician pay was evidence in the Done Global case. Capacity has to scale through licensed provider coverage and reviewable asynchronous telehealth, not pressure on the people signing prescriptions.
FUSE was built around those four points: licensed providers in all 50 states, provider review on every order, LegitScript certification, SOC 2 Type II and HIPAA-aligned telehealth infrastructure, an immutable audit trail across intakes, prescriptions and refills, and pharmacy routing you select.
The decision in front of you
Corporate practice of medicine is not a reason to stay out of telehealth. It is the reason to enter correctly the first time.
Every operator who got into trouble recently made the same trade: optimize for speed, treat structure as something to fix later. Carbon Health and Done Global both trace back to choices that looked like product configuration and became evidence.
The alternative is not slower, just built in a different order. Put the clinical entity, the licensure map, the provider workflow and the audit trail in place first, then point your brand at growth. That is what a white label telehealth platform should buy you. Not a template. A structure you can scale on.
This article is general information for business operators. It is not legal or medical advice and does not create an attorney-client relationship. Corporate practice of medicine rules, scope of practice rules and FDA compounding policy vary by state and change frequently. Nothing here recommends or advises on the use of any medication. Confirm your structure with licensed healthcare counsel in every state where you operate.
References
- The Source on Healthcare Price and Competition, UC Law SF, Corporate Practice of Medicine (March 2025)
- Ropes & Gray, Key Takeaways Related to Oregon's New CPOM Law (June 2025)
- California Attorney General, First-of-its-Kind Settlement with Carbon Health and Its Co-Founder (June 26, 2026)
- IRS Criminal Investigation, Founder/CEO and Clinical President of Digital Health Company Convicted (November 2025)
- American Association of Nurse Practitioners, State Practice Environment (2026)
Daniel is a two-time founder who has scaled service businesses across major U.S. markets. A Y Combinator competition winner, he focuses on removing operational and regulatory barriers so operators can build and scale modern healthcare businesses.
- Background
- Startup Operations & Service Systems
- Experience
- 2x Founder, Multi-Market U.S. Scaling
- Qualifications
- Healthtech Market Expertise & Operational Scaling
- Key Achievement
- Scaled Premier Staff & Eventstaff across major U.S. markets
