Corporate practice of medicine, fee-splitting, and other legal issues in the aesthetic medical practice and medspa

If you're opening a medical spa or an aesthetic medical practice, watch out for lurking legal issues.

Corporate practice of medicine, fee-splitting, anti-kickback and other legal rules can ruin your aesthetic medical practice, medical spa, cosmetic medicine business, or integrative medicine clinic.

Mai Pham has written a good article summarizing these issues, with the following scenarios and admonitions:


Here are some typical scenarios which may apply to you:

  • A nurse or spa owner wants to open a laser clinic and approaches a physician to ask that physician to be his/her medical director. In exchange for being medical director, the physician will receive a percentage of all aesthetic medical fees collected.

Potential problem: Violating Corporate Practice of Medicine and Fee splitting prohibitions

  • The spouse of a physician with an existing medical practice decides to open a medical spa with a lay business partner. The physician regularly refers patients to this medical spa, and the physician’s spouse receives a 40% profit distribution from revenues collected at the spa.

Potential problem: Violating Self-Referral laws

  • A spa regularly refers patients to a doctor’s clinic for laser hair removal. The doctor charges the patient $200 per treatment and gives the spa a $25 referral fee.

Potential problem: Violating Fee-Splitting Prohibitions

  • A non-professional lay corporation calls itself a “Medical Spa,” advertises medical procedures, runs all aspects of the medical spa business without physician oversight, purchases medical equipment, and hires and trains medical personnel.

Potential problem: Violating Corporate Practice of Medicine

If you can believe it, many health care providers and entities want to "do it themselves."  They may "save" a little on legal investment here but pay in the long run.  Don't go to the dentist for 2 years and trust to thine own brushing and then see if the regulators raise an eyebrow.

Ms. Pham recommends:

To protect yourself from feesplitting prohibitions, be careful about monetary distributions, and try not to fashion financial agreements which disburse profits on a per-case or percentage basis. Make sure that payments to the lay entity related to medical services are clearly worded and are based on fair market value, monthly salary, or flat fee arrangement which is not directly connected with the volume of cases performed or the volume of referrals received.

If you are concerned about any of the issues raised in this article, consult with your healthcare attorney as soon as possible. Addressing potential problems before they arise will be much less costly than waiting until something happens.


Please also see:

Drafting legal contracts for medical spa and integrative medicine clinics to address kickback and fee-splitting issues

Creating Legally Successful, Multidisciplinary Health Care Practices: Fee-Splitting, Kickbacks, Stark Analysis, Corporate Practice of Medicine, Unlicensed Practice, Employment, and Other Issues


Our law office has attorneys with legal experience  in FDA matters, including guiding  clients involved in health care  delivery, group medical and private  medical practice, who are concerned  about issues at the interface of  federal and state law, concerned  about medical board discipline or  medical malpractice liability  issues.  We also review and draft informed  consent forms and guide  clients concerning a variety of health care law  issues.

If you have legal questions concerning self-referral, kickbacks and fee-splitting or patient brokering in New York, California, Massachusetts, Washington DC, and other states, contact  a lawyer who knows the rules.

Consult an experienced  health care law attorney who knows complementary medicine and integrative  medicine for legal advice pertaining to any project involving allied health or CAM     professionals.


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