Below is a case study of CAM legal issues involving a client seeking to build a wellness center. This business required rapid, effective solutions without excessive cost.
The Spa/Wellness Center
Problem: Our client, an entrepreneur who had been successful in several businesses offering health foods on-line, sought to build a spa/health and wellness center. He asked for advice about the optimum business structure and what kind of healthcare services could be offered without crossing the line into ‘practicing medicine.’
Approach: A major planning question was whether to include medical doctors among the array of health care provider-employees. On one hand, this would broaden the enterprise’s potential offerings to the full spectrum of health issues and ensure that medical concerns would be handled; at the same time, including MDs would run counter to the client’s desired goal of focusing on exclusively holistic approaches. The client also wanted to include a non-profit research arm as well as educational activities.
Together, we analyzed the costs and benefits of different menus, including the “+MD” option. We discussed the notion that legally, an entity offering a broad if not comprehensive spectrum of health advice and services can easily cross beyond “wellness care” into “disease care.” If the business goes down this road, it triggers more complex legal considerations, including: (a) malpractice liability, (b) the corporate practice of medicine doctrine, (c) conflicts-of-interest rules around sales of herbal and other products; and (d) attention to potential application of federal and state anti-kickback rules. We would also have to deal with charting and other documentation; federal privacy and confidentiality rules (HIPPA) and reimbursement (and Medicare) issues, as well as billing, scheduling, forms (including consent forms), and workers’ compensation; employment agreements; rental contracts; staffing; operations; office policies; and state-specific health care regulatory compliance (e.g., licensing, insurance).
Result: Although intially favoring only a “spiritual,” wellness approach, the client ultimately decided that it would be prudent to include a medical approach, amping up the vision to a kind of medical spa with affiliated educational and research arms. We drafted a business structure that would legally accommodate the different entities. We also noted that investors and employees would have to understand that shared liability among the healthcare providers and entities remained possible irrespective of efforts to create walls, but could be reduced by a variety of risk management devices and quality controls between the various legal entities and/or providers. This would help, for example, both reduce risk of negligence (e.g., a “missed diagnosis”) as well as risk that negligence by one provider (e.g., CAM or conventional) would be attributed to the other. We designed a corporate structure to include a medical professional corporation and a spa/wellness/holistic health arm, with sufficient flexibility to include psychological and other “conventional” mental health services, educational programs and products, and seminars.
See also Case Study: Online Health Services.