Ohio permits the corporate practice of medicine in a way many states do not: a licensed physician may be employed by a corporation, LLC, professional association, or other business entity to deliver medical care. The State Medical Board has said directly that “Ohio law does not prohibit an Ohio licensed physician from rendering medical services as an employee of a corporation or any other form of business entity.”1State Medical Board of Ohio. Corporate Practice of Medicine What Ohio still requires is that every person who practices medicine hold a valid license, that physicians keep clinical decision-making authority, and that fee-splitting and certain ownership rules be respected. Getting those details wrong can cost a physician their license and leave the underlying contracts unenforceable.
What Changed in 1998, and What Didn’t
For decades, Ohio Attorney General opinions from 1952 and 1962 read Ohio Revised Code Section 4731.41, the statute prohibiting the practice of medicine without a license, to mean that corporations could not employ physicians to deliver care. The 1998 revisions to Ohio’s statutes on professional corporations, LLCs, and professional associations overtook those opinions. The Board now acknowledges that “by the clear language of the 1998 statutes, professionals licensed under Chapter 4731 may be employed by a number of business entities.”1State Medical Board of Ohio. Corporate Practice of Medicine
The licensing requirement itself did not change. Section 4731.41 still prohibits anyone from opening an office for the practice of medicine, advertising medical services, or treating patients without a license from the State Medical Board.2Ohio Legislative Service Commission. Ohio Code 4731.41 – Practicing Medicine Without License or Certificate A corporation may employ a physician, but the corporation cannot itself practice. In practice that means the entity can handle billing, lease office space, negotiate with payers, and manage scheduling without issue. It cannot dictate treatment protocols, restrict prescribing based on cost alone, override diagnostic judgment, or make clinical staffing calls that compromise patient care. The physician remains the decision-maker in the exam room regardless of who signs the paycheck.
Choosing a Business Structure
Ohio recognizes several entity types through which physicians can organize a practice. Each carries its own ownership and governance rules.
Professional Associations
Chapter 1785 of the Ohio Revised Code allows licensed individuals to form professional associations. Every shareholder must be licensed to render the same kind of professional service within Ohio.3Ohio Legislative Service Commission. Ohio Code 1785 – Professional Associations The association can deliver professional services only through officers, employees, and agents who are themselves licensed in Ohio.4Ohio Legislative Service Commission. Ohio Code 1785.03 – Rendering Professional Services The structure fits multi-physician group practices, and ownership stays with licensed practitioners.
Limited Liability Companies
The Board’s position statement references Section 1705.03 as the LLC authority covering doctors of medicine and surgery, osteopathic medicine and surgery, and podiatric medicine and surgery licensed under Chapter 4731.1State Medical Board of Ohio. Corporate Practice of Medicine Ohio replaced Chapter 1705 with Chapter 1706 effective February 11, 2022, and that newer chapter now governs all limited liability companies in the state.5Ohio Legislative Service Commission. Ohio Code Chapter 1706 – Limited Liability Companies Each member and manager who renders professional services must hold the appropriate Ohio license.
Professional Corporations
Section 1701.03 permits corporations formed specifically for the practice of medicine, surgery, osteopathic medicine, or podiatric medicine.6Ohio Legislative Service Commission. Ohio Code 1701.03 – Purposes of Corporation Forming a professional corporation does not shield anyone from State Medical Board authority. The Board keeps full power to license, regulate, and discipline the individual practitioners inside it.
Who the Rules Reach
The entity statutes cover a broad slice of licensed healthcare, not just physicians. Optometrists under Chapter 4725, chiropractors under Chapter 4734, pharmacists under Chapter 4729, registered and licensed practical nurses under Chapter 4723, physical and occupational therapists, psychologists, licensed professional counselors, social workers, and marriage and family therapists can all form or participate in professional entities under Chapter 1785 and the related statutes.3Ohio Legislative Service Commission. Ohio Code 1785 – Professional Associations
Dentistry sits apart. Chapter 4715 addresses the corporate practice of dentistry on its own terms and contains its own restrictions on practicing under the name of a company, association, or corporation.7Ohio Legislative Service Commission. Ohio Code Chapter 4715 – Dentists and Dental Hygienists A dentist weighing a corporate arrangement should look at those provisions directly rather than relying on the general medical framework.
Fee-Splitting Is Still Prohibited
Even where corporate employment is lawful, Ohio draws a hard line on fee-splitting. Section 4731.22(B)(17) prohibits physicians from dividing fees for patient referrals or accepting anything of value in exchange for referring a patient to a particular service or business.8Ohio Legislative Service Commission. Ohio Code Chapter 4731 – Physicians and Limited Practitioners Violations are grounds for Board discipline.
This is where otherwise legal arrangements commonly go wrong. Compensation tied to referral volume, or a management company steering patients toward services it profits from, both risk tripping the prohibition. The safer approach is to tie physician compensation to the value of services personally rendered, not to referral patterns or downstream profitability.
Management Services Organizations
A common Ohio structure is the management services organization. A separate company handles billing, human resources, marketing, lease negotiations, and IT, while the physician or professional entity keeps every clinical decision. Done this way, the MSO never practices medicine and Ohio’s licensure rule stays satisfied.
The arrangement breaks when it inverts. If the MSO controls which patients the practice sees, sets staffing ratios that affect care quality, or holds contractual leverage that overrides the physician’s clinical independence, the structure begins to look like the unlicensed practice of medicine no matter how the contract is worded. An MSO exercising clinical control over an Ohio practice risks a violation of Section 4731.41 and exposes the physician to discipline for aiding unauthorized practice.
What Violations Cost
Penalties land on both the physician and the entity. The State Medical Board can discipline any physician who violates or assists in violating Chapter 4731, which reaches aiding the unauthorized practice of medicine.8Ohio Legislative Service Commission. Ohio Code Chapter 4731 – Physicians and Limited Practitioners Discipline can include suspension or revocation, and the record is permanent and public.
The Board’s fining guidelines put numbers on the exposure. Aiding and abetting unlicensed practice draws fines of $5,000 to $20,000 per violation. Practicing during a Board-imposed suspension carries fines of $18,000 to $20,000. Practicing outside the scope of one’s license runs from $3,500 to $20,000.9State Medical Board of Ohio. Disciplinary and Fining Guidelines The fines are per violation, so a pattern adds up fast.
Then there is the contract problem. Ohio courts can declare agreements that violate public policy unenforceable. A physician whose employment agreement sits on top of an entity structured to facilitate unauthorized practice could see the contract voided, losing the ability to collect compensation. The entity could lose enforcement of non-competes and other restrictive covenants. A voided contract often costs more than the administrative fines do.
Practical Takeaways
Ohio’s framework is more flexible than the traditional corporate practice doctrine implies, but flexibility is not a free pass. Physicians can work as corporate employees. The physician must stay the clinical decision-maker. Fee-splitting is off limits. Any entity delivering professional services has to meet the ownership and licensure rules of the statute it is formed under.
Choosing among a professional association, an LLC under Chapter 1706, or a professional corporation under Section 1701.03 turns on how many owners you have, your liability picture, and whether you want to combine different licensed professions in one entity. Each form has its own rules about who may own interests and who may render services. Breaking those rules does more than invite fines; it can unravel the legal foundation of the whole practice.