Opening a medical practice in California takes more than forming a company. Physicians must also choose a structure that fits the services they plan to provide.
Two questions should come first:
Who can legally own and control the medical practice?
What type of facility structure best fits the services you plan to provide?
These questions matter when a physician is considering a community clinic or an Outpatient Surgery Setting (OSS). A community clinic follows a nonprofit primary care model. An OSS follows rules for outpatient surgery, anesthesia, accreditation, and facility oversight.
For physicians starting a practice, adding procedures, or changing an existing operation, physician ownership in California should be reviewed early. The ownership model should show who owns the practice and who controls medical decisions. Corporate governance, licensing, facility rules, and daily operations should then match the services provided.
What Does Physician Ownership Mean in California?
Physician ownership in California is closely linked to the state’s corporate practice of medicine rules, often called CPOM California.
California limits the ability of business entities and unlicensed people to control medical practice. The purpose of physician ownership in California is to keep medical decisions with licensed physicians.
For a physician owned practice, ownership is only one part of the structure. The practice should also make clear who controls:
- Patient care
- Medical records
- Referrals
- Treatment decisions
- Clinical staff
- Medical equipment
- Coding and billing processes
The main point is simple of physician ownership in California. A practice must look at both ownership and control.
Ownership VS Clinical Control
A physician may own most or all of a practice on paper. That does not automatically resolve every CPOM issue.
Physician ownership in California also looks at actual control.
A licensed physician should retain authority over important clinical decisions. These include:
- Diagnostic testing
- Referrals and consultations
- Treatment options
- Overall patient care
- Physician workload
- Clinical competency
The Medical Board also identifies business decisions that can affect medical practice. These include medical records, clinical hiring and firing, payer-contracting parameters, coding and billing procedures, and medical equipment and supplies.
This is why physician ownership in California cannot be judged only by looking at a shareholder’s percentage.
Who Is Legally Permitted to Own a Medical Practice in California?
For a conventional medical clinic, physician ownership in California requires and control through a structure allowed by law.
The California Medical Board states that a layperson cannot own a medical clinic.
So, can a non-physician own a medical practice in California? Generally, no.
A non-physician may provide administrative services under an appropriate arrangement. That does not give the person the right to own or control the professional practice of medicine.
California does allow certain licensed professionals to hold limited physician ownership in California in professional medical corporations. Those exceptions do not allow general lay ownership.
How CPOM Rules Affect physician ownership in California
What Is Corporate Practice of Medicine in California?
Corporate practice of medicine in California refers to rules that limit unlicensed control over medical practice.
The basic principle is easy to understand:
Business work can be managed, but medical decisions must remain with licensed professionals.
A management company may handle:
- Payroll
- Accounting
- Billing
- Scheduling
- Technology
- Administrative support
These services do not by themselves create a CPOM issue.
The concern is control over medical judgment physician ownership in California.
How Does CPOM Affect Physician Ownership in California?
How does CPOM affect physician ownership in California?
CPOM affects both the ownership structure and the way a practice operates.
A physician may own a professional medical corporation and work with a separate management company. The arrangement should still leave medical decisions with the physician.
The outside company should not control:
- Patient treatment
- Medical referrals
- Clinical staffing decisions
- Medical testing
- Physician judgment
- Clinical policies
The physician should retain final authority over these matters.
California CPOM Requirements and Management Companies
A management company can support a physician owned practice without owning the medical practice.
It may provide billing, technology, staffing support, or other business services.
The management agreement should clearly separate business duties from medical duties.
This matters even more when a practice works with private investors or a management services organization.
The key question is:
Who has final authority over professional medical decisions?
That authority should remain with the appropriate licensed physician.
2026 Update: Private Equity and Physician Clinical Judgment
California has also adopted rules that affect certain relationships between physician practices and private equity groups or hedge funds.
SB 351 became effective January 1, 2026. The law places restrictions on covered private equity groups and hedge funds involved with physician and dental practices.
It also addresses interference with professional judgment and certain practice decisions.
For physicians, the practical point is clear. Financial investment does not give an outside party control over professional medical judgment.
Physicians considering these arrangements should have the proposed structure reviewed by California healthcare counsel.
California Professional Medical Corporation: Ownership and Structure
A California professional medical corporation is one structure physicians can use to operate a medical practice.
Physician ownership in California has specific rules for ownership of shares in a medical corporation.
At least 51% of the shares must be owned by one or more licensed physicians and surgeons. Certain other licensed healthcare professionals may also hold shares within the limits allowed by law.
A business investor without a qualifying professional license cannot become a shareholder simply because the person provides money or business services.
Who Can have Physician Ownership in California?
The answer to who can physician ownership in California depends on the person’s professional license.
Physicians and surgeons must hold the required majority ownership.
Certain other licensed professionals may hold a limited interest. These can include podiatrists, psychologists, registered nurses, optometrists, physician assistants, chiropractors, acupuncturists, physical therapists, pharmacists, and licensed midwives.
The number of shares these professionals can hold may also be limited.
Because these rules are specific, the shareholder list should be reviewed before the corporation is formed.
Medical PC Ownership Requirements
Medical PC ownership should reflect actual ownership and control.
A physician should not serve as an owner on paper while another person controls the medical practice through private agreements.
Before forming a professional medical corporation, physicians should review the articles of incorporation, bylaws, shareholder agreements, employment agreements, and management agreements.
These documents should support the same ownership and control structure.
California Professional Medical Corporation Bylaws
California Professional Medical Corporation by laws explain how the corporation is governed.
The by laws should support the professional nature of the corporation and its ownership structure.
They should also work with other agreements used by the practice.
For example, a management agreement should not give an outside company control over medical decisions reserved for physicians.
Can a Physician Practice Through an LLC?
No.
Physicians cannot practice medicine through an LLC or LLP in California. The Medical Board also identifies general corporations as prohibited structures for practicing medicine.
A physician should select the proper professional structure before starting operations.
Professional Corporation Name Requirements
The corporate name and the name used to practice medicine may not be the same.
A physician using a fictitious or assumed name may need a Fictitious Name Permit.
Forming a corporation with the California Secretary of State does not by itself allow a physician to use any name to advertise or practice medicine for the purpose of physician ownership in California.
The applicable name rules should be reviewed before the name is used publicly.
What Is a Community Clinic in California?
A community clinic California model is different from a standard physician owned practice.
A community clinic operates through a tax exempt nonprofit corporation. It also follows specific rules for patient charges.
Under California’s Primary Care Clinic framework, charges must be based on the patient’s ability to pay and use a sliding fee scale.
A private medical practice does not become a community clinic simply because it serves local residents or underserved patients.
The organization must meet the requirements for the community clinic model.
Does a Community Clinic Have to Be Nonprofit?
Yes.
A qualifying community clinic must operate through a tax exempt nonprofit corporation.
The clinic must also follow the applicable patient payment rules.
This is a major difference between a community clinic and a conventional physician owned practice.
Community Clinic Licensing California
Community clinic licensing California falls under the California Department of Public Health.
A state license is required to operate a community or free Primary Care Clinic unless an applicable exemption applies.
The organization must provide the required information and meet the applicable facility and operating rules.
For physician ownership in California, Physicians planning a community clinic should review the licensing process before opening.
California Community Clinic Requirements
The main California community clinic requirements include:
- Tax exempt nonprofit status
- Primary Care Clinic licensing when required
- Proper organizational documents
- Sliding fee patient charges
- Facility compliance
- Proper staffing
- Clinical oversight
- Applicable state requirements
Other rules may apply based on the services and programs offered.
Community Clinic vs Physician Owned Practice
| Factor | Physician Owned Practice | Community Clinic |
| Main structure | Professional medical practice | Nonprofit clinic |
| Ownership | Licensed professionals under applicable law | Tax exempt nonprofit corporation |
| Profit model | May be for profit | Nonprofit |
| Patient charges | Standard payment arrangements | Sliding fee based on ability to pay |
| Main focus | Physician directed care | Community based primary care |
| State licensing | Depends on facility type | Primary Care Clinic license when required |
A community clinic is not simply another type of physician owned practice.
What Is an Outpatient Surgery Setting in California?
The official California term is Outpatient Surgery Setting (OSS).
An OSS is a facility, clinic, center, office, or other setting outside a general acute care hospital where certain types of anesthesia are used.
The type of anesthesia matters because some anesthesia may place a patient at risk of losing life preserving protective reflexes.
Not every office procedure makes a facility an OSS.
The actual procedure and anesthesia should be reviewed before deciding which requirements apply.
What Is an Outpatient Surgery Setting Used For?
An OSS is used for qualifying outpatient surgery.
The patient generally receives care without an overnight hospital stay.
The type of anesthesia is important. Some procedures using only local anesthesia may not fall under the same OSS rules.
Physicians planning surgical services should review:
- The procedure
- The anesthesia
- Patient monitoring
- Recovery procedures
- Emergency procedures
- Facility requirements
This review should happen before qualifying surgery begins.
Who Can Own an Outpatient Surgery Setting in California?
Who can own an outpatient surgery setting in California?
An OSS may be owned by:
- An association
- A corporation
- A firm
- A partnership
- An individual
Facility ownership does not give the owner control over medical decisions.
Facility ownership and professional medical practice are separate issues.
The facility owner must still follow California rules that protect physician clinical judgment.
Outpatient Surgery Setting Licensing California
Outpatient surgery setting licensing California requirements depend on the facility and the regulatory path that applies.
Certain outpatient surgeries must take place in an accredited, licensed, or certified setting.
Qualifying surgery may take place in:
- An outpatient setting accredited by a Medical Board approved agency
- A surgical clinic licensed by the California Department of Public Health
- An ambulatory surgical center certified by CMS
- Another setting allowed by California law
The correct path for physician ownership in California depends on the facility.
Physicians should identify the applicable regulatory agency before performing qualifying surgery.
Outpatient Surgery Setting Accreditation California
Outpatient surgery setting accreditation California rules are important for physician owned facilities.
A physician owned OSS that falls under the Medical Board accreditation framework must use an agency approved by the Board.
The four approved agencies are:
- Accreditation Association for Ambulatory Health Care, or AAAHC
- Quad A
- The Joint Commission
- Accreditation Commission for Health Care, or ACHC
Some other outpatient surgery settings may instead be licensed by CDPH or certified by CMS.
The facility’s regulatory path should be identified before an accreditation agency is selected.
What About “OSBS California”?
OSBS California is not the official term used by the California Medical Board.
The official term is:
Outpatient Surgery Setting (OSS).
People may still search for terms such as OSBS requirements California, OSBS licensing California, and OSBS vs community clinic California.
These searches may refer to outpatient surgery settings.
For legal and regulatory accuracy, OSS should be used as the official term.
Community Clinic vs Outpatient Surgery Setting: Key Differences
A community clinic and an OSS serve different purposes.
A community clinic follows a nonprofit primary care model.
An OSS is designed for qualifying outpatient surgical care.
| Issue | Community Clinic | Outpatient Surgery Setting |
| Main purpose | Primary care | Outpatient surgery |
| Corporate model | Tax exempt nonprofit | Depends on the facility |
| Nonprofit required | Yes | No general nonprofit requirement |
| Main requirement | Community clinic rules | Surgery and anesthesia rules |
| Main regulator | CDPH | Medical Board, CDPH, CMS, or another applicable agency |
| Patient charges | Based on ability to pay | Not defined by OSS status |
| Accreditation | Depends on the clinic | Required when Medical Board rules apply |
| Physician control | Required | Required |
A community clinic is not a lower level OSS.
An OSS is also not a surgical version of a community clinic.
They are different models with different requirements.
Can a Physician Owned Practice Become a Community Clinic?
A physician owned practice cannot become a community clinic simply by changing its name.
The organization must meet the requirements for a community clinic.
This includes the required nonprofit structure and patient payment model.
A practice considering this change should review:
- Nonprofit status
- Corporate structure
- Primary Care Clinic licensing
- Sliding fee requirements
- Governance
- Staffing
- Facility requirements
- Funding
- Payer arrangements
The change may require more than a new business name.
Can a Physician Owned Practice Operate as an OSS?
Yes, if the practice and facility meet the applicable requirements.
The first step is to determine whether the planned surgery and anesthesia meet the definition of an OSS.
The practice should then review the procedures, anesthesia, patient monitoring, recovery, emergency procedures, facility design, physician credentials, clinical privileges, accreditation, and licensing or certification.
A physician owned OSS that falls under the Medical Board accreditation framework must obtain accreditation through an approved agency.
The facility must also meet the applicable safety and operating requirements.
How Revex Square Supports Physician Owned Practices in California
Physician ownership involves more than forming a corporation. Practices also need organized billing and administrative processes.
Revex Square supports physician ownership in California with administrative and revenue cycle services that can work alongside the physician’s clinical role.
Services may include:
- Medical billing support
- Claims management
- Insurance eligibility work
- Accounts receivable follow up
- Denial management
- Payment posting
- Administrative support
These services help practices manage business tasks while clinical decisions remain with the appropriate licensed professionals.
Medical Assistants, Delegation, and Physician Control
Medical assistants are part of many physician practices.
California law allows medical assistants to perform certain administrative and technical tasks when the required training, supervision, and delegation rules are met.
They do not replace licensed physicians.
Physicians should create clear policies that explain which duties medical assistants can perform and who provides supervision.
Medical Assistant Scope of Practice in California
The medical assistant scope of practice in California includes specific administrative, clerical, and technical support duties.
Medical assistants may perform permitted tasks when the required supervision and delegation rules are met.
They cannot independently:
- Diagnose a patient
- Decide on treatment
- Provide medical advice
- Make clinical decisions reserved for licensed professionals
The corporate structure of a practice does not expand a medical assistant’s legal scope.
Trained and Qualified Medical Assistants
Medical assistants should receive the training needed for their assigned duties.
Physicians should also make sure staff receive the required supervision.
Clear job duties help keep clinical decisions with the appropriate licensed professional.
What Should a Physician Evaluate Before Choosing a Facility Structure?
1. Who Will Own the Professional Practice?
First, determine who will own the medical practice.
If the practice uses a professional medical corporation, confirm that all shareholders meet the applicable ownership rules.
2. What Services Will the Organization Provide?
Services affect the regulatory structure.
A primary care office may have different requirements from a practice that performs surgery.
Define the services before choosing the facility model.
3. Will the Organization Be For Profit or Nonprofit?
A community clinic must follow the nonprofit rules that apply to that model.
A standard physician practice does not become a community clinic because it serves an underserved population.
4. Will the Facility Perform Surgery?
If surgery is planned, review the procedures and anesthesia.
This helps determine whether OSS requirements apply.
5. Who Will Control Clinical Decisions?
The physician must retain control over professional medical decisions.
This includes patient care, diagnosis, treatment, referrals, and other clinical matters.
6. How Will Administrative Services Be Structured?
Administrative work can often be outsourced.
Billing, payroll, scheduling, accounting, and technology services may be handled by another company.
The arrangement should not transfer medical decision making to that company.
7. Does the Facility Need Licensing or Accreditation?
This depends on the facility and services.
Physicians should identify the applicable Medical Board, CDPH, CMS, and accreditation requirements before opening.
Common Mistakes in Physician Ownership in California
Using a Nominee Physician
A physician should not act as the owner on paper while another person controls the practice.
The ownership structure should reflect actual ownership and control.
Assuming 51% Ownership Solves Every CPOM Issue
The 51% physician ownership rule is important for a professional medical corporation.
It does not mean every management arrangement is compliant.
The physician must also retain the required professional control.
Using an LLC or General Corporation
Physicians cannot practice medicine through an LLC or LLP in California.
The Medical Board also identifies general corporations as prohibited structures for practicing medicine.
Treating an OSS Like a Standard Medical Office
Surgery and anesthesia can create added facility requirements.
A practice should not assume that an office is exempt simply because it has always operated as a medical office.
Calling a Facility a Community Clinic Without Meeting the Definition
A facility does not become a community clinic because it serves a local community, treats underserved patients, offers lower fees, or accepts government insurance.
The organization must meet the applicable community clinic requirements.
Giving a Management Company Clinical Authority
A management company can provide administrative support.
It should not decide how physicians treat patients or control other professional medical decisions.
Confusing Facility Ownership With Practice Ownership
Facility ownership and medical practice ownership are different issues.
Someone may be able to own an outpatient facility without having the right to own or control the professional medical practice operating there.
Community Clinic or Outpatient Surgery Setting: Which Model Fits?
The right model depends on the organization’s purpose.
A nonprofit organization providing qualifying primary care should review the California community clinic framework.
A practice providing qualifying outpatient surgery should review the California OSS requirements.
A standard physician practice may need neither model.
Before making a decision, review the structure in this order:
Ownership → Corporate structure → Clinical control → Services → Facility type → Licensing → Accreditation
This helps physicians avoid choosing a business or facility structure before deciding what the organization will actually do.
Frequently Asked Questions
Can a non physician own a medical practice in California?
Generally, no. California’s corporate practice of medicine rules restrict non physicians from owning or operating a business that provides patient evaluation, diagnosis, care, or treatment.
A non physician may provide administrative services under an appropriate arrangement. That does not give the person control over professional medical decisions.
Can a physician own a medical practice in California?
Yes. Physicians can own and operate medical practices through structures permitted by California law.
A professional medical corporation is one common option. The structure must meet physician ownership in California requirements.
Who can own a medical corporation in California?
At least 51% of the shares of a professional medical corporation must be owned by one or more licensed physicians and surgeons.
Certain other licensed professionals may own shares within the limits allowed by California law.
What is CPOM in California?
CPOM California means corporate practice of medicine.
The rules limit the ability of unlicensed people and entities to practice medicine or control physicians’ professional judgment.
What is a California professional medical corporation?
A California professional medical corporation is a professional corporate structure used to operate a medical practice.
Its shareholders must meet California’s professional ownership requirements.
Does a community clinic have to be nonprofit in California?
Yes. A qualifying community clinic operates through a tax exempt nonprofit corporation and follows the applicable patient payment rules.
What are the requirements for a community clinic in California?
Requirements can include tax exempt nonprofit status, Primary Care Clinic licensing when required, facility compliance, appropriate staffing, and a sliding fee system based on the patient’s ability to pay.
What is an outpatient surgery setting in California?
An Outpatient Surgery Setting (OSS) is a facility outside a general acute care facility where certain anesthesia is used at levels that may put the patient at risk of losing protective reflexes that help preserve life.
Qualifying surgery must take place in an appropriately accredited, licensed, or certified setting.
Who can own an outpatient surgery setting in California?
An OSS may be owned by an association, corporation, firm, partnership, or individual.
However, facility ownership does not give the owner control over professional medical decisions.
Does every outpatient surgery setting need Medical Board accreditation?
No. The required pathway depends on the facility.
A physician owned OSS that falls under the Medical Board’s accreditation framework must use a Board approved accreditation agency. Other settings may be licensed by CDPH or certified by CMS.
Is OSBS the official California term?
No. OSBS California may appear in searches, but the official term used by the California Medical Board is Outpatient Surgery Setting (OSS).
What can a medical assistant do in California?
A medical assistant can perform certain administrative, clerical, and technical support duties when the required training, supervision, and delegation rules are followed.
Medical assistants cannot independently diagnose patients, decide on treatment, or make clinical decisions reserved for licensed professionals.
Does SB 351 affect physician owned medical practices in California?
SB 351 became effective January 1, 2026. It places restrictions on certain private equity groups and hedge funds involved with physician and dental practices.
The law addresses interference with professional judgment and control over certain practice decisions.
Physicians involved in these arrangements should review the structure with qualified California healthcare counsel.
Conclusion for Physicians
Physician ownership in California requires more than choosing a business entity. The structure must align Ownership, physician control, corporate governance, facility requirements, and the services the organization will provide.
Before forming the entity or opening the facility, physicians should answer five questions:
Who will own the professional practice?
Who will control clinical decisions?
What services will the organization provide?
Will the facility perform qualifying outpatient surgery or use anesthesia that triggers OSS requirements?
Does the organization meet the licensing, accreditation, and operational requirements for its chosen facility model?
A California professional medical corporation can provide the professional Ownership and governance structure for a physician-led practice. California CPOM rules protect clinical judgment from unlicensed control. A community clinic California model follows a different path, requiring a tax-exempt nonprofit structure and an ability-to-pay sliding-fee model. An Outpatient Surgery Setting (OSS) follows its own regulatory framework based on qualifying surgery, anesthesia, and the applicable accreditation, licensing, or certification pathway.
These are not two alternative licenses for the same type of practice. They represent different organizational and facility models.
For physicians establishing a new healthcare organization, expanding into procedural care, or restructuring an existing practice, the right starting point is the actual operation of the organization. Ownership, clinical authority, facility classification, and regulatory requirements should be determined together not treated as separate decisions after the organization has already been formed.
