Demand Growing for Corporate Practice of Medicine

Published January 1, 2006

Americans often find themselves taking half a day off from work and waiting an hour in a physician’s office, only to see a doctor for 10 minutes. And the primary reason people see a doctor is for access to prescription drugs.

As a result of time constraints, increased knowledge, and advanced technology, many patients are beginning to receive some of their medical services in a setting other than the traditional physician’s office visit. And despite legal obstacles and some objections from the traditional medical community, the growth of this corporate practice of medicine is on the rise.

Internet Consultations

One of the primary reasons doctors give for not communicating with their patients by e-mail is that many insurance companies will not pay for e-mail consultations. That may be changing. A few insurers are beginning to see the benefits of e-consultations, as are physicians.

Some health plans will compensate doctors for e-mail exchanges if the patient has been examined in the physician’s office prior to e-mail contact. Other insurers will pay for e-mail exchanges but at a lower rate than for in-person visits. The November 10, 2004 issue of the Journal of the American Medical Association reported physicians find e-mail exchanges with patients often replace more burdensome telephone calls.

Phone Consultations

Doctokr (pronounced “doc talker”) Family Medicine is a Washington, DC-area clinic that practices family medicine almost entirely by telephone and e-mail.

According to the clinic’s Web site,, time is billed in five-minute increments, and prices range from $15 for phone consultations with patients who have set up prepaid accounts to $67.50 for in-office visits for patients preferring not to prepay. Although patients may request an in-person office visit, they are discouraged from doing so unless absolutely necessary.

Dallas-based TelaDoc Medical Services is a phone-based medical consultation service, founded in 2002, that works with physicians from all over the country.

The TelaDoc service is not designed to compete with or replace primary care physicians. It fills a niche when a patient may urgently need a consultation but is unable to see his or her primary care physician. To utilize the service, patients must sign up in advance so their medical histories can be placed online. When a patient calls requesting a consultation, several participating physicians practicing near the patient are paged. The first physician to respond to the call is paid for the consultation, which costs the patient about $35. Average call-back time by physicians is just under one hour.

Quick Clinics

A new type of treatment facility, which features limited services but added convenience, consists of small health care centers located inside big box retailers and staffed by nurse practitioners. MinuteClinic is the pioneer and industry leader of retail-based health care in the United States. Its clinics allow shoppers in Cub Foods, CVS pharmacies, and Target stores to get routine medical services such as immunizations and strep tests.

“MinuteClinic is an answer to consumers’ overwhelming demand for more patient-centric health care,” said Michael Howe, chief executive officer for MinuteClinic.

Patients check in at the health care center. If there is a wait, they can continue their shopping. Within a few minutes, they are paged to return to MinuteClinic for a consultation. Little time is wasted, since time ordinarily spent waiting is used to shop. According to its Web site,, no appointment is necessary, visits take about 15 minutes, and the cost of an office visit can be as low as $28.

Legal Barriers

There are legal obstacles to these consumer-centered models of practice, however. Physicians are licensed by state medical boards to practice medicine in a specific state, and many state medical boards find cyber-medicine (i.e. consultation via the Internet or e-mail) unethical unless the consultation occurs after an initial face-to-face examination. State-specific licensure of physicians also makes practicing medicine online illegal if the patient resides in a state other than where the physician is licensed.

Finally, many states have laws banning the “corporate practice of medicine,” preventing non-physicians from hiring physicians to practice on their behalf. About one-third of states appear to have definitive laws against “corporate medicine,” and about the same number have laws generally allowing some forms (such as hospitals and health plans). In the remainder of states the laws are either unclear on this matter or appear to support or restrict the practice to an uncertain degree, according to a November 2003 report, “State Survey: Corporate Practice of Medicine,” from the Center to Advance Palliative Care.

In some cases, restrictions against corporate medicine could mean a store such as Wal-Mart cannot open a health kiosk inside the building and hire practitioners to staff the clinic as Wal-Mart employees. However, corporations are generally free to staff facilities with providers who work as independent contractors.

The American Academy of Emergency Medicine (AAEM) warns against the practice of medicine in a corporate atmosphere. “The obvious conflict is the interest of the business over the interest of the patient,” says Robert McNamara, M.D., member of the AAEM board of directors and professor and chairperson of the department of emergency medicine at Temple University School of Medicine. “A doctor should not be owned by a corporation that can dictate the standards by which he practices. He is making decisions about your health and needs free rein to make the best choices for you.”

Standards and Practices

Medical practices are regulated through state medical boards. Those boards set standards for the licensure of professionals in the practice of medicine, rather than merely certifying them. An accountant, by contrast, is certified–the public has the option of picking a certified accountant over one who is not certified, but both have the right to practice.

With licensure, the state board holds a monopoly on the practice. If the (traditional) physicians on the state medical board deem telemedicine to be unethical, they can censure (i.e. discipline) any physician performing the service.

A censured physician could lose his or her license to practice in that state, or might at least become an easy target for lawsuits by disgruntled patients who could use the censure as evidence of quackery. A physician treating patients over the Internet across state lines could be arrested and charged with the unlicensed practice of medicine in the state where the patient resided.

The setting in which patients receive medical care is largely a function of how physicians are paid. “Physicians avoid telephone calls and often refuse to communicate with patients by e-mail because they do not get paid for these types of consultations,” says National Center for Policy Analysis President John Goodman.

Because insurers pay nearly 90 percent of physicians’ bills, they have little incentive to pay for additional physician services that might increase their costs. In fact, for many years health economists have theorized that forcing patients to wait in crowded physicians’ offices is a means of rationing health care using time rather than money. Consequently, most Americans still access medical care much as they did four decades ago.

Devon M. Herrick, Ph.D. ([email protected]) is a health economist and senior fellow at the National Center for Policy Analysis.