Hiring NP in Texas Question

Trauma Columnist · May 15, 2009

I think you are going to need to contact the board of nursing or a labor relations specialist as I'm not sure you are going to find someone qualified to answer your question here. Good luck.

core0 · May 15, 2009

I manage a small services company in Texas that handles occupational services like drug and alcohol testing, etc. We are wanting to hire a board-certified FNP to treat patients for work injuries and illnesses, physical, etc, plus provide other care for general family needs.
Are there any requirements stating that our clinic must be majority-owned by the NP or a physician, or can we simply payroll the NP (and pay the service fees to a third-party physician)? I know there are rules regarding the hiring of physicians in Texas, but we are not hiring physicians.
Ideas?

You might want to try here. They have a guide to clinical practice that may cover it:

http://www.texasnp.org/storeindex.cfm

An NP in Texas has to have a collaborative agreement that details the delegation of medical authority. So you would have to have a physician involved. The bigger problem is what is called corporate practice of medicine which is what you appear to be trying to do. The reference I have is here:

"It is a violation of the doctrine for a corporation comprised of

lay persons to hire licensed physicians to treat patients and

receive fees for these services. See Gupta v. E. Idaho Tumor

Institute, Inc., 140 S.W.3d 747, 752 (Tex. App. 2004)."

From here:

http://www.nhpco.org/files/public/palliativecare/corporate-practice-of-medicine-50-state-summary.pdf

On the other hand the TMB FAQ says that physicians can be independent contractors to non-physicians:

http://www.tmb.state.tx.us/professionals/physicians/licensed/cpq.php

Here is another article by AAEM:

http://www.aaem.org/corporatepractice/texas.php

So it would appear that a nurse practitioner could start a clinic but would have to be an owner. Usually the NP cannot directly hire the physician but can form an LLC that can hire the physician. As long as the NP does not directly employ the physician and there is a mechanism to prohibit interference in the physicians practice of medicine it will usually pass the smell test. I know that there are PA owned clinics in Texas and I'm pretty sure that there are NP owned clinics. From my understanding this is how they are set up. There are seperate issues about ownership of medical practices and Medicare .

This is a definitely a case where you need a lawyer to advise you.

David Carpenter, PA-C

ANPFNPGNP · Feb 3, 2010

I know that there are PA owned clinics in Texas and I'm pretty sure that there are NP owned clinics. From my understanding this is how they are set up. There are seperate issues about ownership of medical practices and Medicare .
This is a definitely a case where you need a lawyer to advise you.
David Carpenter, PA-C

I live in Texas and I hired an attorney to set up a business (PLLC) for me a few weeks ago. You mentioned that you know of some PA owned clinics in Texas...this is ILLEGAL! My attorney contacted the TX Secretary of State's office for guidance, since I'm not a physician and he wanted to make sure we did everything legally (they have the final say on business ownership in TX). I wanted to co-own the business with my daughter, but since she isn't a NP, this wasn't possible.

You should be able to find this information on the TX Secretary of State's website, but ONLY PHYSICIANS WHO PRACTICE MEDICINE CAN LEGALLY OWN A MEDICAL CLINIC IN THE STATE OF TEXAS. The way we got around this is because I practice advanced nursing under the Texas Board of Nursing and we are calling my clinic a "Health Care Clinic." A PA practices MEDICINE and since he/she isn't a physician, they aren't allowed to own a clinic in this state.

I've heard there are a couple of PA owned clinics in this state - they can be shut down. A non-medical person owned a clinic in a rural area and she hired a physician as a "collaborative physician" and a NP to work there. The state got wind of it and closed it down after 4 years. So, just because they're doing it DOESN'T make it legal.

People need to be very careful before going out on their own and opening a business like this. It would be an absolute shame to invest your savings in a clinic that's going to get shut down.

ANPFNPGNP · Feb 3, 2010

I manage a small services company in Texas that handles occupational services like drug and alcohol testing, etc. We are wanting to hire a board-certified FNP to treat patients for work injuries and illnesses, physical, etc, plus provide other care for general family needs.
Are there any requirements stating that our clinic must be majority-owned by the NP or a physician, or can we simply payroll the NP (and pay the service fees to a third-party physician)? I know there are rules regarding the hiring of physicians in Texas, but we are not hiring physicians.
Ideas?

Definitely contact an attorney who has experience in setting up businesses. There are very strict rules/guidelines concerning the ownership of medical clinics in this state - these questions can be answered by one of the attorneys at the TX Secretary of State's office.

Only a physician who practices medicine is allowed to own a medical clinic. A NP is licensed under the Texas Board of Nursing to practice advanced nursing, so they are allowed to own a "health care clinic." Never mind that it's the same thing, it's about the wording.

You could have a NP start their own business and place it in your workplace - there's no law against that. He/she is required to have a "collaborative agreement" with a physician in order to practice and I doubt you'll find one who will work for free. I'm paying mine $1,000 per month - they have to be on site a certain number of hours per month and they must review a certain percentage of charts. A log of the hours they're on site and a log of the charts they reviewed must be kept on site in case of an audit. Anyway, that's the way it's supposed to happen...

core0 · Feb 3, 2010

I live in Texas and I hired an attorney to set up a business (PLLC) for me a few weeks ago. You mentioned that you know of some PA owned clinics in Texas...this is ILLEGAL! My attorney contacted the TX Secretary of State's office for guidance, since I'm not a physician and he wanted to make sure we did everything legally (they have the final say on business ownership in TX). I wanted to co-own the business with my daughter, but since she isn't a NP, this wasn't possible.
You should be able to find this information on the TX Secretary of State's website, but ONLY PHYSICIANS WHO PRACTICE MEDICINE CAN LEGALLY OWN A MEDICAL CLINIC IN THE STATE OF TEXAS. The way we got around this is because I practice advanced nursing under the Texas Board of Nursing and we are calling my clinic a "Health Care Clinic." A PA practices MEDICINE and since he/she isn't a physician, they aren't allowed to own a clinic in this state.
I've heard there are a couple of PA owned clinics in this state - they can be shut down. A non-medical person owned a clinic in a rural area and she hired a physician as a "collaborative physician" and a NP to work there. The state got wind of it and closed it down after 4 years. So, just because they're doing it DOESN'T make it legal.
People need to be very careful before going out on their own and opening a business like this. It would be an absolute shame to invest your savings in a clinic that's going to get shut down.

This is from the Texas BOM:

"A general summary of the corporate practice of medicine doctrine is that it prohibits physicians from entering into partnerships, employee relationships, fee splitting, or other situations with non-physicians where the physician's practice of medicine is in any way controlled or directed by, or fees shared with a non-physician. Generally, physicians may enter into independent contractor arrangements with non-physicians. However, whether an independent contractor situation exists is a question of law and attendant facts."

If you very carefully structure the contract with the physician some lawyers believe you can set up a true independent contractor relationship. Others are unsure.

More importantly there are several carve outs. The primary one is Federally qualified health center. Also Texas professional corportations and certified non-profit health corporations can employ physicians. I would guess that the great majority of PA owned practices are federally qualified health centers. For that matter the PA that I talked says that a few NPs own their own clinics under the same system.

Here is a very nice article on the corporate practice of medicine in Texas:

http://www.law.uh.edu/Healthlaw/perspectives/2009/(CC)%20CorpPractice.pdf

FWIW an attorney you hire to do this should not have to contact the State BOM to find this out. You should hire a lawyer well versed in the case law and experienced in setting up practices for NPs in that state.

David Carpenter, PA-C

ANPFNPGNP · Feb 3, 2010

This is from the Texas BOM:
"A general summary of the corporate practice of medicine doctrine is that it prohibits physicians from entering into partnerships, employee relationships, fee splitting, or other situations with non-physicians where the physician's practice of medicine is in any way controlled or directed by, or fees shared with a non-physician. Generally, physicians may enter into independent contractor arrangements with non-physicians. However, whether an independent contractor situation exists is a question of law and attendant facts."
If you very carefully structure the contract with the physician some lawyers believe you can set up a true independent contractor relationship. Others are unsure.
More importantly there are several carve outs. The primary one is Federally qualified health center. Also Texas professional corportations and certified non-profit health corporations can employ physicians. I would guess that the great majority of PA owned practices are federally qualified health centers. For that matter the PA that I talked says that a few NPs own their own clinics under the same system.
Here is a very nice article on the corporate practice of medicine in Texas:
http://www.law.uh.edu/Healthlaw/perspectives/2009/(CC)%20CorpPractice.pdf
FWIW an attorney you hire to do this should not have to contact the State BOM to find this out. You should hire a lawyer well versed in the case law and experienced in setting up practices for NPs in that state.
David Carpenter, PA-C

The Texas Board of Medicine does not NOT control the creation of businesses in Texas, the Secretary of State does. It is ILLEGAL for physicians to form corporations in this state, they can only form Professional Associations.

The attorney I used has set up several physician owned practices, but not a NP owned practice and that's why he contacted the Texas Secretary of State's office. It was his understanding that it was illegal for me to own a practice until he talked with one of their attorneys and found out otherwise.

Once again, the Texas Secretary of State's laws/rules supercede all others when it comes to establishing a business. A PA can NOT legally own a medical clinic in this state. Only a physician who practices medicine can own a medical practice in Texas, but since NP's practice advanced nursing, we are able to own health care clinics. Your PA friend is wrong and he needs to contact the Texas Secretary of State's office ASAP, because he could find himself in a whole lot of trouble. Just because he's doing it, doesn't mean it's legal. As I mentioned before, a nonhealth care provider got her clinic closed down - she had no idea it was an illegal business and neither did the "collaborative physician" or NP.

Also, the money I'm paying the physician is done in a way that's legal.

jerrylundergard · Feb 5, 2010

APNFNGPGNP...

How do you get your patients? Are you just opening doors and putting a sign out there? Are you advertising? Did you already have clients? How much money are you investing to get started up? What are you doing? Just simple stuff like a minute clinic or are you allowed to admit pts in hospitals?

Sorry to be so nosy but its interesting. Im sure it takes time to get it rolling so good luck with your venture. Id love to do something like that some day.

ANPFNPGNP · Feb 5, 2010

I had originally planned on having over 100K for start up, but since my daughter wasn't allowed to co-own the business, I'm starting with 50K (she was an investor). The renovations, credentialing, EMR software, computers, supplies, etc is costing roughly 30K. Then there's the advertising which is extremely expensive.

We're going to be open until 10 pm weeknights and also on Sat & Sun (7 days per week). I would NEVER be able to do this if I didn't have family members willing to work for little or no money. My daughter, who was originally going to be an owner, is going to work there for $10 per patient until I can start paying her. My total expenses per month (including $1,000 to doctor) is around $3,000.

I was very fortunate b/c some clinics donated exam tables, which are in excellent condition. I bought just about everything else from a physician who was downsizing. The only thing I haven't bought is an autoclave, which runs $1,500 for a small steam one.

We got an extra good deal with the newspaper to run a full page ad for just $1,000 the day before the grand opening (they usually cost over $4,000 for a full page ad). We're going to run some smaller ads weekly at $350 each. We're also advertising in the yellow pages (pricey) and several trade magazines around town. I'm going to close the clinic for one weekend and do free school physicals this summer. Several NP's have offered to donate their time - I'm hoping to pick up some media attention with that. We'll have fliers all over town with our cash prices. The majority of my money will go towards advertising - if they don't know you're there, they won't come.

I'm the only urgent care clinic that's open until 10 pm 7 days per week, so I should be able to attract a lot of business. My temporary signs went up a week ago and people are already calling to schedule an appt! We won't take appts though and at this time we're cash only and WAAAAAY cheaper than the other UC clinics (where I've worked for 5 years). The clinic is in a highly visible area and there aren't any physicians around (except one pediatrician). There was a practice of 3 doctors, but they moved away 5 years ago and left 27,000 pts without a doctor. I'm hoping to pick up some of that business. I also have a following, so my picture will be in my ad. Also, we're in the process of constructing a website. We're hoping to open by mid-April at the latest.

Yes, it is very expensive and I don't know how people do it if they have salaries to pay. One of my daughers has a M.S. in Computer Science and a business degree and she'll be there pretty much full time (working for $10 per pt). When she can't be there, my husband will fill in. I have another daughter who is in a BSN program and she'll fill in when she can. I'm also going to train MA's from the local career center. If I find one really good, then I'll hire them. Of course, my daughter who's in nursing school plans on going to work there for money when she gets out.

We have enough capital to keep it running for a year, so if I may a profit, I'll be ecstatic!

If you can think of some inexpensive ways to advertise, please let me know!

ANPFNPGNP · Feb 5, 2010

APNFNGPGNP...
How do you get your patients? Are you just opening doors and putting a sign out there? Are you advertising? Did you already have clients? How much money are you investing to get started up? What are you doing? Just simple stuff like a minute clinic or are you allowed to admit pts in hospitals?
Sorry to be so nosy but its interesting. Im sure it takes time to get it rolling so good luck with your venture. Id love to do something like that some day.

One more thing, I'm doing a LOT more than a retail clinic. I suture, perform I&D's, treat DM, HTN and of course, minor illnesses. There are so many people who use UC as their primary care...I'm looking for that business too!

If anyone's clinic has been credentialed through insurance payors as "urgent care," please let me know. We don't know how that's going to go over. UC clinics are reimbursed at a higher rate than primary care...we'll see how that goes.

jerrylundergard · Feb 6, 2010

Flyers? I guess everyone is your target audience now cause so many people of different demographics may be without health insurance or only have overly expensive insurance available to them. It sounds like your going for the uninsured.

If you are cool and have a good service I couldnt see anyreasone why you wouldnt get referels and repeat customers. Than youll just have to wait to grow your biz...

Good luck!