Can a Nurse Practitioner Work in a Medical Corporation in California?

Nurse practitioners (NPs) play an increasingly important role in healthcare delivery across California, including in specialty practices such as dermatology. A common question that arises from NP clients when structuring a medical practice is whether an NP can work in a physician-owned medical corporation and potentially hold an ownership interest. California law does permit this in certain circumstances, but there are important statutory requirements that must be followed.

Below is an overview of how nurse practitioners may work within a medical corporation and the key legal considerations involved.

Nurse Practitioner Independent Practice in California

California law allows nurse practitioners to practice independently under specific circumstances. Under California Business and Professions Code § 2837.103, a nurse practitioner may practice without standardized procedures if they have completed a required transition-to-practice period.

This transition period requires:

• At least three full-time equivalent years of clinical practice, or

• A minimum of 4,600 hours of clinical experience.

Once these requirements are met and the nurse practitioner satisfies the necessary certification and training standards, the NP may practice without standardized procedures in qualifying settings.

However, the statute also imposes certain obligations when practicing independently. Nurse practitioners must:

• Inform patients that they are not physicians.

• Post notice that they are regulated by the California Board of Registered Nursing.

• Refer patients to a physician or other licensed healthcare provider when a patient's condition exceeds the nurse practitioner's training or scope of practice.

These requirements are designed to ensure transparency for patients and maintain appropriate referral pathways when specialized care is needed.

Nurse Practitioner Ownership in a Medical Corporation

California's Professional Corporation Act allows certain licensed healthcare professionals to hold ownership interests in medical corporations.

Under California Corporations Code § 13401.5, nurse practitioners may be minority shareholders in a medical corporation, provided that the following requirements are satisfied:

• Licensed physicians and surgeons must own the majority of shares.

• Non-physician healthcare professionals (such as nurse practitioners) may collectively own no more than 49% of the corporation.

• The number of non-physician shareholders cannot exceed the number of physician shareholders.

These rules are intended to preserve the physician control required under California's corporate practice of medicine doctrine, while still allowing certain healthcare professionals to participate in ownership.

Physician Supervision and Furnishing Authority

Even where nurse practitioners work in a medical corporation or operate with greater independence, certain activities still require physician supervision.

Under California Business and Professions Code § 2836.1, nurse practitioners who furnish or order drugs or devices must do so under physician supervision. This supervision generally involves:

• Collaboration through standardized procedures, and

• Availability of the supervising physician for consultation, including telephonic consultation when patient examinations occur.

In practice, many medical offices operate under a model where a physician is not physically present every day, but remains available for consultation and oversight.

For example, in some dermatology clinics the supervising physician may:

• Visit the clinic periodically,

• Review charts remotely, and

• Remain available for consultation when needed.

This type of arrangement may satisfy the statutory supervision requirements so long as the physician remains accessible and the nurse practitioner operates within their authorized scope of practice.

Key Compliance Considerations

For medical practices employing nurse practitioners in California, several compliance issues should be carefully evaluated:

• Ownership structure of the medical corporation

• NP transition-to-practice eligibility

• Scope of practice limitations

• Supervision requirements for furnishing medications or devices

• Patient disclosure obligations

Because these rules intersect with California's corporate practice of medicine laws, careful planning is essential when structuring a practice or ownership arrangement.

Final Thoughts

Nurse practitioners can play a vital role in medical corporations, including specialty clinics such as dermatology practices. California law allows nurse practitioners to work in and even hold minority ownership interests in medical corporations, provided the statutory ownership and supervision requirements are satisfied.

Healthcare providers considering this type of structure should ensure that their practice arrangements comply with both professional licensing statutes and the corporate practice of medicine doctrine.

This article is provided for general informational purposes only and does not constitute legal advice. Healthcare providers should consult qualified counsel regarding their specific practice structure and regulatory compliance.