A Florida medical professional corporation is a corporation owned only by Florida-licensed physicians that exists to provide medical services. It’s governed by Chapter 621 of the Florida Statutes, costs $70 to file, and gives you tax flexibility and protection from the practice’s business debts. It doesn’t protect you from your own malpractice.
The filing is the quick part. Licensing, insurance, payer enrollment and healthcare compliance are what take months, and they’re what this guide spends most of its time on.
Why do physicians form a professional corporation?
Mostly for tax flexibility. A professional corporation can be taxed as an S-Corp or a C-Corp. With an S-Corp election you pay yourself a reasonable salary and take the rest of the profit as distributions, which can cut your self-employment taxes.
There are other reasons too:
- Retirement plans. A corporation can set up 401(k), defined benefit and profit-sharing plans, which can allow higher contributions than self-employed physicians typically get.
- Family employment. Within IRS rules, you can employ family members for real administrative work and pay them for it, which can lower your overall tax bill.
- Continuity. The corporation keeps existing after the founding physician steps back, which makes succession and practice sales easier.
- Structure. Clear roles and decision-making help a lot once a group practice has several physician owners.
- Credibility. Hospitals, insurance networks and patients tend to read a corporation as a stable, permanent practice.
What does Florida require of a medical professional corporation?
Chapter 621 sets the rules that separate a medical PC from an ordinary corporation.
The corporation can only provide medical services, plus whatever’s incidental to providing healthcare. Every shareholder must be licensed to practice medicine in Florida.
You need a registered agent with a physical Florida street address to accept legal papers for the corporation. You file Articles of Incorporation for a Professional Corporation with the Florida Department of State, Division of Corporations, stating that the corporation will provide medical services and identifying all the initial shareholders. The filing fee is $70, and expedited processing is available for an extra fee.
What licenses do the owners need?
Every shareholder, director and officer who provides medical services through the corporation needs an active, unrestricted Florida medical license from the Florida Board of Medicine or the Florida Board of Osteopathic Medicine.
The Division of Corporations may ask for license verification when you file, so have license numbers and supporting documents ready.
A license from another state isn’t enough. A physician licensed elsewhere can’t be a shareholder unless they also hold a valid Florida license. And if a shareholder’s license is suspended or revoked, they have to divest their ownership immediately.
How should you name it?
The name must include a corporate designator: “Professional Association,” “P.A.,” “Professional Corporation,” “P.C.,” “Chartered,” or an abbreviation showing corporate status.
The name also can’t suggest services the shareholders aren’t licensed for. A medical PC can’t put “dental” or “legal” in its name unless appropriately licensed professionals are shareholders. Check that your name is distinguishable from existing entities on the Sunbiz website before you file.
If you’ll practice under a different name than the legal one, register a fictitious name (DBA) with the Florida Department of State and the county where your practice is located.
What does the Florida Board of Medicine expect from the practice?
Incorporating doesn’t change your obligations to the board.
Your corporation and every physician it employs must meet the prevailing professional standard of care. The corporate form doesn’t lower it.
If you employ physician assistants, advanced practice registered nurses or other mid-level providers, follow Florida’s supervision and protocol rules for each license type.
All advertising has to follow the Florida Administrative Code rules on physician advertising. That means no misleading claims, no guaranteed results, and no testimonials that set unrealistic expectations.
Keep patient records as Florida law requires, typically five years from the last patient contact or two years after the patient reaches the age of majority, whichever is longer.
What does the corporation protect you from, and what doesn’t it?
It protects you from the practice’s business debts and from claims that have nothing to do with professional services. If the practice defaults on a lease or an equipment loan, creditors generally can’t go after the physicians’ personal assets.
It doesn’t protect you from your own malpractice. If you make a medical error, your personal assets are exposed to claims arising from what you did, corporation or not.
The corporation itself can also be on the hook. Under respondeat superior, it may be liable for malpractice by employed physicians, nurses and staff acting within the scope of their jobs. That’s why you need malpractice coverage for the entity as well as for each physician.
Courts can also ignore the corporation altogether (“piercing the corporate veil”) if you skip corporate formalities, mix personal and business money, leave the corporation badly undercapitalized, or use it to commit fraud. Keep separate bank accounts, hold regular meetings, record big decisions in minutes, file your annual report, and treat the corporation as its own entity in every respect.
Who can own a medical professional corporation?
Only physicians licensed in Florida. Spouses, family members, business partners and investors without medical licenses can’t hold shares. The point is to keep medical decisions with licensed physicians instead of lay investors focused on returns.
In a group practice, every owner must be a licensed physician. Non-physician administrators can’t hold equity, though they can be employees with performance bonuses.
There’s one temporary exception. When a shareholder dies, the estate or heirs can hold the shares during estate administration, typically for no longer than a reasonable period to transfer them to qualified physicians.
That’s where a buy-sell agreement earns its keep. Set out mandatory buyouts for retirement, disability, license loss and death, with a clear valuation formula and payment terms. Agreeing on this at formation is far easier than negotiating it after someone leaves.
Single-specialty or multi-specialty?
Florida allows both.
A single-specialty practice (cardiology, orthopedics, pediatrics and so on) is simpler. Everyone shares the same scope of practice, so credentialing, payer contracting and clinical protocols are more straightforward.
A multi-specialty practice puts physicians from different specialties under one corporation. You get shared overhead, cross-referrals and more complete patient care. You also take on more work:
- Make sure each physician’s license covers what they do. Some specialties require board certification or extra credentials.
- Expect harder credentialing, since each specialty has its own requirements, privileging and payer standards.
- You need a billing system that codes accurately across specialties and follows each payer’s rules for each one.
- Referrals inside the practice fall under the federal Stark Law and Anti-Kickback Statute, so compensation arrangements must meet the regulatory safe harbors.
What goes in a physician employment agreement?
If the corporation hires other physicians, put every arrangement in writing. A good agreement covers:
- Pay. Salary, productivity-based pay, base plus bonus, or a hybrid. If pay depends on productivity, define the metric (work RVUs, net collections, patient encounters or a specialty-specific measure) and how bonuses are calculated and paid. The method has to comply with federal rules on physician compensation.
- Benefits. Health insurance, malpractice insurance, CME allowance, professional dues and retirement contributions, and whether they’re part of total compensation or on top of salary.
- Call. Call obligations, backup arrangements, and any extra pay for call beyond regular duties.
- Termination. Resignation, termination with and without cause, notice periods, and who pays for malpractice tail coverage.
- Restrictive covenants. Florida courts enforce reasonable non-competes in physician contracts if the geography, duration and restricted activities are reasonable. Typical terms run 1-2 years within a 5-15 mile radius.
Stark Law applies here too. The employment exception gives you a safe harbor for bona fide employment with fair market value pay.
How much malpractice insurance do you need?
Get coverage for both the corporation and each physician. Claims may name both the physician and the employer.
Typical policies provide $250,000 per occurrence and $750,000 aggregate, or $1 million/$3 million. High-risk specialties often carry more. Hospitals, ambulatory surgery centers and payer networks typically set their own required amounts and coverage types as credentialing conditions, so check what yours require before you buy.
Most physician policies are claims-made. They cover claims reported while the policy is active, regardless of when the incident happened. Occurrence policies cover incidents that happen during the policy period.
With claims-made coverage, the cost that surprises people is tail coverage (an extended reporting period endorsement), which covers claims reported after the policy ends for incidents that happened while it was active. It typically costs 150-300% of the annual premium. Decide in every employment agreement whether the corporation or the departing physician pays for it. The usual arrangement is that the corporation covers physicians during employment.
S-Corp or C-Corp for a medical practice?
For most practices that distribute their profits each year, we’d elect S-Corp status. It avoids double taxation and can lower self-employment taxes.
S-Corp. Profits pass through to your personal return. You pay yourself a reasonable salary subject to employment taxes and take the rest as distributions that aren’t subject to self-employment tax. The IRS requires physician-shareholders to pay themselves reasonable compensation, judged by specialty, location, practice type, experience and what comparable physicians earn. An S-Corp can’t have more than 100 shareholders, can’t have corporate or partnership shareholders, and can only have one class of stock. Those limits rarely matter for a medical practice.
C-Corp. Profits are taxed at the corporate level, and shareholders pay individual tax on dividends. The trade-off is more flexibility with employee benefit plans, and it can make sense if you’ll keep a lot of earnings in the corporation for investment or expansion.
To elect S-Corp status, file Form 2553 (Election by a Small Business Corporation) with the IRS by the 15th day of the third month of the tax year, or at any time during the preceding tax year.
The right answer depends on your income, ownership, retirement goals and benefits. A CPA who works with medical practices can run the numbers both ways.
How do credentialing and payer enrollment work?
Start early. This is usually the longest part of opening a practice.
- Get NPIs. The corporation needs a Type 2 (organizational) National Provider Identifier, and each physician needs a Type 1 (individual) NPI. They’re used in every electronic healthcare transaction.
- Set up CAQH. Most commercial payers credential through the Council for Affordable Quality Healthcare (CAQH) database. Create a profile and keep it current.
- Enroll in Medicare. The corporation enrolls as the billing entity on form CMS-855B. Each physician enrolls as an individual practitioner on CMS-855I.
- Enroll in Florida Medicaid. It takes separate applications for the corporation and the individual practitioners, and processing typically takes 60-90 days.
- Enroll with commercial plans. Each payer has its own application, credentialing requirements and timeline.
- Get facility credentials. Hospitals, ambulatory surgery centers and other facilities verify your education, training, licensure, board certification, malpractice history and references. Initial credentialing typically takes 60-180 days.
Payers and facilities re-credential every 2-3 years. Track the expiration dates and send updates before they lapse, so you don’t lose privileges or network status.
What healthcare compliance applies to a medical PC?
On top of the usual corporate requirements, a medical PC needs:
- HIPAA. Written privacy and security policies, workforce training, business associate agreements, breach notification procedures and security risk assessments.
- Fraud and abuse laws. The Stark Law (physician self-referral), the Anti-Kickback Statute and the False Claims Act govern financial relationships with other healthcare entities, ban improper inducements for referrals, and create liability for false claims to government programs.
- Physician ownership and control. Under the corporate practice of medicine doctrine, lay persons and lay entities can’t practice medicine or employ physicians to provide professional services. Your PC has to be physician-owned and physician-controlled.
- Billing compliance. Accurate coding and documentation, backed by written policies, regular audits, staff training and a way to report potential violations.
- Controlled substances. DEA registration, Florida’s prescription drug monitoring program (E-FORCSE) and recordkeeping, if you prescribe them.
- Telemedicine. Florida’s telemedicine laws on informed consent, standards of care and documentation, if you offer it.
How do you form a Florida medical professional corporation?
- Choose a name with a corporate designator (P.A. or P.C.) and confirm it’s available on Sunbiz.
- Appoint a registered agent with a physical Florida street address. You can serve yourself or hire a commercial service.
- Prepare the Articles of Incorporation for a Professional Corporation, stating that the corporation will provide medical services and naming the initial directors, shareholders and registered agent.
- File the articles with the Division of Corporations online through Sunbiz or by mail, and pay the $70 fee. Online filings typically process in 24-48 hours. Mail takes 5-7 business days.
- Adopt bylaws covering shareholder meetings, director and officer duties and decision-making. They aren’t filed with the state.
- Get an EIN from the IRS online, by phone, by fax or by mail.
- Hold the organizational meeting to adopt bylaws, elect officers and authorize stock, and record it in minutes.
- Issue stock certificates and start a stock ledger that records every transfer.
- Get your licenses, including a Florida Department of Health facility license if you operate a medical facility, local business tax receipts and any other professional licenses that apply.
- Open a business bank account in the corporation’s name using the articles, EIN and organizational documents.
- Buy malpractice insurance for the corporation and every physician before you see a single patient.
- Get NPIs and start payer credentialing with Medicare, Medicaid and commercial plans.
- Set up compliance programs for HIPAA and billing, and train everyone.
After that, file the annual report with the Division of Corporations by May 1 every year. The fee is $150.
Where to start
If you’re opening a new practice, work backwards from the day you want to see patients. Credentialing can take up to six months, and it can’t begin until the corporation exists and has its NPI. So file the articles first, get the EIN and Type 2 NPI the same week, and start CAQH and Medicare enrollment right away. The buy-sell agreement and employment contracts can be finished while you wait on payers, but get a healthcare attorney to draft them.