Existing law, the Medical Practice Act, establishes the Medical Board of California for the licensing, regulation, and discipline of physicians and surgeons. Existing law establishes the California Board of Podiatric Medicine within the Medical Board of California for the licensing, regulation, and discipline of podiatrists. Existing law, the Osteopathic Act, enacted by an initiative measure, establishes the Osteopathic Medical Board of California for the licensing and regulation of osteopathic physicians and surgeons and requires the Osteopathic Medical Board of California to enforce the Medical Practice Act with respect to its licensees. Existing law makes a violation of specified provisions of the Medical Practice Act a crime.

The Medical Practice Act authorizes physicians and surgeons and doctors of podiatric medicine to establish a professional partnership or group that includes both physicians and surgeons and doctors of podiatric medicine if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons. Existing law prohibits a partner who is not a physician and surgeon from practicing in the partnership or voting on partnership matters related to the practice of medicine that are outside the partners scope of practice.

This bill would revise the above-described provisions to allow a majority of the partners and partnership interests to be physicians and surgeons, osteopathic physicians and surgeons, or doctors of podiatric medicine. The bill would correct an erroneous cross-reference and make other nonsubstantive changes.

Existing law, the Medical Practice Act, establishes the Medical Board of California for the licensing, regulation, and discipline of physicians and surgeons. Existing law establishes the California Board of Podiatric Medicine within the Medical Board of California for the licensing, regulation, and discipline of podiatrists. Existing law, the Osteopathic Act, enacted by an initiative measure, establishes the Osteopathic Medical Board of California for the licensing and regulation of osteopathic physicians and surgeons and requires the Osteopathic Medical Board of California to enforce the Medical Practice Act with respect to its licensees. Existing law makes a violation of specified provisions of the Medical Practice Act a crime.

The Medical Practice Act authorizes physicians and surgeons and doctors of podiatric medicine to establish a professional partnership or group that includes both physicians and surgeons and doctors of podiatric medicine if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons. Existing law prohibits a partner who is not a physician and surgeon from practicing in the partnership or voting on partnership matters related to the practice of medicine that are outside the partners scope of practice.

This bill would revise the above-described provisions to allow a majority of the partners and partnership interests to be physicians and surgeons, osteopathic physicians and surgeons, or doctors of podiatric medicine. The bill would correct an erroneous cross-reference and make other nonsubstantive changes.

Existing law, the Medical Practice Act, establishes the Medical Board of California for the licensing, regulation, and discipline of physicians and surgeons. Existing law establishes the California Board of Podiatric Medicine within the Medical Board of California for the licensing, regulation, and discipline of podiatrists. Existing law, the Osteopathic Act, enacted by an initiative measure, establishes the Osteopathic Medical Board of California for the licensing and regulation of osteopathic physicians and surgeons and requires the Osteopathic Medical Board of California to enforce the Medical Practice Act with respect to its licensees. Existing law makes a violation of specified provisions of the Medical Practice Act a crime.

The Medical Practice Act authorizes physicians and surgeons and doctors of podiatric medicine to establish a professional partnership or group that includes both physicians and surgeons and doctors of podiatric medicine if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons. Existing law prohibits a partner who is not a physician and surgeon from practicing in the partnership or voting on partnership matters related to the practice of medicine that are outside the partners scope of practice.

This bill would revise the above-described provisions to allow a majority of the partners and partnership interests to be physicians and surgeons, osteopathic physicians and surgeons, or doctors of podiatric medicine. The bill would additionally prohibit a partner who is not a doctor of podiatric medicine from practicing in the partnership or voting on partnership matters related to the practice of podiatric medicine that are outside the partners scope of practice. By imposing a new requirement under the Medical Practice Act, the violation of which is a crime, the bill would impose a state-mandated local program. The bill would correct an erroneous cross-reference and make other nonsubstantive changes.

Existing law, the Medical Practice Act, authorizes establishes the Medical Board of California for the licensing, regulation, and discipline of physicians and surgeons. Existing law establishes the California Board of Podiatric Medicine within the Medical Board of California for the licensing, regulation, and discipline of podiatrists. Existing law, the Osteopathic Act, enacted by an initiative measure, establishes the Osteopathic Medical Board of California for the licensing and regulation of osteopathic physicians and surgeons and requires the Osteopathic Medical Board of California to enforce the Medical Practice Act with respect to its licensees. Existing law makes a violation of specified provisions of the Medical Practice Act a crime.

The Medical Practice Act authorizes physicians and surgeons and doctors of podiatric medicine to establish a professional partnership or group that includes both physicians and surgeons and doctors of podiatric medicine if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons. Existing law prohibits a partner who is not a physician and surgeon from practicing in the partnership or voting on partnership matters related to the practice of medicine that are outside the partners scope of practice.

This bill would delete the requirement that revise the above-described provisions to allow a majority of the partners and partnership interests to be physicians and surgeons or surgeons, osteopathic physicians and surgeons. surgeons, or doctors of podiatric medicine. The bill would also delete the prohibitions on additionally prohibit a partner who is not a physician and surgeon, doctor of podiatric medicine from practicing in the partnership or voting on partnership matters related to the practice of podiatric medicine that are outside the partners scope of practice. By imposing a new requirement under the Medical Practice Act, the violation of which is a crime, the bill would impose a state-mandated local program. The bill would correct an erroneous cross-reference and make other nonsubstantive changes.

Existing law, the Medical Practice Act, authorizes physicians and surgeons and doctors of podiatric medicine to establish a professional partnership that includes both physicians and surgeons and doctors of podiatric medicine if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons. Existing law prohibits a partner who is not a physician and surgeon from practicing in the partnership or voting on partnership matters related to the practice of medicine that are outside the partners scope of practice.

This bill would delete the requirement that a majority of the partners and partnership interests be physicians and surgeons or osteopathic physicians and surgeons. The bill would also delete the prohibitions on a partner who is not a physician and surgeon, and make other nonsubstantive changes.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 834

Author:(Irwin)

As Amended Ver:May 24, 2023

Majority vote

SUMMARY

Authorizes doctors of podiatric medicine (DPMs) to own an equal or majority interest in a professional partnership with physicians.

Senate Amendments

Delete provisions making changes to the existing voting rights of non-physician partners.

COMMENTS

Background. DPMs are licensed healthcare providers who practice medicine on the human foot, including the ankle and tendons that insert into the foot. They may also provide nonsurgical and limited surgical treatment of the muscles and tendons of the leg governing the functions of the foot, including wound care for ulcers. This aspect of medicine is known as podiatric medicine. Because podiatric health conditions can be complex, or be the result of a broader health condition, they will work closely with physicians in the event treatment is needed beyond the DPM scope of practice.

DPM and Physician Professional Partnerships. Before 1995, the Medical Practice Act prohibited DPMs and physicians from forming partnerships together – they were only authorized to provide services as DPMs in a partnership or as physicians in a partnership. As a result, podiatrists and physicians could not form partnerships that focused on podiatry but also provided ancillary medical services, even minor ones. The podiatry partnership would have to refer the patient to a physician.

The only way to provide this type of service together was to form a physician-owned medical corporation. At the time, there was concern that joint partnerships could result in non-physician control of a physician's practice. In general, the argument against that control, which is often called the "corporate practice of medicine," is that a healthcare business controlled by non-physicians could overrule physician judgment and expertise in favor of business interests, such as efficiency or profit, resulting in a lower quality of care.

Professional corporations currently avoid that concern because of the limitations under the Moscone-Knox Professional Corporations Act. The act only authorizes professional corporations to render services within a single profession, such as medicine or podiatry, and requires the majority of the shares to be owned by licensees of the principal profession.

As a result, podiatrists can provide podiatric medicine within a medical corporation that focuses on podiatry, but the corporation must still be majority owned by physicians. And, while physicians can also provide services as part of a podiatric medical corporation, they would not technically be allowed to provide any services outside of the scope of podiatric medicine.

In 1995, the Medical Board of California sponsored legislation allowing for physicians and DPMs to form partnerships together, but included the limitation that the majority of the partners be physicians and prohibited DPMs from voting on matters outside of their scope of practice. In the committee analysis at the time, the limitations were noted as being included to address concerns around the lay control of a physician's practice.

This bill would remove those limitations. The change would allow for DPMs and physicians to form partnerships that have DPM majorities.

According to the Author

"Medical practices often bring together different specialties to provide more holistic care to patients. In regulating how these partnerships and businesses are formed, safeguards have been put in place to ensure non-medically trained partners do not influence the practice, including how patient care is delivered. Despite their extensive training, Doctors of Podiatric Medicine are unfairly prevented from partnering with physicians on an equal footing when they agree to form a practice. [This bill] removes this impediment and allows podiatrists and physicians to have equal ownership in medical practices."

Arguments in Support

The California Podiatric Medical Association (sponsor) writes in support:

Current law specifically authorizes MD/DO's and DPM's to create partnerships. However, despite the advancements in the podiatric profession, the law further prohibits DPM's from having more than 49% ownership of that partnership. This means a DPM can never be an equal partner, even if both parties agree that is the best interest of the practice. For example, if a group of three podiatric surgeons wanted to open a wound care center and partner with a vascular surgeon, they would need to give the vascular surgeon 51% ownership of the center to comply with existing law, even if the services provided were primarily podiatric.

This ownership restriction limits the DPM's involvement in key administrative decisions, including staffing, purchasing real estate, insurance credentialing, and acquiring business loans, and has served as a deterrent for DPM's to enter such arrangements.

This inequity disincentives the formation of these partnerships which only disrupts the continuity of care. If DPM's are deterred from partnering with MD/DO's, that partnership would not benefit from the many services they specialize (wound care, diabetic foot ulcer treatment, etc.)….

Once licensed, DPMs can independently diagnose and treat human ailments within their scope of practice. This scope includes performing surgery in ambulatory and hospital settings, taking x-rays, writing prescriptions, and ordering diagnostic studies. Other than the fact that podiatric medicine has a scope of practice that is defined by law, managing a podiatric practice is no different from managing any other MD or DO surgical specialty practice. Anything that impacts medical practice will always impact the podiatric practice in the same way. Therefore, specifically restricting the size of the ownership interest in a professional partnership between a physician and surgeon and a podiatrist no longer makes sense.

Arguments in Opposition

None on file

FISCAL COMMENTS

According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, no significant state costs anticipated.

VOTES:

ASM BUSINESS AND PROFESSIONS: 18-0-1

YES: Berman, Flora, Alanis, Alvarez, Bains, Bonta, Chen, Dixon, Gipson, Grayson, Irwin, Jackson, Lee, Lowenthal, McKinnor, Stephanie Nguyen, Joe Patterson, Ting

ABS, ABST OR NV: McCarty

ASM APPROPRIATIONS: 14-0-2

YES: Holden, Megan Dahle, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Robert Rivas, Sanchez, Weber, Wilson

ABS, ABST OR NV: Bryan, Pellerin

ASSEMBLY FLOOR: 79-0-1

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones‑Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

ABS, ABST OR NV: Jim Patterson

SENATE FLOOR: 38-0-2

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Glazer, Gonzalez, Grove, Hurtado, Jones, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Eggman, Laird

UPDATED

VERSION: May 24, 2023

CONSULTANT: Vincent Chee / B. & P. / (916) 319-3301 FN: 0001268

 CONSENT  

Bill No: AB 834

Author: Irwin (D)

Amended: 5/24/23 in Senate

Vote: 21

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 12-0, 7/3/23

AYES: Roth, Nguyen, Alvarado-Gil, Archuleta, Ashby, Becker, Eggman, Glazer, Niello, Smallwood-Cuevas, Wahab, Wilk

NO VOTE RECORDED: Dodd

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 79-0, 4/27/23 (Consent) - See last page for vote

SUBJECT: Physicians and surgeons and doctors of podiatric medicine: professional partnerships

SOURCE: California Podiatric Medical Association

DIGEST:

This bill authorizes doctors of podiatric medicine (DPMs) to own an equal or majority interest in a professional partnership with physicians.

ANALYSIS:

Existing law:

1. Establishes the Podiatric Medical Board of California (PMBC) to license and regulate doctors of podiatric medicine. (Business and Professions Code (BPC) §§ 2460, et seq.)
2. Defines “podiatric medicine” as the diagnosis, medical, surgical, mechanical, manipulative, and electrical treatment of the human foot, including the ankle and tendons that insert into the foot, and the nonsurgical treatment of the muscles and tendons of the leg governing the functions of the foot. (BPC § 2472(b))
3. Enacts the Moscone-Knox Professional Corporation Act (Moscone-Knox) which authorizes the formation of specified healing arts professional corporations and establishes which healing arts licensees who are not of the same license type as the corporation may be shareholders, officers, and directors of that corporation. (Corporations Code §§ 13400)
4. Establishes the general rules and requirements related to business partnerships under the Uniform Partnership Act of 1994. (Corporations Code (Corp) §§16100-16962)
5. Defines “partnership” as an association of two or more persons to carry on a business for profit as co-owners. Defines “partnership agreement” as the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement. (Corp §§ 16101(a)(9) and 16101(a)(10))
6. Specifies that relations among the partners and between the partners and the partnership are governed by the partnership agreement, except as prohibited under the Uniform Partnership Act of 1994. (Corp § 16103)
7. Specifies that physicians and surgeons may only form partnerships with other physicians and surgeons and DPMs may only form partnerships with other DPMs, except as specified. Authorizes partnerships that include both physicians and surgeons and DPMs if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons and if partners who are not a physician and surgeon do not practice in the partnership or vote on partnership matters related to the practice of medicine that are outside the partner’s scope of practice. All partners may vote on general administrative, management, and business matters. (BPC § 2416)

This bill further authorizes DPM and physician partnerships by deleting requirements that the majority of the partners in the partnership are physicians and that the majority of the partnership interest belongs to physicians, and that a non-physician partner may not practice medicine in the partnership or vote on partnership matters related to the practice of medicine to the extent either of those is outside the partner’s scope of practice.

Background

PMBC is tasked with oversight of practitioners of podiatric medicine (podiatrists) and administers and enforces the laws relating to licensure. Podiatric medicine is a branch of medicine that focuses on the foot and ankle. In California, it is defined as “the diagnosis, medical, surgical, mechanical, manipulative, and electrical treatment of the human foot, including the ankle and tendons that insert into the foot and the nonsurgical treatment of the muscles and tendons of the leg governing the functions of the foot”. It is unlawful to practice podiatric medicine without a license and licensed podiatrists are known as DPMs.

PMBC currently licenses over 2,000 podiatric practitioners statewide. DPMs are licensed to diagnose and treat conditions affecting the foot, ankle and related structures including the tendons that insert into the foot, and to diagnose and provide medical treatment of the muscles and tendons of the leg through all nonsurgical means and modalities. Unlike a physician and surgeon, whose scope is only limited by the licensee’s own area of competence, a DPM’s scope is statutorily limited to the foot and ankle. DPMs are authorized to perform surgeries within their scope of practice, including surgical treatment of the ankle and tendons at the level of the ankle, in certain locations, such as a licensed general acute care hospital, and a partial amputation of the foot no further proximal than the Chopart’s joint. They are also authorized to perform services under the direct supervision of a physician and surgeon, as an assistant at surgery, in surgical procedures that are otherwise beyond a DPM’s scope of practice.

Moscone-Knox authorizes the formation of various healing arts professional corporations and establishes which healing arts licensees who are not of the same license type as the corporation may be shareholders, officers, and directors of that corporation. Any person licensed under the BPC, the Chiropractic Act, or the Osteopathic Act may be employed by these professional corporations. Current law specifies that DPMs can form partnerships with other DPMs without limitations and can only form partnerships with physicians and surgeons if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons and if partners who are not a physician and surgeon do not practice in the partnership or vote on partnership matters related to the practice of medicine that are outside the partner’s scope of practice.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/16/23)

California Podiatric Medical Association (source)

OPPOSITION: (Verified 8/16/23)

None received

ARGUMENTS IN SUPPORT: The California Podiatric Medical Association writes that “despite the advancements in the podiatric profession, the law further prohibits DPM’s from having more than 49% ownership of that partnership. This means a DPM can never be an equal partner, even if both parties agree that is the best interest of the practice. For example, if a group of three podiatric surgeons wanted to open a wound care center and partner with a vascular surgeon, they would need to give the vascular surgeon 51% ownership of the center to comply with existing law, even if the services provided were primarily podiatric. This ownership restriction limits the DPM’s involvement in key administrative decisions, including staffing, purchasing real estate, insurance credentialing, and acquiring business loans, and has served as a deterrent for DPM’s to enter such arrangements. This inequity disincentives the formation of these partnerships which only disrupts the continuity of care.”

ASSEMBLY FLOOR: 79-0, 4/27/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Rendon

NO VOTE RECORDED: Jim Patterson

Prepared by: Sarah Mason / B., P. & E.D. /

8/16/23 14:02:22

**** END ****

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Richard Roth, Chair

2023 - 2024 Regular

Bill No: Hearing Date: July 3, 2023

Subject:

SUMMARY:

Authorizes doctors of podiatric medicine (DPMs) to own an equal or majority interest in a professional partnership with physicians.

Existing law:

1. Establishes the Podiatric Medical Board of California (PMBC) to license and regulate doctors of podiatric medicine. (Business and Professions Code (BPC) §§ 2460, et seq.)
2. Defines “podiatric medicine” as the diagnosis, medical, surgical, mechanical, manipulative, and electrical treatment of the human foot, including the ankle and tendons that insert into the foot, and the nonsurgical treatment of the muscles and tendons of the leg governing the functions of the foot. (BPC § 2472(b))
3. Enacts the Moscone-Knox Professional Corporation Act (Moscone-Knox) which authorizes the formation of specified healing arts professional corporations and establishes which healing arts licensees who are not of the same license type as the corporation may be shareholders, officers, and directors of that corporation. (Corporations Code §§ 13400)
4. Establishes the general rules and requirements related to business partnerships under the Uniform Partnership Act of 1994. (Corporations Code (Corp) §§16100-16962)
5. Defines “partnership” as an association of two or more persons to carry on a business for profit as co-owners. Defines “partnership agreement” as the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement. (Corp §§ 16101(a)(9) and 16101(a)(10))
6. Specifies that relations among the partners and between the partners and the partnership are governed by the partnership agreement, except as prohibited under the Uniform Partnership Act of 1994. (Corp § 16103)
7. Specifies that physicians and surgeons may only form partnerships with other physicians and surgeons and DPMs may only form partnerships with other DPMs, except as specified. Authorizes partnerships that include both physicians and surgeons and DPMs if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons and if partners who are not a physician and surgeon do not practice in the partnership or vote on partnership matters related to the practice of medicine that are outside the partner’s scope of practice. All partners may vote on general administrative, management, and business matters. (BPC § 2416)

This bill further authorizes DPM and physician partnerships by deleting requirements that the majority of the partners in the partnership are physicians and that the majority of the partnership interest belongs to physicians, and that a non-physician partner may not practice medicine in the partnership or vote on partnership matters related to the practice of medicine to the extent either of those is outside the partner’s scope of practice.

FISCAL EFFECT:

This bill is keyed fiscal by Legislative Counsel. According to the Assembly Committee on Appropriations, this bill will result in minor and absorbable costs to the Medical Board of California and the Osteopathic Medical Board, and will not result in costs to PMBC.

COMMENTS:

1. Purpose. The California Podiatric Medical Association is the Sponsor of this bill. According to the Author, in 1995, the Medical Board of California sponsored SB 609 (Rosenthal, Chapter 708, Statutes of 1995), allowing for physicians and DPMs to form partnerships together, but included the limitation that the majority of the partners be physicians and prohibited DPMs from voting on matters outside of their scope of practice. The Author states that the changes in this bill would allow DPMs and physicians to form partnerships that have DPM majorities or equal partnership. This could allow more of these businesses to open up in areas that are low and moderate income and provide better care for vulnerable communities. In addition, lifting the 49% ownership cap could help address the wage gap; in general, women who work in healthcare make 80 to the dollar compared to men.”
2. Background. PMBC is tasked with oversight of practitioners of podiatric medicine (podiatrists) and administers and enforces the laws relating to licensure. Podiatric medicine is a branch of medicine that focuses on the foot and ankle. In California, it is defined as “the diagnosis, medical, surgical, mechanical, manipulative, and electrical treatment of the human foot, including the ankle and tendons that insert into the foot and the nonsurgical treatment of the muscles and tendons of the leg governing the functions of the foot”. It is unlawful to practice podiatric medicine without a license and licensed podiatrists are known as DPMs.

PMBC currently licenses over 2,000 podiatric practitioners statewide. DPMs are licensed to diagnose and treat conditions affecting the foot, ankle and related structures including the tendons that insert into the foot, and to diagnose and provide medical treatment of the muscles and tendons of the leg through all nonsurgical means and modalities. Unlike a physician and surgeon, whose scope is only limited by the licensee’s own area of competence, a DPM’s scope is statutorily limited to the foot and ankle. DPMs are authorized to perform surgeries within their scope of practice, including surgical treatment of the ankle and tendons at the level of the ankle, in certain locations, such as a licensed general acute care hospital, and a partial amputation of the foot no further proximal than the Chopart’s joint. They are also authorized to perform services under the direct supervision of a physician and surgeon, as an assistant at surgery, in surgical procedures that are otherwise beyond a DPM’s scope of practice.

Moscone-Knox authorizes the formation of various healing arts professional corporations and establishes which healing arts licensees who are not of the same license type as the corporation may be shareholders, officers, and directors of that corporation. Any person licensed under the BPC, the Chiropractic Act, or the Osteopathic Act may be employed by these professional corporations. Current law specifies that DPMs can form partnerships with other DPMs without limitations and can only form partnerships with physicians and surgeons if a majority of the partners and partnership interests in the professional partnership are physicians and surgeons and if partners who are not a physician and surgeon do not practice in the partnership or vote on partnership matters related to the practice of medicine that are outside the partner’s scope of practice.

1. Arguments in Support. The California Podiatric Medical Association writes that “despite the advancements in the podiatric profession, the law further prohibits DPM’s from having more than 49% ownership of that partnership. This means a DPM can never be an equal partner, even if both parties agree that is the best interest of the practice. For example, if a group of three podiatric surgeons wanted to open a wound care center and partner with a vascular surgeon, they would need to give the vascular surgeon 51% ownership of the center to comply with existing law, even if the services provided were primarily podiatric. This ownership restriction limits the DPM’s involvement in key administrative decisions, including staffing, purchasing real estate, insurance credentialing, and acquiring business loans, and has served as a deterrent for DPM’s to enter such arrangements. This inequity disincentives the formation of these partnerships which only disrupts the continuity of care.”

SUPPORT AND OPPOSITION:

Support:

California Podiatric Medical Association

Opposition:

None received

-- END --

Date of Hearing: April 19, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 834

Author:(Irwin) – As Amended Ver:March 29, 2023

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill allows doctors of podiatric medicine (DPMs) to own an equal or majority interest in a professional partnership with physicians, and prohibits a partner who is not a physician or DPM from practicing in the partnership or voting on partnership matters that are outside the partner’s scope of practice.

FISCAL EFFECT:

Minor and absorbable costs to the Medical Board of California and the Osteopathic Medical Board, and no costs to the Podiatric Medical Board.

COMMENTS:

1. Purpose. According to the California Podiatric Medical Association, sponsor of this bill:

Current law…authorizes [physicians] and DPM’s to create partnerships. However,…the law…prohibits DPM’s from having more than 49% ownership of that partnership. This means a DPM can never be an equal partner, even if both parties agree that is the best interest of the practice. For example, if a group of three podiatric surgeons wanted to open a wound care center and partner with a vascular surgeon, they would need to give the vascular surgeon 51% ownership of the center to comply with existing law, even if the services provided were primarily podiatric.

This ownership restriction limits the DPM’s involvement in key administrative decisions, including staffing, purchasing real estate, insurance credentialing, and acquiring business loans, and has served as a deterrent for DPM’s to enter such arrangements….This inequity disincentivizes the formation of these partnerships, which only disrupts the continuity of care.

1. Background. SB 1558 (Keene), Chapter 1313, Statutes of 1980, amended the Medical Practice Act to prohibit DPMs and physicians from forming partnerships together. As a result, podiatrists and physicians could not form partnerships that focused on podiatry but also provided ancillary medical services.
   
   In 1995, the Medical Board of California sponsored SB 609 (Rosenthal), Chapter 708, Statutes of 1995, which allowed physicians and DPMs to form partnerships together, but required the majority of the partners to be physicians and prohibited DPMs from voting on matters outside of their scope of practice. The requirement of a physician majority was included to address concerns around non-physician control of a physician's practice, often called the “corporate practice of medicine.” The argument against a healthcare business being controlled by non-physicians is generally that a lay person could overrule physician judgment and expertise in favor of business interests, such as efficiency or profit, resulting in lower quality care.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing:

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Marc Berman, Chair

ABPCA Bill Id:AB 834

Author:(Irwin) – As Introduced Ver:February 14, 2023

SUBJECT: Physicians and surgeons and doctors of podiatric medicine: professional partnerships.

SUMMARY: Authorizes doctors of podiatric medicine (DPMs) to own an equal or majority interest in a professional partnership with physicians.

EXISTING LAW:

1. Regulates the practice of medicine, including podiatric medicine, under the Medical Practice Act. (BPC §§ 2460-2499.8)
2. Prohibits the practice of medicine, including using drugs or devices, severing or penetrating tissue, or using any other method in the treatment of diseases, injuries, deformities, or other physical and mental conditions without a physician and surgeon or osteopathic physician and surgeon license, unless authorized by a license granted under some other law. (BPC §§ 2051, 2052, 2453)
3. Defines “podiatric medicine” as the diagnosis, medical, surgical, mechanical, manipulative, and electrical treatment of the human foot, including the ankle and tendons that insert into the foot, and the nonsurgical treatment of the muscles and tendons of the leg governing the functions of the foot. (BPC § 2472(b))
4. Authorizes the practice of podiatric medicine if licensed as a DPM. (BPC § 2472(a))
5. Establishes the general rules and requirements related to business partnerships under the Uniform Partnership Act of 1994. (Corporations Code (Corp) §§16100-16962)
6. Defines “partnership” as an association of two or more persons to carry on a business for profit as co-owners. (CORP § 16101(a)(9))
7. Defines “partnership agreement” as the agreement, whether written, oral, or implied, among the partners concerning the partnership, including amendments to the partnership agreement. (CORP § 16101(a)(10))
8. Specifies that relations among the partners and between the partners and the partnership are governed by the partnership agreement, except as prohibited under the Uniform Partnership Act of 1994. (CORP § 16103)
9. Specifies that physicians and surgeons may only form partnerships with other physicians and surgeons and DPMs may only form partnerships with other DPMs, except as specified. (BPC § 2416)
10. Authorizes partnerships that include both physicians and surgeons and DPMs if both of the following conditions are satisfied:
    1. A majority of the partners and partnership interests in the professional partnership are physicians and surgeons or osteopathic physicians and surgeons. (BPC § 2416(a))
    2. Partners who are not a physician and surgeon do not practice in the partnership or vote on partnership matters related to the practice of medicine that are outside the partner’s scope of practice. All partners may vote on general administrative, management, and business matters. (BPC § 2416(b))

THIS BILL:

1. Deletes the following two limitations on joint DPM and physician partnerships:
   1. That the majority of the partners in the partnership are physicians and that the majority of the partnership interest belongs to physicians.
   2. That a non-physician partner may not practice medicine in the partnership or vote on partnership matters related to the practice of medicine to the extent either of those is outside the partner’s scope of practice.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the California Podiatric Medical Association. According to the author, “Medical practices often bring together different specialties to provide more holistic care to patients. In regulating how these partnerships and businesses are formed, safeguards have been put in place to ensure non-medically trained partners do not influence the practice, including how patient care is delivered. Despite their extensive training, Doctors of Podiatric Medicine are unfairly prevented from partnering with physicians on an equal footing when they agree to form a practice. [This bill] removes this impediment and allows podiatrists and physicians to have equal ownership in medical practices.”

Background. DPMs are licensed healthcare providers who practice medicine on the human foot, including the ankle and tendons that insert into the foot. They may also provide nonsurgical and limited surgical treatment of the muscles and tendons of the leg governing the functions of the foot, including wound care for ulcers. This aspect of medicine is known as podiatric medicine. Because podiatric health conditions can be complex, or be the result of a broader health condition, they will work closely with physicians in the event treatment is needed beyond the DPM scope of practice.

DPM and Physician Professional Partnerships. Before 1995, the Medical Practice Act prohibited DPMs and physicians from forming partnerships together—they were only authorized to provide services as DPMs in a partnership or as physicians in a partnership. As a result, podiatrists and physicians could not form partnerships that focused on podiatry but also provided ancillary medical services, even minor ones. The podiatry partnership would have to refer the patient to a physician.

The only way to provide this type of service together was to form a physician-owned medical corporation. At the time, there was concern that joint partnerships could result in non-physician control of a physician's practice. In general, the argument against that control, which is often called the “corporate practice of medicine,” is that a healthcare business controlled by non-physicians could overrule physician judgment and expertise in favor of business interests, such as efficiency or profit, resulting in a lower quality of care.

Professional corporations currently avoid that concern because of the limitations under the Moscone-Knox Professional Corporations Act. The act only authorizes professional corporations to render services within a single profession, such as medicine or podiatry, and requires the majority of the shares to be owned by licensees of the principal profession.

As a result, podiatrists can provide podiatric medicine within a medical corporation that focuses on podiatry, but the corporation must still be majority owned by physicians. And, while physicians can also provide services as part of a podiatric medical corporation, they would not technically be allowed to provide any services outside of the scope of podiatric medicine.

In 1995, the Medical Board of California sponsored legislation allowing for physicians and DPMs to form partnerships together, but included the limitation that the majority of the partners be physicians and prohibited DPMs from voting on matters outside of their scope of practice. In the committee analysis at the time, the limitations were noted as being included to address concerns around the lay control of a physician's practice.

This bill would remove those limitations. The change would allow for DPMs and physicians to form partnerships that have DPM majorities.

Prior Related Legislation. SB 609 (Rosenthal), Chapter 708, Statutes of 1995, among other things, authorized physicians and podiatrists to form partnerships together and established the restrictions on podiatry partners this bill would delete.

SB 1558 (Keene), Chapter 1313, Statutes of 1980, revised and recast the Medical Practice Act, including the limitation against physicians and DPMs forming partnerships together.

ARGUMENTS IN SUPPORT:

The California Podiatric Medical Association (sponsor) writes in support:

Current law specifically authorizes MD/DO’s and DPM’s to create partnerships. However, despite the advancements in the podiatric profession, the law further prohibits DPM’s from having more than 49% ownership of that partnership. This means a DPM can never be an equal partner, even if both parties agree that is the best interest of the practice. For example, if a group of three podiatric surgeons wanted to open a wound care center and partner with a vascular surgeon, they would need to give the vascular surgeon 51% ownership of the center to comply with existing law, even if the services provided were primarily podiatric.

This ownership restriction limits the DPM’s involvement in key administrative decisions, including staffing, purchasing real estate, insurance credentialing, and acquiring business loans, and has served as a deterrent for DPM’s to enter such arrangements.

This inequity disincentives the formation of these partnerships which only disrupts the continuity of care. If DPM’s are deterred from partnering with MD/DO’s, that partnership would not benefit from the many services they specialize (wound care, diabetic foot ulcer treatment, etc.)….

Once licensed, DPMs can independently diagnose and treat human ailments within their scope of practice. This scope includes performing surgery in ambulatory and hospital settings, taking x-rays, writing prescriptions, and ordering diagnostic studies. Other than the fact that podiatric medicine has a scope of practice that is defined by law, managing a podiatric practice is no different from managing any other MD or DO surgical specialty practice. Anything that impacts medical practice will always impact the podiatric practice in the same way. Therefore, specifically restricting the size of the ownership interest in a professional partnership between a physician and surgeon and a podiatrist no longer makes sense.

ARGUMENTS IN OPPOSITION:

None on file

IMPLEMENTATION ISSUES:

Orphan Reference to Osteopathic Physicians and Surgeons. In 1995, a reference to osteopathic physicians and surgeons was added to the code section this bill is amending. While the current version of this bill deletes that reference, the amendments at the end of this analysis add it back. There is no other reference to osteopathic physicians and surgeons in the code section, and the Medical Practice Act treats osteopathic physicians and surgeons the same as non-osteopathic physicians and surgeons. If this bill passes this committee, the author may wish to amend the bill to include osteopathic physicians and surgeons where they are left out or delete the lone reference for consistency.

AMENDMENTS:

To (1) address concerns raised by stakeholders about the corporate practice of medicine by non-physicians or non-DPMs and the lack of clarity around scope of practice and (2) update an erroneous cross-reference to a repealed Corporations Code section, the bill should be amended as follows:

2416. (a) Physicians and surgeons and doctors of podiatric medicine may conduct their professional practices in a partnership or group of physicians and surgeons or a partnership or group of doctors of podiatric medicine, respectively.

(b) Physicians and surgeons and doctors of podiatric medicine may establish a professional partnership that includes both physicians and surgeons and doctors of podiatric medicine. medicine, if both of the following conditions are satisfied:

(a) A majority of the partners and partnership interests in the professional partnership are physicians and surgeons, osteopathic physicians and surgeons, or doctors of podiatric medicine.

(b) Notwithstanding Chapter 5 (commencing with Section 16100) of Title 2 of the Corporations Code, a partner who is not a physician and surgeon or a doctor of podiatric medicine, shall not practice in the partnership or vote on partnership matters related to the practice of medicine, or the practice of podiatric medicine, respectively, that are outside the partner’s scope of practice. All partners may vote on general administrative, management, and business matters.

REGISTERED SUPPORT:

California Podiatric Medical Association (sponsor)

REGISTERED OPPOSITION:

None on file

Analysis Prepared by: Vincent Chee / B. & P. / (916) 319-3301