Research · 9 min read
Why a Telehealth Brand and Its Medical Practice Are Separate Companies
The company you pay and the practice that treats you are often two businesses with two owners, and that is usually a response to a rule about who may own a medical practice at all. Reading the rule explains the structure better than any disclaimer does.
Key takeaways
- California's medical practice act says corporations and other artificial legal entities have no professional rights, privileges, or powers, which is why a consumer brand and a medical practice are usually two companies.
- The exception in that same sentence covers salaried employment by licensed charitable institutions, foundations or clinics, and only where no charge for professional services is made.
- Shares in a California professional corporation may be issued only to a licensed person, defined as a natural person licensed to render the same services, and shares issued otherwise are void.
- Named other licensees may hold shares in a medical corporation there, but all of their shares together are capped at forty-nine percent.
- Washington reaches the same place differently, and adds that forming a professional service corporation does not relax its disciplinary act or the limits of anyone's credential.
- This is state law and it is not uniform; two states were read, and nothing is claimed about the other forty-eight.
Answer first: in some states a company cannot hold the license
Most weight-loss telehealth brands are two businesses wearing one name. One runs the site, the billing and the shipping. The other employs the clinicians and carries the license.
That split is not a marketing choice. In a number of states, a general business corporation is not permitted to practice medicine or to own the entity that does.
California puts it in eleven words. Corporations and other artificial legal entities shall have no professional rights, privileges, or powers.
Once you know that sentence exists, the structure stops looking like evasion and starts looking like plumbing. What matters to you is which of the two companies is answerable for what.
The statute, and the exception written into the same sentence
The California provision does not stop at the prohibition. It goes on to allow one narrow thing, and reading to the end of it is the difference between quoting the law and paraphrasing it.
The licensing division may, in its discretion and after the investigation and documentary review it requires, approve the employment of licensees on a salary basis by licensed charitable institutions, foundations or clinics.
That approval carries a condition. It applies only where no charge for professional services rendered patients is made by the institution, foundation or clinic.
So the exception is written for care given without a charge. It is not a general permission for a company to employ physicians and bill patients for their work.
A separate section of the same code makes the underlying conduct an offense. Practicing, attempting to practice, or advertising or holding oneself out as practicing any system or mode of treating the sick is a public offense there. So is diagnosing, treating or prescribing for a condition, where the person holds no valid certificate.
Who is allowed to own the practice
If a corporation cannot practice, something has to. The answer in both states read here is a professional corporation, and its shareholder list is restricted by statute.
California's professional corporation law says shares of capital stock in a professional corporation may be issued only to a licensed person, or to someone licensed to render the same professional services where they practice. Shares issued in violation of that restriction are void.
A licensed person is defined narrowly, and the definition does the work. It means a natural person duly licensed to render the same professional services the corporation renders.
A natural person cannot be a holding company. That single word is why an investor cannot simply buy the practice.
There is a documented sideways route, and it has a ceiling. A separate section lets named other licensees hold shares in a medical corporation. Among them are registered nurses, physician assistants, psychologists and pharmacists. All shares held by those licensees together must stay at or below forty-nine percent.
Forty-nine percent is a minority by design. Even the licensed exception does not hand control of a medical corporation to anyone but the profession it belongs to.
A second state, in different words
One state's statute is one state's statute. Washington was read as a second, and its professional service corporation act reaches the same place along a different path.
It says an individual or group of individuals duly licensed or otherwise legally authorized to render the same professional services within the state may organize and become shareholders of a professional corporation for pecuniary profit. One or more of those legally authorized individuals has to be the incorporator.
Washington also does something California does not. It lists health professions by chapter and deems them, for the purpose of forming one professional service corporation, to be rendering the same professional services.
That is a deliberate loosening, and the same subsection immediately closes the door it might have opened. Forming such a corporation does not restrict the state's uniform disciplinary act, or the professional statutes, including restrictions on practicing without being appropriately credentialed and on practicing beyond the scope of a credential.
Two states, two drafting styles, one shared idea. Ownership of the practice follows the license, and organizing a company does not enlarge what anyone in it may do.
What the name on the door has to satisfy
There is a second reason a brand and a practice can look like one thing. In California a physician who wants to practice under a trade name has to obtain a permit for it.
The permit is issued only if the licensing body is satisfied of three things. The applicants or the professional corporation's shareholders hold valid current licenses. The professional practice is wholly owned and entirely controlled by the applicants. And the proposed name is not deceptive, misleading or confusing.
Read the second condition again. Wholly owned and entirely controlled is a stronger phrase than any of the ownership rules above, and it is a condition of using a name at all.
The section names its own limits, and they matter. It does not apply to licensees who contract with, are employed by, or are on the staff of a clinic licensed under the state's health and safety code. The same exclusion covers a medical school approved by the division, and a faculty practice plan connected with one.
The permit also comes with a display duty. A notice accompanying it has to be displayed where patients and staff can readily see it, at each place of business the permit identifies.
What the other company actually does
None of this stops an unlicensed company from doing a great deal. Software, scheduling, marketing, payment processing, customer support, logistics and the supply relationship with a pharmacy are ordinary business services.
That is the arrangement most of these brands describe somewhere in their terms, usually in a paragraph saying the company does not practice medicine and does not control clinical decisions. The paragraph is a description of the split, not a disclaimer invented for the page.
The word that often sits at the seam is medical director. It appears on seller pages across this market and it is not a license type; it names a clinician's role inside the practice, and the role's content varies from company to company.
The clean question is not whether a program has a director. It is which entity that person works for, and whether the same entity holds your record and answers your clinical message.
What this settles for you, and what it does not
It settles where accountability lives. A licensing board regulates people and professional entities, not consumer brands, so a clinical complaint needs a clinician's name and the practice behind it.
It settles which document to read before you pay. The paragraph explaining the two entities tells you who holds the record, who answers a clinical question, and who a billing dispute goes to.
It does not settle quality. A well-organized structure can deliver careless care and an awkward one can deliver careful care, and nothing here is a measurement of either.
It does not settle what the law is where you live. Two states were read here. Their rules are not identical to each other, let alone to the other forty-eight.
And it decides nothing about your own position in a dispute. That is a question for someone advising you directly, with your facts in front of them.
Sources
- California Business and Professions Code section 2400, Corporations (Medicine, Article 18)That corporations and other artificial legal entities shall have no professional rights, privileges, or powers, and that the Division of Licensing may in its discretion, after such investigation and review of such documentary evidence as it may require, grant approval of the employment of licensees on a salary basis by licensed charitable institutions, foundations, or clinics, if no charge for professional services rendered patients is made by any such institution, foundation, or clinic. The limiting condition on that approval is quoted in the article rather than summarized.
- California Business and Professions Code section 2052, License Required and ExemptionsThat any person who practices or attempts to practice, or who advertises or holds himself or herself out as practicing, any system or mode of treating the sick or afflicted in that state, or who diagnoses, treats, operates for, or prescribes for any ailment, blemish, deformity, disease, disfigurement, disorder, injury, or other physical or mental condition of any person, without holding a valid, unrevoked and unsuspended certificate, or without being authorized under some other provision of law, is guilty of a public offense.
- California Corporations Code sections 13401 and 13401.5, Professional CorporationsThe definition of professional services as any type that may lawfully be rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act; the definition of a professional corporation as one engaged in rendering professional services in a single profession except as otherwise authorized; and the definition of a licensed person as any natural person duly licensed to render the same professional services as are or will be rendered by the corporation. Section 13401.5 supplies the named licensees who may be shareholders, officers, directors or professional employees of a medical corporation — including licensed physician assistants, registered nurses, licensed psychologists, licensed pharmacists and licensed physical therapists — subject to the condition that the sum of all shares owned by those licensed persons does not exceed forty-nine percent of the total, and that the number of them owning shares does not exceed the number of persons licensed by the regulating agency.
- California Corporations Code section 13406, Issuance of shares in a professional corporationThat shares of capital stock in a professional corporation may be issued only to a licensed person or to a person licensed to render the same professional services in the jurisdiction or jurisdictions in which the person practices, and that any shares issued in violation of this restriction shall be void. The same subdivision also voids a voting trust, proxy or other arrangement vesting a person other than a shareholder of the same corporation with the authority to exercise a shareholder's voting power.
- California Business and Professions Code section 2415, Fictitious-name permitsThat a physician and surgeon, whether a sole proprietor or in a partnership, group or professional corporation, may practice under a name that would otherwise breach the naming rules only while holding a current fictitious-name permit; that the permit issues only where the licensing body finds the applicants or shareholders hold valid current licenses, the professional practice is wholly owned and entirely controlled by the applicants, and the proposed name is not deceptive, misleading, or confusing; that each permit is accompanied by a notice to be displayed in a location readily visible to patients and staff at each place of business identified in the permit; and the section's own exclusion for licensees who contract with, are employed by, or are on the staff of a clinic licensed under the named chapter of the Health and Safety Code, an approved medical school, or a faculty practice plan connected with that school.
- Revised Code of Washington 18.100.050, Organization of professional service corporations authorized generallyThat an individual or group of individuals duly licensed or otherwise legally authorized to render the same professional services within that state may organize and become a shareholder or shareholders of a professional corporation for pecuniary profit, and that one or more of the legally authorized individuals shall be the incorporators. Also subsection five, under which health care professionals licensed or certified under a list of named chapters may own stock in and render their individual professional services through one professional service corporation and are considered to be rendering the same professional services for that purpose, together with the immediately following clause providing that formation of such a corporation does not restrict the application of the state's uniform disciplinary act or the applicable health care professional statutes, including restrictions on persons practicing a health profession without being appropriately credentialed and persons practicing beyond the scope of their credential.
Frequently asked questions
Can a company own a medical practice?
It depends on the state. The two read here both say no in the ordinary case. California's medical practice act says corporations and other artificial legal entities have no professional rights, privileges, or powers. Its professional corporation law says shares may be issued only to a licensed person, defined as a natural person licensed to render the same services. Washington's professional service corporation act says the shareholders are individuals licensed or otherwise legally authorized to render those services. Neither leaves room for an unlicensed investor to hold the practice. No claim is made here about any other state.
Is a split between a brand and a medical practice a warning sign?
Not on its own, and the law is a large part of why the split exists at all. Where a corporation may not hold professional privileges, a business that wants to sell care at scale has to work with a separately owned practice. The structure is ordinary and it says nothing about the standard of care. What is worth noticing is whether the program names the professional entity, names the clinician who reviewed your case, and says which entity holds your record. A program that describes none of that has not made itself worse at medicine, but it has made itself harder to follow up with.
What is a professional corporation?
It is a corporate form reserved for services that may only be rendered under a license. California defines professional services as any type that may lawfully be rendered only under a license, certification or registration authorized by the state's professions code or two named acts. A professional corporation is then defined as one engaged in rendering professional services, generally in a single profession. The point of the form is that the ownership rules travel with it. Shares go to licensed people, and shares issued in breach of that are void by statute rather than merely irregular.
Can a nurse or a pharmacist own part of a medical corporation?
In California, some can, up to a ceiling. A separate section lists licensees who may be shareholders, officers, directors or professional employees of a medical corporation, including registered nurses, physician assistants, psychologists, pharmacists, physical therapists and others. All shares held by those licensees together must stay at or below forty-nine percent of the total. The number of them holding shares may not exceed the number of persons licensed by the agency that regulates the corporation. The design keeps control inside the profession the corporation belongs to.
Why does the website have a different name from the practice?
Sometimes because they are different companies, and sometimes because the trade name itself is regulated. California requires a physician, group or professional corporation practicing under certain names to hold a fictitious-name permit. The permit issues only where the applicants hold current licenses, the practice is wholly owned and entirely controlled by them, and the name is not deceptive, misleading or confusing. That section names its own exclusions, including licensees who contract with or are employed by a clinic licensed under the state's health and safety code. So a naming difference can be structural, regulatory or both.
Does any of this apply where I live?
That cannot be answered from this article, and it would be wrong to imply otherwise. The rules described here are the statutes of two states, read in September 2026, and they are already different from each other in how they are drafted and what they permit. Other states approach the question in other ways. If the answer matters to a decision you are making, there is a narrower and more useful question. Ask the program which professional entity treats you and in which states it is licensed, and keep the reply.