If you're running a healthcare practice in Delaware, you're juggling two separate compliance systems that never quite sync up. Delaware enforces Corporate Practice of Medicine principles through statutory ownership restrictions embedded in professional entity statutes, requiring you to maintain strict control over your practice entities under Delaware Code Title 8, Chapter 6. You're managing continuous coordination between business entity compliance obligations and individual professional licensing requirements under Title 24—creating dual compliance responsibilities that demand constant attention.
Delaware recognizes three distinct professional entity types for healthcare organizations: Professional Corporations under Title 8, Chapter 6, Professional Limited Liability Companies governed by Title 6, Chapter 18, and Limited Liability Partnerships established through Title 6, Chapter 15, Subchapter X. Each entity type offers different governance structures and compliance obligations, with Professional Corporations providing the most comprehensive healthcare-specific statutory framework. You need to understand these distinctions to select appropriate entity structures that align with your practice model while maintaining compliance with both the Delaware Division of Corporations and the Delaware Board of Medical Licensure and Discipline.
If you choose a PC, you get Delaware's most explicit healthcare entity framework under the Professional Service Corporation Act (Title 8, Chapter 6, Sections 601-619). Professional Corporations offer you a structured governance model with clear statutory requirements specifically designed for licensed professional services.
Section 603 defines eligible professions to explicitly include physicians, dentists, veterinarians, and other licensed healthcare professionals. Under Sections 605-608, only licensed professionals can organize, own shares, serve as directors/officers, and provide services—and you remain personally liable for malpractice despite the corporate form.
Professional Corporations must include "Chartered," "Professional Association," or "P.A." in their legal names. The formation filing fee is $109.00 according to the Delaware Division of Corporations Fee Schedule effective August 1, 2024.
The LLC Act (Title 6, Chapter 18) doesn't include healthcare-specific provisions. You'll need to build professional restrictions into your operating agreement and ensure external compliance with Title 24 licensing requirements. Unlike PCs with embedded professional service requirements, PLLCs require you to craft operating agreements that replicate professional service restrictions through external compliance mechanisms.
The PLLC formation fee is $110.00, with an annual tax of $300.00 due June 1st. Unlike corporations, you don't file annual reports and pay a flat tax regardless of capitalization or membership structure.
LLPs operate under Title 6, Chapter 15, Subchapter X. Like PLLCs, the statute has no healthcare-specific provisions, so you'll implement professional compliance through your partnership agreement and Title 24 licensing requirements.
Delaware enforces Corporate Practice of Medicine through ownership restrictions in Title 8, Sections 601-607, preventing non-physician corporate ownership of medical practices. However, Delaware permits specific regulatory exceptions: hospital employment of residents and interns through Institutional Certificates under Delaware Administrative Code § 1700-4.0, and employment of physician assistants under Delaware Code § 1771(h).
A critical ambiguity remains: no statute explicitly addresses hospital employment of fully licensed attending physicians providing clinical care. While Delaware Administrative Code § 3340-6.0 establishes comprehensive credentialing and governance requirements for hospital physicians, suggesting regulatory acceptance of hospital-physician relationships, it doesn't explicitly authorize direct employment. You should consult legal counsel regarding employment structures for attending physicians.
Recent case law (Bakotic v. Bako Diagnostics, 288 A.3d 252) confirms the validity of properly structured physician professional corporations.
Here's what you'll need to get your Delaware healthcare entity off the ground:
Delaware recognizes three distinct professional entity types for healthcare organizations—Professional Corporations (PC), Professional Limited Liability Companies (PLLC), and Limited Liability Partnerships (LLP)—each with different annual compliance obligations based on statutory requirements.
Franchise tax calculation uses two alternative methods for Delaware corporations. The Authorized Shares Method produces a minimum tax of $175.00 and maximum of $200,000, calculated based solely on the number of authorized shares in the Certificate of Incorporation. The Assumed Par Value Capital Method generates a minimum tax of $400.00 and maximum of $250,000, using a complex calculation incorporating gross assets and issued shares. The Delaware Franchise Tax Calculator provides calculation tools.
According to the Delaware Division of Corporations, you must file annual franchise tax reports by March 1st annually per Delaware Franchise Tax Information. The annual report filing fee is $50.00, with franchise tax amounts calculated using two alternative methods. Late filing triggers a flat $200.00 penalty plus 1.5% monthly interest on unpaid tax amounts.
Your Professional LLC faces a flat annual tax of $300 due by June 1st each year. Unlike Professional Corporations, you're not required to file annual reports with the Delaware Division of Corporations. The $300 annual tax is your only recurring state tax obligation. Late payment results in a $200 flat penalty plus 1.5% monthly interest on the unpaid tax amount. You can pay online via credit card (Visa, MasterCard, American Express, Discover) or through ACH debit from checking or savings accounts through the Delaware Division of Corporations Pay Taxes portal.
Professional LLCs benefit from simplified compliance. According to Delaware Alternative Entity Tax Instructions, you pay a flat $300.00 annual tax due June 1st with no annual report filing requirement. This creates substantially less administrative burden compared to corporations, which must file annual franchise tax reports by March 1st with franchise taxes ranging from $175 to $250,000.
Delaware provides no exemptions, reductions, or special treatment for professional service entities. Your healthcare practice pays the same franchise taxes and annual fees as general business corporations and LLCs. Medical, dental, or other licensed healthcare professional practices receive no industry-specific concessions.
Recent healthcare-specific legislation includes the Delaware End of Life Options Act (HB 140, 2025) requiring hospitals and healthcare facilities to establish documented end-of-life policies, the Delaware Pre-Authorization Act (SB 12, 2025) regulating prior authorization processes and establishing decision timeframes, healthcare-associated infection disclosure and reporting requirements (HB 156, 2025), and the Hospital Cost Review Board establishment (HB 350, 2024) creating regulatory oversight for hospital costs and budget review processes.
The Delaware Board of Medical Licensure and Discipline operates under 24 Del. C., Chapter 17. You conduct all licensing activities through DELPROS (Delaware Professional Regulation Online System) at https://delpros.delaware.gov/OH_HomePage according to the Board of Medical Practice Licensure page.
You must complete 40 hours of approved CME every two years, plus one mandatory hour in child abuse/domestic violence recognition. If you prescribe controlled substances, add two more hours for controlled substance-specific training. Enter credits into the DELPROS CE Tracker and attest during your biennial renewal as specified in 24 Del. Admin. Code § 1700-12.0.
Your Delaware physician license expires on March 31 of odd-numbered years, establishing a biennial renewal cycle. You complete renewal online through DELPROS with email notices sent several months before expiration according to the Board's Renewal Page.
Delaware Code Title 8, Chapter 6 requires shareholders to be "duly licensed," but doesn't specify whether inactive licenses qualify. Before allowing ownership changes, you should verify current license status through DELPROS and consult Delaware corporate counsel.
Delaware's narrow definition of "qualified related professional services" creates significant restrictions on multi-discipline ownership. Delaware Code Title 8, Chapter 6 limits qualified related professional services to the practice of medicine by medical doctors (MDs) and doctors of osteopathy (DOs), and podiatry practice. You may co-own with other physicians and podiatrists, but cannot co-own with nurse practitioners, physician assistants, physical therapists, occupational therapists, or other allied health professionals.
If you're seeking multi-discipline practices, you must consider alternative structures including separate professional entities with management service agreements, employment arrangements, or affiliation models preserving separate ownership while allowing collaborative practice.
Can hospitals directly employ physicians in Delaware, or does the Corporate Practice of Medicine doctrine restrict this? What are the specific exceptions?
Yes, with specific exceptions. Delaware Administrative Code Section 1700-4.0 explicitly authorizes hospitals to employ house physicians, interns, and residents through "Institutional Certificates." Delaware Code Section 1771(h) permits hospital employment of physician assistants. While no statute explicitly addresses hospital employment of fully licensed attending physicians providing clinical care, Delaware Administrative Code Section 3340-6.0 establishes comprehensive credentialing requirements suggesting regulatory acceptance when properly structured. You should consult legal counsel for attending physician employment arrangements.
What happens if a physician's medical license lapses while they own shares in a Delaware Professional Corporation?
Title 8, Sections 605-606 require shareholders to be "duly licensed." While the statute doesn't specify what happens when licenses lapse, you should implement buy-sell provisions triggered by license suspension. Physicians can renew within one year of expiration by providing CME proof per 24 Del. Admin. Code Section 1700-7.0.
Do Delaware Professional Corporations need to file annual reports with the Secretary of State and maintain compliance with the Board of Medical Licensure?
Yes. You must file franchise tax reports by March 1 annually ($50 fee, $175-$250,000 tax range depending on calculation method). PLLCs pay $300 flat annual tax by June 1 with no report requirement. You don't file separate reports with the Board of Medical Licensure—entity compliance and licensing compliance remain separate tracks.
What are the key differences between Professional Corporations and Professional LLCs for Delaware medical practices?
PCs operate under Title 8, Chapter 6 with explicit healthcare-specific provisions embedded in the statute. PLLCs operate under the general LLC Act (Title 6, Chapter 18) without healthcare-specific statutory provisions, requiring external compliance through operating agreements. PCs face annual franchise tax reports due March 1st with taxes ranging from $175 to $250,000 plus $50 filing fees. PLLCs pay a flat $300 annual tax due June 1st with no annual report requirement. PCs offer clearer statutory guidance, while PLLCs provide simplified ongoing compliance and governance flexibility.
Can Delaware medical practices have multi-specialty ownership, such as physicians and nurse practitioners owning the same entity together?
No. Delaware law prohibits you from co-owning professional corporations with non-physician healthcare professionals such as nurse practitioners, physician assistants, or allied health professionals. According to Delaware Code Title 8, Chapter 6, professional corporations may only be owned by individuals licensed to render "the same professional service or qualified related professional services"—narrowly limited to the practice of medicine by MDs and DOs, and podiatry practice. You may co-own with other physicians and podiatrists, but cannot co-own with nurse practitioners, physician assistants, physical therapists, or occupational therapists.
Managing Delaware healthcare compliance means tracking two separate deadline systems: corporate filings with the Division of Corporations and professional licensing with the Division of Professional Regulation. Miss either one, and you risk losing good standing or licensure eligibility. You're coordinating March 1 franchise tax deadlines, June 1 LLC tax payments, March 31 biennial license renewals, 40 hours of CME tracking, mandatory training hours, and registered agent maintenance—all while running your practice.
Discern automates the compliance burden. Stop manually tracking multiple deadlines across different systems. Ready to form your Delaware healthcare entity without the compliance anxiety? Book a demo with Discern today and reduce administrative burden while maintaining compliance.
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