If you're establishing a medical practice in Indiana, you'll quickly discover that healthcare entity formation creates what one compliance officer called "existential dread." You can't just file Articles of Incorporation with the Secretary of State like a regular business. Instead, you'll navigate a mandatory two-phase process requiring Indiana Professional Licensing Agency pre-approval before you can even submit your formation documents, and that's just the beginning.
Indiana enforces a strict Corporate Practice of Medicine (CPOM) doctrine per Indiana Code § 25-22.5-8-1, and your professional corporation requires mandatory pre-approval from the Indiana Professional Licensing Agency before Secretary of State filing.
Choosing the wrong entity type creates compliance headaches that can take months to unravel. Indiana recognizes two primary professional entity types for healthcare organizations: Professional Corporations (PCs) under Indiana Code Title 23, Article 1.5 and Professional Limited Liability Companies (PLLCs) under Indiana Code Title 23, Article 18. Notably, Indiana does not recognize "Professional Associations" (PA) as a distinct statutory entity type. This is a common source of confusion if you're familiar with other states' terminology.
Professional Corporations represent the most clearly defined statutory entity type for your healthcare practice. Indiana Code § 23-1.5-1-8 defines a "health care professional" as an individual licensed, certified, or registered by a board as defined in IC 25-1-9-1 (excluding veterinarians).
Indiana Code § 23-1.5-2-3 lets you and other health care professionals form a professional corporation to render services that may legally be performed only by health care professionals. You must have at least one shareholder licensed in Indiana, though other shareholders may hold licenses from other states for the same professional services.
Indiana strictly controls who can run your Professional Corporation. Indiana Code § 23-1.5-2-4 mandates that all your directors and all officers (except the secretary and treasurer) must be licensed professionals in the relevant healthcare field. This ensures professional control over medical decision-making while preventing unauthorized corporate practice of medicine.
A critical naming restriction applies to your healthcare Professional Corporation. Indiana Code § 23-0.5-3-2 permits the use of "medical" in your professional corporation name only when all shareholders are physicians licensed under Indiana Code IC 25-22.5. If you're a dentist, psychologist, or physical therapist, you cannot legally use "medical" in your entity name.
Professional Limited Liability Companies operate under Indiana's general LLC statutes with specific provisions for professional services. Indiana Code § 23-18-2-2 establishes that your LLC has the power to provide professional services if authorized by the licensing authority.
The licensing authority maintains full regulatory control through Indiana Code § 23-18-2-3, which confirms that licensing authorities retain full regulatory authority over your PLLC and cross-references Professional Corporation statutes. You form your PLLC by filing articles of organization with the Secretary of State per Indiana Code § 23-18-2-4.
Importantly, Indiana Code § 23-18-3-4 preserves healthcare malpractice and professional liability standards for your PLLC, ensuring that the LLC structure doesn't diminish professional accountability.
Indiana explicitly enforces the Corporate Practice of Medicine doctrine through statutory law. Indiana Code § 25-22.5-8-1 prohibits unlicensed persons or entities from practicing medicine, establishing fee-splitting arrangements between physicians and non-licensed entities, or engaging in medical practice without proper licensure.
Indiana law creates two explicit statutory exceptions to the CPOM prohibition. First, Indiana Code § 16-21-2-9 permits hospitals licensed under IC 16-21 to employ physicians and provide healthcare services through delegation to licensed practitioners. Second, Indiana Code § 27-13-4-1 authorizes properly licensed Health Maintenance Organizations to contract with or employ physicians.
If you're operating outside these statutory exceptions, your medical practice must be structured as a professional corporation with 100% physician ownership, where all shareholders hold required professional licenses.
Recent legislation reinforces Indiana's commitment to practitioner ownership. House Enrolled Act 1666 (enacted May 6, 2025) creates new ownership reporting requirements with staggered effective dates: annual ownership reporting for hospitals, physician groups, health insurers, third-party administrators, and pharmacy benefit managers became effective July 1, 2025, while biannual reporting for other healthcare entities begins January 1, 2026. The law includes a critical exemption. If licensed Indiana practitioners who actively provide care majority-own your practice, you're exempt from certain reporting requirements. This exemption strengthens the regulatory distinction between professional and corporate ownership structures.
This is where most healthcare professionals get stuck, and it's completely understandable. The Indiana Professional Licensing Agency pre-approval requirement catches people off guard because it's invisible to anyone who's formed a business entity in another state. You face a mandatory two-phase formation process that distinguishes your healthcare entity from general business entities. You must first obtain Indiana Professional Licensing Agency pre-approval before filing Articles of Incorporation with the Secretary of State.
This is the most critical procedural requirement that distinguishes your healthcare entity formation from general business entity formation in Indiana.
If you're forming a Professional Corporation, you must obtain Indiana Professional Licensing Agency (IPLA) pre-approval before filing with the Secretary of State. This mandatory two-step process is established by the Professional Corporation Code References - IPLA.
Pre-Approval Requirements and Filing Sequence:
Your healthcare professional entity must continuously maintain a registered agent with a physical Indiana street address per Indiana Code § 23-0.5-4-3. The Indiana Secretary of State explicitly prohibits P.O. boxes, virtual offices, and mail drops. Your registered agent must be available during normal business hours to receive service of process and official correspondence.
Eligible registered agents include individual residents at least 18 years old with a physical Indiana address, general partnerships with Indiana business offices, domestic filing entities with Indiana business offices, or registered foreign entities with Indiana business offices. A critical limitation: your business entity itself cannot serve as its own registered agent. However, you or your individual business officers may serve as the registered agent if you meet the statutory eligibility requirements.
Indiana requires biennial (not annual) Business Entity Reports for all your professional entities. According to the INBiz Business Entity Reports portal, your reports are due during the anniversary month of your entity's formation, with the first report due two years after formation, and subsequent reports required every two years thereafter.
Failure to file results in administrative dissolution for domestic entities or revocation of authority for foreign entities. Administrative dissolution terminates your entity's legal existence, eliminates liability protections, and potentially voids contracts. Indiana doesn't impose monetary late filing penalties; instead, failure to file results in administrative dissolution, which is a consequence far more severe than fee assessments.
Your healthcare professional corporation must pay a $20 renewal fee to IPLA for periodic renewal of your professional corporation registration, according to IPLA Professional Corporation Code References. This requirement operates independently of the biennial Business Entity Report filed with the Secretary of State.
Indiana doesn't impose franchise taxes or privilege taxes on your professional corporation or PLLC. This saves you money compared to states like California, Delaware, or New York that impose substantial annual franchise taxes. You benefit from this streamlined tax structure, which eliminates an entire category of compliance obligations common in other jurisdictions.
House Enrolled Act 1666, enacted May 6, 2025, creates the most significant compliance changes for healthcare entities in recent years. Effective May 6, 2025, you must notify the Indiana Attorney General at least 90 days before merging with or acquiring another healthcare entity. The previously applicable $10 million asset threshold was removed for certain provisions, substantially expanding the scope of transactions subject to review.
Beginning July 1, 2025, if your entity is a hospital, physician group, health insurer, third-party administrator, or pharmacy benefit manager, you must file annual ownership reports disclosing entities or individuals owning 5% or more of your healthcare entity, controlling interests, and private equity partners. If you operate a clinical laboratory, imaging center, or other healthcare entity not included in Phase 1, you must file biannual ownership reports beginning January 1, 2026. Notably, if licensed Indiana practitioners who actively provide care majority-own your practice, you're exempt from certain reporting requirements.
Senate Enrolled Act 475, enacted May 6, 2025 with a July 1, 2025 effective date, expands the 2023 prohibition on noncompete agreements to include all physicians (not limited to primary care) when employed by hospitals or hospital-affiliated entities. This expansion significantly affects employment agreement structures within hospital-affiliated healthcare professional entities.
The Indiana Medical Licensing Board, operating under the Indiana Professional Licensing Agency, administers physician licensing with specific requirements that directly affect your entity ownership and operations.
Continuing Medical Education: Physicians in Indiana have no general continuing medical education requirement for license renewal. However, targeted mandatory CME requirements do exist. If you hold a Controlled Substance Registration who prescribes controlled substances, you must complete 2 hours of CME on opioid prescribing and opioid abuse every two years. Additionally, all DEA-registered physicians must complete an 8-hour MATE Act training course on treating and managing patients with opioid or other substance use disorders as a one-time federal requirement.
License Renewal Cycle: Your medical licenses must be renewed biennially on October 31 of odd-numbered years (October 31, 2025, October 31, 2027, and so on). According to Indiana Code § 25-22-5-6-1, renewal fees are $200 for active licenses and $100 for inactive licenses, with a $50 late renewal penalty applicable after the October 31 deadline.
The interaction between license status and entity ownership creates serious problems if you're not paying attention. If your physician's license becomes inactive under Indiana Code § 25-22.5-6-1, you cannot maintain an office or provide medical services, creating immediate operational and governance consequences. You must monitor the license status of all your shareholders, directors, and officers to ensure continuous compliance with Indiana's professional corporation requirements and Corporate Practice of Medicine restrictions.
Indiana law doesn't contain explicit statutes that specifically authorize or prohibit multi-discipline co-ownership among different healthcare professionals. If you're considering multi-discipline ownership arrangements, consult with relevant professional licensing boards and Indiana-licensed healthcare attorneys to ensure compliance with Corporate Practice of Medicine doctrine requirements.
Yes. Hospitals licensed under Indiana Code § 16-21-2-9 are explicitly permitted to employ physicians as a statutory exception to Indiana's Corporate Practice of Medicine doctrine.
Indiana Code § 25-22-5-6-1 explicitly states that physicians holding inactive licenses "may not maintain an office," cannot practice medicine, and cannot hold themselves out as practicing physicians. The statutory prohibition on "maintaining an office" combined with CPOM requirements creates substantial operational barriers. You should establish internal monitoring systems to track shareholder license renewal dates and implement contingency plans for ownership restructuring if a shareholder's license becomes inactive or suspended.
No. Indiana requires biennial (every two years) Business Entity Reports, not annual reports. According to the INBiz Business Entity Reports portal, your reports are due during the anniversary month of your entity's formation, with the first report due two years after formation and subsequent reports every two years thereafter. The online filing fee is $32. Additionally, your healthcare professional corporation must pay a separate $20 renewal fee to IPLA for periodic renewal of your professional corporation registration. No franchise or privilege taxes apply to your healthcare professional entity in Indiana.
Professional Corporations have a clearly defined dual-regulatory framework with explicit fees totaling $168-$170 ($98-$100 Secretary of State base filing fee plus $20 enhanced access fee plus $25 IPLA registration fee plus $25 IPLA issuance fee), mandatory pre-approval requirements, and established governance structures. Professional LLCs operate under general LLC statutes with a $100 base formation fee plus $20 enhanced access fee, but official documentation doesn't establish comparable IPLA registration requirements, fees, or pre-approval processes for PLLCs. Professional Corporations provide greater regulatory clarity for your healthcare practice. The choice between PC and PLLC structures should be made in consultation with Indiana-licensed healthcare attorneys and tax advisors.
House Enrolled Act 1666 (enacted May 6, 2025) creates staggered implementation of ownership transparency requirements. Beginning July 1, 2025, hospitals, physician groups, health insurers, third-party administrators, and pharmacy benefit managers must file annual ownership reports. Starting January 1, 2026, clinical laboratories, imaging centers, and other healthcare entities must file biannual ownership reports. The critical exemption: if licensed Indiana practitioners who are actively providing care majority-own your practice, you're exempt from these ownership reporting requirements, reinforcing traditional Corporate Practice of Medicine principles while addressing private equity involvement in healthcare.
Managing Indiana's dual-regulatory framework for healthcare professional entities through mandatory IPLA pre-approvals, biennial filing deadlines, and new ownership reporting requirements creates a substantial administrative burden for your healthcare organization. From the mandatory two-phase formation process to ongoing compliance across multiple state agencies, you face complexity that extends far beyond standard business operations.
Discern provides comprehensive entity management solutions designed for healthcare organizations dealing with complex regulatory environments. Our digital platform automates compliance filings, maintains registered agent services across Indiana and multi-jurisdictional locations, and provides real-time visibility into your compliance status, eliminating the uncertainty that creates operational stress.
Ready to simplify your healthcare entity compliance? Book a demo with Discern today and see how we can reduce your administrative burden while ensuring your Indiana entities stay in good standing.
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