Healthcare organizations in Ohio navigate a distinctive compliance landscape shaped by the state's progressive approach to professional entity regulation. Ohio Revised Code Section 4731.226 explicitly permits corporate employment of physicians, creating significant operational flexibility for medical practices and hospitals. However, this flexibility comes with specific formation requirements, biennial reporting obligations, and professional licensing coordination.
Ohio law recognizes four professional entity types: Professional Corporations (PCs), Professional Limited Liability Companies (PLLCs), Professional Associations (PAs), and Limited Liability Partnerships (LLPs), each under distinct statutory frameworks in Ohio Revised Code Chapters 1701, 1706, 1785, and 1776.
Professional Corporations (PCs)
Professional Corporations operate under the general corporation framework of Ohio Revised Code Chapter 1701 combined with professional association provisions in Chapter 1785. All shareholders and directors must hold valid medical licenses under Ohio Revised Code Chapter 4731. Section 4731.226(A)(1) explicitly authorizes licensed physicians to render professional medical services through corporations.
Professional Limited Liability Companies (PLLCs)
PLLCs combine liability protection with professional service restrictions under Ohio Revised Code Chapter 1706, which represents Ohio's adoption of the Revised Uniform Limited Liability Company Act (effective February 11, 2022). Membership must be restricted to licensed healthcare professionals, with Section 4731.226(A)(1) providing the same authorization as professional corporations.
Professional Associations (PAs)
Professional Associations are governed by Ohio Revised Code Chapter 1785, formed "solely for the purpose of rendering professional services" by licensed individuals.
Limited Liability Partnerships (LLPs)
LLPs operate under Ohio Revised Code Chapter 1776 (partnerships formed after January 1, 2009). Partners rendering medical services must hold valid Ohio medical licenses.
Ohio does not enforce the Corporate Practice of Medicine doctrine. The State Medical Board of Ohio explicitly states that "the Corporate Practice of Medicine doctrine no longer exists in Ohio." Corporations, LLCs, partnerships, and professional associations may employ physicians, though corporations cannot control physician clinical judgment regarding patient care.
One exception: Pain management clinics must be owned by licensed physicians (MD or DO) under Ohio Revised Code Section 4729.552(B)(1).
Ohio healthcare entity formation follows a streamlined process with uniform fees across all professional entity types. Contact the State Medical Board at (614) 466-3934 before finalizing formation to clarify any additional requirements. The uniform $99 filing fee across all healthcare professional entity types represents a significant cost advantage compared to many states.
Registered agent maintenance
Every professional entity must maintain a registered agent with an Ohio address to receive service of process and official correspondence. Discern provides registered agent services across all jurisdictions, ensuring continuous compliance.
Biennial report requirements
Ohio does not require annual reports. Instead, Ohio Revised Code Section 1785.06 mandates biennial statements filed every two years within 30 days after June 30 in even-numbered years (July 30 deadline). The next compliance deadline is July 30, 2026. The statement must include names and addresses of all shareholders plus certification that all shareholders are duly licensed.
Non-compliance consequences: If you fail to file, the Ohio Secretary of State will send notice with 30 days to remedy. If not corrected, articles of incorporation are canceled.
Tax obligations
Ohio's franchise tax has been completely eliminated (last collected in 2014). The Commercial Activity Tax (CAT) applies only to businesses exceeding $6 million in taxable gross receipts at 0.26% of receipts above the exclusion.
The State Medical Board of Ohio requires physicians to complete 50 hours of continuing medical education every two-year renewal period. At least 1 hour must address the duty to report misconduct under Ohio Revised Code Section 4731.224.
Ohio law links CME compliance directly to entity ownership eligibility. Physicians who fail to complete required CME cannot renew their license per Ohio Administrative Code Rule 4731-10-02. Because Ohio Revised Code Section 1785.02 requires shareholders to be "licensed or otherwise legally authorized," physicians with lapsed licenses lose statutory eligibility to maintain ownership interests.
Healthcare organizations expanding into Ohio from other states benefit from Ohio's streamlined approach, though foreign registration requirements still apply.
Ohio Revised Code Section 4731.226 authorizes multi-discipline ownership. Different licensed professionals (physicians, dentists, chiropractors, physical therapists) may co-own entities, with each practicing only within their scope. Exception: Pain management clinics must be owned exclusively by licensed physicians.
Can non-physician corporations employ physicians in Ohio? Yes. Ohio does not enforce the Corporate Practice of Medicine doctrine. The State Medical Board confirms the doctrine "no longer exists in Ohio." Ohio Revised Code Section 4731.226 authorizes physicians to work as employees of corporations, LLCs, partnerships, and professional associations. The only exception: pain management clinics must be owned by licensed physicians under ORC Section 4729.552(B)(1).
What happens if a physician shareholder's license lapses? A physician who loses their medical license loses eligibility to maintain ownership. Ohio Revised Code Section 1785.02 requires shareholders to be "licensed or otherwise legally authorized." The most common cause is CME non-compliance—failure to complete 50 hours every two years makes license renewal impossible, resulting in loss of ownership eligibility.
Does Ohio require annual reports for healthcare entities? No. Ohio requires biennial statements every two years, filed by July 30 in even-numbered years. The statement must include shareholder names/addresses plus certification that all shareholders are duly licensed. Failure to file triggers Secretary of State notice with 30 days to remedy before articles are canceled.
Should I form a PC or PLLC? Both offer liability protection under ORC Section 4731.226. PLLCs provide greater operational flexibility with member-managed or manager-managed structures. PCs follow traditional corporate governance with directors and officers. Formation costs are identical ($99), and biennial compliance obligations are the same. Consult legal counsel to evaluate which structure best serves your practice needs.
Managing Ohio healthcare entities means tracking biennial filings by July 30, coordinating registered agents, and monitoring physician CME compliance for ownership eligibility. Even with Ohio's simplified system, compliance demands careful attention.
Discern automates these requirements with deadline tracking for biennial statements, registered agent services across all jurisdictions, and centralized management for multi-entity practices. Reduce entity management time to minutes while maintaining perfect compliance.
Ready to simplify your healthcare entity compliance? Book a demo with Discern today.
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