Starting a Nursing Business in California

Nurse Entrepreneur

Starting a nursing business is an exciting opportunity to create a job that is impactful, fulfilling, and lucrative. Designing your business in a way that is fully compliant with California regulations is critical to a business that is sustainable and protects you and your clients. This article is intended for registered nurses in California. Nurse Practitioners and nurses in other states have very different regulations.

When I started my business formation there was endless misinformation from various sources. 

Be Compliant, Save Money

I spent more than $5,000 working with a CA healthcare attorney for months to get a clear understanding of the regulations we need to work within. It’s complex because there are far more than one or two laws that impact this. 

Be wary of any advice you get for business structures that references one law that “allows” it. I see people spending money on nurse entrepreneur courses that are not specific to California and it can cause a lot of confusion and disappointment to start envisioning your business without the context of California regulations.

I have had so many nurses ask for guidance on this that I’ve gathered the points I found most significant so that I can pass it all along. I recommend all nurse entrepreneurs consult with an attorney and the information shared here does not replace legal counsel.

However, my goal is that with this information you may be able to do a much less expensive one time consult rather than months of work with an attorney. 

Business Structure

A nursing business in California has to be formed as a professional nursing corporation.

California prohibits nurses from working as an LLC or general corporation.  You can have a nursing corporation as one person but there are some documents including bylaws and meeting minutes that have to be maintained.  It can seem daunting but it is doable without spending a bunch of money for a service to set it up for you. 

Key Points

• Business name must include “nursing” or “registered nursing” and include wording or an abbreviation to indicate that it is a corporation such as Co.  Inc.  or P.C. for professional corporation.  For example my full business name is: “Vallation Health Concierge Nursing Co.”

CA Business and Professions Code:  ARTICLE 3.5. Nursing Corporations

• Register with Secretary of State   Select the “Articles of Incorporation- CA Corporation- Professional” The fee was $100 to file this document.  You will also have to file a Statement of Information.  
• Obtain EIN for tax purposes- be sure you are doing this through the IRS.gov website. There is no fee for obtaining an EIN. There are several official looking websites that will charge you to file it— don’t do this! It’s an easy process and I consider the “services” that charge for it to be a complete scam. 
• Determine any local business permits you may need to obtain through your city/county. 

Allowed Services

Evaluation, Case Management, and Supervision

Nursing services provided in home require home health agency licensing except for evaluating individuals to determine care needs, case management, and supervision of personal care services. You can see the full text of this regulation here under section (c). 

• Skilled services include any services provided by a nurse. 
• Even “private duty nursing” is something that requires agency licensing and is legally defined as being “for patients who require individual and continuous nursing care…”.
• A nurse cannot legally employ a physician as a “medical director.” 

Options To Provide Further Services:

1. Obtain home health agency licensing. This requires a minimum of 2 RNs with supervisory experience. One could serve as both Administrator and Director of Patient Care Services and the other RN as backup for both roles. There are several other requirements but these are the two positions that are required for licensing. 
2. Work with a physician under a medical corporation.  A medical corporation has to be owned at least 51% by the physician. Revenue dispersement can be arranged however agreed upon but the controlling ownership belongs to the physician. 
3. Work with an established home health agency. 
4. MSO- (sometimes referred to as a “Friendly PC”)This is not a route I recommend but worth discussing because I’m hearing about a lot of nurses going this route. MSO stands for Management Services Organization. It is a structure that can employ a physician so some are using this as a structure for maintaining ownership of their nursing business. However, by law the MSO can only provide management services and no clinical service or other business functions. To create that shell to have a physician and nurse work under is a way to try to get around the law and definitely a grey area.  An attempt to get around the law is much less likely to hold up to legal scrutiny. The intent of the law matters. Just because you can file the paperwork doesn’t mean it would hold up in court. 

More References

CA Health and Safety Code Chapter 8 Section 1726 (a) “No private or public organization, including, but not limited to, any partnership, corporation, political subdivision of the state, or other governmental agency within the state, shall provide, or arrange for the provision of, skilled nursing services in the home in this state without first obtaining a home health agency license.”

Section 1727 (b) “ ‘Skilled nursing services’ means services provided by a registered nurse or licensed vocational nurse.” 

CHAPTER 8.3. Private Duty Nursing Agencies Section 1742.3 (b) “ “Private duty nursing services” means skilled nursing services provided on a shift basis for patients who require individual and continuous nursing care, and that meets all of the following requirements:…”

I worked with Cohen Healthcare Law Group. 

• I had a great experience with them and they have attorneys with different specialties including the MSO structure if you are considering that.
• Their Legal Strategy Session was $750 and worth every penny— I highly recommend it after you have explored different options on your own and have a good idea of what business structure you would like to do. With the information above you may only need that one session. 
• I do not work for Cohen Healthcare Law Group, do not represent their company, and receive no compensation for referral. This is merely a review that I was satisfied with their service. 

More Support

I will be offering workshop and Q&A sessions on various start-up components. If you’d like to be notified of upcoming topics or have a support request, please sign up here. 

My last piece of advice is to keep moving forward with your drive to start your own business. It may seem daunting especially with the CA regulations, but you can move through it one step at a time. Look at how far you’ve come and get support from others with the drive and passion you want to be working with. 

If you have questions or more information to share on this topic, please comment below. I would be happy to share more details around any of the points in this overview.