Historically, most states have limited the ability of physicians to work as employees of hospitals or other businesses that are not controlled by physician owners. Until recently, this meant that physicians tended to work as solo practitioners, in small groups, or for physician-owned clinics. These businesses employ both physicians and other personnel to aid in the practice of medicine. These persons are protected by the usual business laws governing the employer–employee relationship. In addition, they pose some special legal problems related to medical licensure, the supervision of personnel, and antitrust considerations.

Physicians often employ nonphysician medical personnel, such as nurses, laboratory technicians, physician’s assistants, and respiratory therapists. As employers, the physicians assume both the general employers’ vicarious liability for the acts of its employees, and the special duties of supervision of medical personnel that are imposed by state and federal law. They must be concerned with the appropriate level of delegation for medical care services provided in their offices. Physician–employers must also recognize that while physicians are licensed to perform all medical services, they are often not as skilled as the midlevel practitioners in many routine procedures.

Finally, physicians must compete fairly with other physicians, resisting the temptation to use quality-of-care issues as a cover for anticompetitive activities. This has become a major area of legal conflict as medical practice has become more competitive. The United States has traditionally valued free enterprise and has strict laws governing attempts to restrict competition. Physicians must balance the need to preserve good quality medical care against the policy of allowing the market to regulate business activities.