Non-Profit Health Corporations (NPHC)

How NPHCs are organized and certified.

What is an NPHC?
Types of NPHCs
HCMS Resources

What is an NPHC?

A nonprofit health corporation-organization must meet the required qualifications and be approved and certified by the Texas Medical Board (TMB).

According to the Internal Revenue Service (IRS), corporations that meet the requirements of Internal Revenue Code 501(a) section are exempt from federal income taxation. In addition, charitable contributions made to some section 501(a) organizations by individuals and corporations are deductible under Code section 170.

Types of NPHCs

The TMB rules concerning nonprofit certification are found in Chapter 177 Business Organizations and Agreements.

The Texas Occupations Code, Title 3 Health Professions, Subtitle B Physicians, Chapter 162 Regulation of Practice of Medicine Regulation by Board of Certain Nonprofit Health Corporations further describes the two types of NPHCs certified by the TMB and provides more information about an NPHC's requirements and prohibitions, including not interfering with a physician's professional judgment.

162.001(b) describes one type:

  • Is organized as nonprofit corporation.
  • Is organized for a purpose in the public interest, such as research, education or public health.
  • Must be incorporated and directed by physicians licensed by the TMB.
  • Have as its directors and trustees, persons who are licensed by the TMB and actively engaged in the practice of medicine, without restrictions on their Texas medical license.
  • The administrative side of the corporation may be handled by non-physician officers, but all medical decisions and the overall medical policies of the organization must be made by physicians.

162.001(c) describes the other:

  • Is organized as nonprofit corporation.
  • Be a 501(c)3* and a Federally Qualified Health Center (FQHC), homeless, migrant community center, or
  • Be a hospital district.
  • May employ physicians as an exception to the general rule against corporate practice of medicine.

*Application for 501(c)3 status requires Form 1023 through the IRS be completed.

Initial Certification and Recertification

Both types of NPHCs must keep the TMB informed of changes in their bylaws and boards of directors and must file detailed reports every two years to maintain their certification. Refer to the TMB's licensing section and renewals section for licensing and registration info and more details.

Filing a Complaint

If you feel there are violations or other concerns within a nonprofit health organization, you may file a complaint through the TMB or IRS, as appropriate.

Effective Sept. 1, 2019, the Texas Legislature passed 2019 HB 1532 creating a process at the TMB that employed physicians can use to file complaints against a nonprofit health organization, thus protecting employed physicians' clinical autonomy and independent medical judgment from administrator interference. Under this bill, that amends Section 162 of the Occupations Code, a health organization may not retaliate against a physician who, acting in good faith, files a complaint against the organization, including retaliation such as termination, demotion, discipline, or discrimination. Health organizations also must have in place an anti-retaliation policy. 

TMB complaints against a nonprofit health organization would be directed to the TMB Complaints Department, since these organizations must be incorporated and directed by physicians licensed by the TMB. Section 177.13 of the TMB rules explain the method by which the the public is advised of how to file a complaint. The TMB Notice Concerning Complaints Regarding Non-Profit Health Organizations must be posted, in English and Spanish, in a prominent location at each site of health-care delivery and readily visible to patients or potential patients. See below for a link to file a complaint.

HCMS Resources

Information for Employed Physicians.
See our Physician Career Center for NPHCs in Harris County.