One of the biggest myths in behavioral health is that you need an MD or a DO to open an IOP/PHP center. You don't. In most states, the owner of a behavioral health facility can be a non-clinician, as long as the program meets professional licensing, facility, and clinical staffing requirements set by the state and payers.
The credentials to open an IOP/PHP center depend on your state, your payer mix, and the level of care you're offering, because each state has its own facility standards and each payer has network participation rules you have to meet. State behavioral health or health departments set minimum staffing, clinical oversight, and environmental standards, while Medicare, Medicaid, and commercial plans layer on their own participation and documentation requirements for IOP and PHP levels of care. Get this wrong and you can burn months stuck in regulatory limbo.oklahoma+1
Here’s what actually matters.
The Owner vs. the Clinical Director: A Critical Distinction
First, separate two roles in your head: the business owner and the clinical director. In most states, the person who owns the IOP/PHP center does not need to hold a clinical license; what matters to regulators is that the licensed entity and clinical leaders meet state rules, not that the equity owner is a clinician. You could be an MBA, a former patient turned entrepreneur, or a licensed clinician who wants to wear both hats.[oklahoma]
The clinical director, on the other hand, almost always needs specific credentials. This is the person responsible for overseeing treatment plans, clinical programming, and staff supervision, and many state Medicaid programs and facility rules explicitly require clinical oversight by independently licensed behavioral health professionals. States typically require your clinical director to hold an independent license—meaning they can practice without supervision or a clinical sponsor.[oklahoma]
This distinction is where many aspiring operators get tripped up. They assume they personally need to be the most credentialed person in the room. You don't. You need to hire that person and make sure their license and experience line up with your state’s regulations and payer expectations.[oklahoma]
What License Does Your Clinical Director Need?
The specific license your clinical director needs varies by state, but the most commonly accepted independent behavioral health credentials include:
Licensed Clinical Social Worker (LCSW) — Frequently recognized in state Medicaid regulations and commercial payer standards as a qualifying independent behavioral health professional for outpatient, IOP, and PHP services.[oklahoma]
Licensed Professional Counselor (LPC) or Licensed Mental Health Counselor (LMHC) — Also widely recognized; titles vary by state (LPC, LMHC, LPCC), but they typically meet “licensed behavioral health professional” criteria for supervising and delivering outpatient-level services.[oklahoma]
Licensed Psychologist (PhD or PsyD) — Universally accepted as an independent practitioner and often preferred for higher-acuity or diagnostic-heavy services, including partial hospitalization. Medicare and many Medicaid programs explicitly recognize psychologists as qualified providers for outpatient and PHP services.[cms]
Licensed Marriage and Family Therapist (LMFT) — Accepted in many states for independent practice; some payers and regulations are more specific about which independent licenses can supervise programs, so you’ll want to confirm that an LMFT satisfies “licensed behavioral health professional” language in your state’s rules.
Psychiatrist (MD/DO) or Psychiatric Nurse Practitioner (PMHNP) — These prescribers often serve as medical directors or supervising physicians for higher levels of care; Medicare PHP rules, for example, require physician direction and supervision, which is typically fulfilled by psychiatrists.cms+1
Across nearly all states, the key requirement is that the clinical director holds an independent, unrestricted license. Provisional or associate-level clinicians generally cannot serve as the clinical director because they practice under supervision and do not meet “independently licensed” definitions in state regulations or payer policies.[oklahoma]
State Licensing and Facility Requirements
Beyond individual credentials, you need to understand the credentials to open an IOP/PHP center at the facility level. Most states require your program to obtain a behavioral health facility or outpatient psychiatric license before you can treat a single patient, which is separate from any individual clinical license.[oklahoma]
What State Licensure Typically Involves
Each state's Department of Health or behavioral health authority manages facility licensing. The process usually requires you to show:
A qualified clinical director and, for PHP in particular, a psychiatrist-led medical team if required by rule.
Physical space that meets life safety, infection control, and accessibility standards set by state health or building codes.
Written policies and procedures covering clinical operations, documentation, emergency response, and patient rights.
A defined treatment model using evidence-based interventions at an intensity that matches IOP/PHP definitions (typically multiple hours per day, several days per week).ncbi.nlm.nih+1
Adequate staffing ratios for the level of care, often spelled out in state Medicaid or licensing regulations for PHP and IOP services.[oklahoma]
Some states have multi-step licensing processes and tie PHP approvals to accreditation or specific staffing (for example, Oklahoma requires PHP programs to be accredited and to employ a medical director who is a licensed psychiatrist). Timelines and fees vary widely by state, but it’s common to incur application fees plus the cost of inspections, required staff trainings, and policy development.[oklahoma]
Accreditation: Not Always Required, But Often Essential
Accreditation from a body like The Joint Commission (TJC) or CARF is not legally required in most states for outpatient behavioral health, but it often becomes “effectively required” because many commercial payers and some Medicaid programs expect or strongly prefer accredited providers. Accreditation is also one of the most common ways facilities demonstrate that they meet recognized standards for safety, clinical quality, and governance.jointcommission+1
If you're planning to accept insurance (and most IOP/PHP programs do, because self-pay alone generally limits access and volume), it’s smart to plan for accreditation from day one. Behavioral health accreditation surveys typically review policies, staffing, performance improvement, and clinical documentation against published standards, and organizations often spend several months preparing before the onsite survey. Some payers will consider contracting while your accreditation is “in process,” but others wait until you’ve received an accreditation decision, so you need to build that into your ramp-up timeline.jointcommission+1
Insurance Credentialing: The Credential Most People Forget
You can have every clinical license and state approval in place, but if you're not credentialed with insurance payers, you can't bill them. Insurance credentialing—sometimes called “paneling”—is the process of getting your program and your individual clinicians approved as in-network providers for each health plan.[oklahoma]
For your facility, payers typically require:
A group NPI (National Provider Identifier) and Tax ID.
A current state facility license (where applicable) showing you’re approved for outpatient, IOP, or PHP services.
Proof of professional and general liability insurance.
Accreditation documentation, if the plan requires accreditation for higher levels of care.jointcommission+1
For individual clinicians, payers commonly ask for:
An individual NPI.
An active, unrestricted state license in a recognized discipline (LCSW, LPC, psychologist, psychiatrist, etc.).
Malpractice coverage.
A current CAQH (Council for Affordable Quality Healthcare) profile, which many health plans use to verify credentials and streamline enrollment.
Credentialing timelines vary by health plan and market, but 60–120 days per payer is a realistic planning range for many outpatient behavioral health providers. Many new operators underestimate this and end up with a fully staffed program and no way to bill insurance for several months.[oklahoma]
Medical Director Requirements for PHP Programs
If you're opening a PHP (Partial Hospitalization Program) specifically, most payers and many state Medicaid programs require a medical director for that level of care. Medicare requires that PHP patients be under the care of a physician who is knowledgeable about the patient and certifies the need for partial hospitalization, which is usually fulfilled by a psychiatrist providing medical leadership.cms+1
The medical director doesn’t necessarily need to be onsite full time; models where a psychiatrist provides scheduled hours for psychiatric evaluations, medication management, and treatment team participation are common in PHPs, as long as coverage requirements (such as availability for consultation and timely evaluation) are met. For IOP programs, a designated medical director is less often spelled out in state regulation, but many payers still expect physician or psychiatric oversight for medication management and higher-risk cases.providerexpress+2
Even when not strictly required by law, having a psychiatrist or PMHNP associated with your program can strengthen your clinical model and your insurance credentialing applications, especially if you are managing complex comorbidities.
Do You Need a Business License or Corporate Structure?
Yes—but this is the straightforward part. You’ll need a standard business entity (often an LLC or corporation), a business license from your local jurisdiction if required, an EIN from the IRS, and appropriate liability coverage for the practice; these are the same basic business elements any healthcare practice needs to operate.
In some states, professional practice rules require clinical entities providing licensed health services to be structured as professional corporations (PCs) or professional limited liability companies (PLLCs) owned by licensed professionals, while non-clinician investors provide management or administrative services through separate entities. These “management services organization” or similar models are widely used in healthcare to comply with corporate practice of medicine restrictions while allowing non-clinicians to support operations and growth.[oklahoma]
Because entity and ownership rules can differ significantly by state and discipline, most operators consult healthcare counsel in their state before filing formation documents or signing contracts.
What About DEA Registration and Prescribing Authority?
If your program will prescribe or administer controlled medications—which is common in PHP and in some higher-acuity outpatient programs—you’ll need at least one practitioner with a DEA registration and state authority to prescribe controlled substances. That typically means a psychiatrist, psychiatric nurse practitioner, or, in some states, a physician assistant or other advanced practice professional practicing within their scope and under any required supervision.[cms]
When medications are stored or administered on-site, the facility itself may also need a DEA registration tied to the location, in addition to individual prescriber registrations, depending on how medications are procured and handled. For IOP programs that do not store or administer medications in the facility, DEA registration for the organization is generally not required, but you still want clear relationships with prescribers to coordinate care, even if they operate under their own licenses and registrations.[cms]
The Bottom Line on Credentials
The credentials to open an IOP/PHP center break down into four layers:
Personal qualifications of your leadership team – Owners do not usually need clinical licenses, but your clinical director and medical leadership do need the right independent credentials.
State facility licensure – Your program has to meet state facility and staffing standards for outpatient behavioral health, IOP, or PHP before you admit patients.[oklahoma]
Accreditation for payer access – Many payers expect or require accreditation from organizations like The Joint Commission or CARF, especially for higher levels of care.jointcommission+1
Insurance credentialing for revenue – You and your clinicians must be enrolled and credentialed with each payer’s network before you can bill them for services, and that process often takes several months.[oklahoma]
You personally don't need to be a doctor, a psychologist, or even a licensed clinician—but you absolutely need the right people in the right roles and a plan for working through each of these layers in order. Getting one piece wrong doesn’t just slow you down; it can stall your entire launch.
FAQ
Can I open an IOP without being a licensed therapist?
In many states, yes: the business owner of an IOP program is not required to hold a clinical license, as long as the facility and clinical staff meet state behavioral health standards. You will still need a licensed clinical director and independently licensed clinicians who satisfy your state’s and payers’ qualifications for delivering and supervising IOP services.[oklahoma]
What is the difference between IOP and PHP licensing requirements?
PHP programs usually have stricter requirements than IOP for medical oversight, staffing intensity, and documentation, and Medicare PHP coverage rules specifically require physician involvement and certification of medical necessity. IOP programs may not always require a medical director in state regulations, but many payers still expect psychiatric oversight for higher-acuity patients, and both IOP and PHP must comply with state facility licensure rules for their respective levels of care.cms+2
How long does it take to get licensed and credentialed to open an IOP/PHP?
State facility licensure can range from a few months to longer depending on your state’s review timelines, survey schedules, and whether you need to complete accreditation first. Insurance credentialing and contracting often adds another 60–120 days per payer, so many operators plan on several months of ramp-up before they can bill across all targeted health plans.jointcommission+1
ForwardCare Can Help You Navigate the Process
ForwardCare is a behavioral health MSO (Management Services Organization) that partners with clinicians, sober living operators, healthcare entrepreneurs, and investors to launch and scale behavioral health treatment centers. We handle the business side — licensing support, insurance credentialing, billing, compliance, and operational infrastructure — so our partners can focus on growth and clinical quality.
If you’re serious about opening or expanding a behavioral health treatment center but don’t want to navigate the business side alone, ForwardCare may be worth a conversation.