Healthcare professionals often join efforts with other professionals, whether it be doctors, dentists, psychiatrists etc. Having a partnership or professional corporation with other professionals drives growth and provides for more time away from the business. Risk is managed so you don’t carry it all and access to capital grows exponentially with each new partner. This means more capital for marketing, equipment and for operating costs. As with anything there is the threat of a business divorce between the partners, however much of this risk can be hedged, if you will, with a good partnership agreement or other governing document for your entity of choice. As lawyers we can provide the partnership agreement however it us up to you to make the business deal. What do we mean by that? You need to read the tea leaves and make sure that the professionals you are partnering with provide the right human capital, as well as, financial capital to make the partnership bloom.
Going into a partnership needs to be done so with eyes wide open. Leave no stone unturned when it comes to due diligence. You are used to dealing with your patient’s health but now it is time to look at the financial health of a practice you are considering joining or perhaps the financial health of other professionals you are considering forming a new partnership with. If your potential partners or the potential partnership has poorly managed their/its finances; heed caution. What hard assets does the practice already have? What is the debt on those assets? Are there issues with vendors? Is the office short staffed? Are key persons on the verge?
As stated above a business divorce is always possible. This is largely due to disagreements over the management of the business. Simple mediation or deadlock provisions can be built in to avoid protracted stagnation or impasse on an issue. This builds value for you as a partner as it provides clarity in uncertain times. This is especially important for the healthcare professional as poor management or decisions can cause harm to your reputation. If you are already part of a practice and don’t have such mechanisms built into your partnership agreement seeking legal advice on how to restructure those documents is wise. If you are already at the point of a major conflict getting legal counsel involved sooner than later will almost always save you big on litigation costs and undue stress in the long run.
You don’t want to your star to fade because a key doctor has decided to part ways with the practice. Although duration can be agreed to in a partnership agreement, much like marriage, it can be broken. Therefore, on a triggering event such as when a key doctor is on the verge, a good non-compete and buy/sell agreement give the remaining practice security in its established geography, as well as, certainty as to what it will have to pay out, if anything
This page is just a primer and gives some of the basic information in forming a partnership. It is not exhaustive! Give one of our experienced healthcare attorneys a call today. We can help you make a better legal decision when it comes to partnering up. Call and speak to a Howell Township Business Lawyer today about your agreement!