3 Legal Tips for Physicians Starting a Business
In today’s video, I’ll give you three legal tips for physicians forming a business.
Hi, I’m Michael H. Cohen president and founder of Cohen Healthcare Law Group.
First, it matters what kind of business you’re forming. If you’re looking to join with other clinicians, then you’ll probably have a professional medical corporation or a PLLC.
Now, there are legal rules about who can be a shareholder in that company. You will have obligations to your fellow shareholders. And you’ll want to work out ahead of times what you can do to get rid of those same shareholders, if for some reason somewhere down the line your relationship with them sours over time.
All of this requires clear thinking from the outset of the venture. To give you an example, we represented a medical doctor who got into a dispute with her physician assistant, PA. The PA was really terrific in marketing and set up all the operational and legal details of the practice. Year one, year two, they made a lot of money together. Now, flash forward three years and they can’t stand each other. The PA says she’s the one who brought in the business. She has seen all the patients. She does all the work. In fact, she starts siphoning patients away to a side practice plus she controls the electronic medical record. In fact, she freezes the medical doctor out of the EMR. I know, hard to believe, but true. It’s just one scenario. The physician didn’t think through the worst case scenarios at the outset, and the legal documents she signed gave all the control to the PA.
Even worse, once the PA went rogue, the physician then had to worry about the prospect of getting charged for aiding and abetting unlicensed practice of medicine by the PA which is a crime. So, to make a very long story short, after a lot of work, we finally got the physician out of this nightmare situation. However, it would have been much better for her to get formal legal advice ahead of time, at the beginning.
Now second, along these lines, whenever you form a business with someone else, get your own lawyer. These days when we have so many co-founders, so many healthcare start-ups, people love to share lawyers, they love to talk about their partners, but being a partner it comes with legal consequences. In a nutshell, partners share responsibility for one another’s debts, contracts and much more.
So, you don’t necessarily want a partner. You might have a shareholder, or you might have an employment agreement, or you might have a consulting agreement, or some other type of legal arrangement. No matter how you position the relationship, get your own lawyer. Don’t rely on the other person’s lawyer or even the company lawyer, you have your own interest to protect. Once again, it’s all well and good when the relationship is healthy, young and glowing, but once people make a lot of money, or let’s say, on the opposite side they run into trouble, well, then it’s best to have gotten your own independent legal advice at the beginning.
Third, in our firm we frequently invoke, we recommend a business structure, we call the MSO or Management Services Organization.
In this structure typically you have one business entity, the professional medical corporation that provides the clinical services, and the other entity, the MSO that provides management and marketing services. The MSO structure helps people separate clinical and business lines of activity. Now, these are just three tips to introduce you to the way we tend to look at physician run business opportunities, and some of the legal strategies and solutions we tend to provide to such businesses. Of course, this is a really quick snapshot and there are many other challenges and many other opportunities that you might face. For example, telemedicine is exploding, and it’s one of our areas of expertise. It’s helping physicians and chiropractors and companies navigate the changing legal environment for telehealth.
As part of this, we also advise on health coaching, because many physicians want to work in States where they’re not licensed. And so, they want to call themselves health coaches. We also work with practices, pioneering and integrative medicine, functional medicine, and many cutting edge diagnostic and therapeutic approaches. We draft consent forms, work on HIPAA, we advise on anti-kickback and fee-splitting, and we tackle a myriad of other legal concerns. Now, some of these are going to be familiar, others are very arcane, but that’s part of what makes healthcare law so fascinating to navigate. It’s really a whole separate world. We love entrepreneurial clients, notwithstanding the sometimes byzantine nature of the rules. And we look to give practical advice.
Thanks for watching. Here’s to the success of your healthcare venture. We look forward to speaking with you soon.
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Impressive credentials are only overshadowed by their clear awareness of practical strategies to help Physicians navigate modern healthcare and achieve successful outcomes.