Functional Medicine & Multidisciplinary Clinic Legal Issues

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Hello, this is Michael H. Cohen, I’m a healthcare and FDA attorney and the founder of and Michael H. Cohen Law Group. I’m going to talk today about multidisciplinary clinical healthcare practice. This is an issue that comes up again and again among my own clients. Typically you’ll have an MD or DL, a physician, collaborating with let’s say a chiropractor, an NP or some other kind of healthcare professional.

Now the variations on the multidisciplinary practice are, I wouldn’t say endless, but there are a lot of permutations there. Yesterday for example, my client was a nurse practitioner who wants to set up a clinic to deal with functional medicine and wellness. At the same time I’m dealing with a medical doctor client on the other hand who has gotten involved with the chiropractic practice, and instead of starting the practice is seeking to extricate himself from practice.

Now, one thing to remember is that we can think about the world as having two different slices.

One is the clinical practice itself on one end and the other is the business side.

The business side, we typically put under a management company or what we call an MSO, a Management Services Organization. If you’d like to learn more about MSOs you could go to my website, look on the blog and you can find tons of articles on MSO’s, I go into a lot of drill down depth on the MSOs and what they can accomplish.

The key point to remember is that the clinical practice is very different from the business side. So for example, let’s go back to the nurse practitioner client who wants to establish more than a practice. She wants to break out of her day job and start a clinic, and she wants to create a wellness clinic, a holistic health clinic, bring in functional medicine, have a collaborating physician, have chiropractors, have a massage therapy, acupuncture, Reiki, other practitioners. So what she really wants to do is branch out if her role as an NP collaborating with an MD into wearing a second hat, which is going to be the hat of the MSO. And the MSO is going to do essentially all of the business things that otherwise wouldn’t be done inside the medical practice, inside the chiropractic practice.

The MSO model is really the way for her to go because this allows her to put on a business hat as a secondary role to her clinical path. She had a lot of questions like most practitioners, most entrepreneurs starting this kind of venture, what goes under the professional corporation? And what goes under the MSO? Of course those are questions that I could help you out with in a legal strategy session. The key point here to remember is that, those are again two different boxes, the clinical side and the business side. So typically practitioners on the clinical side stay within the clinical entity, whereas practitioners on the business side, not practitioners, but service providers on the business side can be under the MSO.

Okay, let’s leave the complexity there, let me just say this, let’s turn to the chiropractor who was creating or got involved in a multidisciplinary practice that was initiated, sponsored by the chiropractors. You’ll see this a lot, you have people, I have clients, I have both physician clients, chiropractic clients, entrepreneur, non-clinician ventures who are creating organizations, telemedicine companies. People creating something that draws in a doctor. So for example, you have chiropractors that are trying to add a stem cell practice to their existing practice, they need a medical doctor or DL do this.

What happen in this situation is that the MD got very immersed in the chiropractic web and the chiropractors did create an MSO. So this created a compliance issue really for both of them, because without an MSO, it turns into what’s called the corporate practice of medicine problem. Not to get too technical here again, you could read all about corporate practice of medicine on Go to the blog, lots of articles and corporate practices of medicine. The bottom line is that the chiropractors can hire or be supervising or be over an MD. The MD is really in his or her own separate clinical box.

Now with an MSO, the MSO could manage and market the medical practice. In fact, he can manage and market the entire system and presumably brand everything under that MSO name.

I had a third client yesterday, this one was an MSO and what they wanted to do was figure out how to drive the brand, drive the value, drive the product, drive the revenues in the MSO, given that in the eyes of the law, in a sense, the MDDR was top dog. And then you’ve got the other providers and then you sort of have the entrepreneur kind of not even considered or maybe at the bottom, but from a branding marketing perspective, from a revenue perspective, the entrepreneur is all important here because that’s what’s really driving the value, driving the revenue and driving the brand forward.

So the MSO is a really good tool.

The point I want to make about the physician who got drawn into the practice with the chiropractors is that, without an MSO everything was murky, nobody knew whose revenues or whom, there’s a lot of ongoing confusion during the process of disentangling about who billed under who’s name, will there be an accounting. None of this was ever provided for us.

So a couple of takeaways here, if you’re a clinician or an entrepreneur setting up a multidisciplinary practice, look to the MSO model, number one.

Number two, if you’re a clinician specifically getting involved, make sure that you have representation by an attorney and make sure that all of the critical paper work is something that you very carefully review.

Number three, make sure you have paperwork, and make sure you have legal documentation. Never, never go into a deal without having proper legal documentation and legal review. Have an ounce of prevention or pay the pound of cure later. It’s really important because at the outset of the relationship everybody is friendly, everybody is collaborative. This is going to be the greatest healing center in the world, patients are going to benefit, the practitioners are going to smile and give each other the love and the high fives and practice in a very interdisciplinary way. And the brand is going to succeed and everyone is going to be happy.

Couple of things can happen, the thing might not take off, there could be losses then who’s going to be accountable? Who’s accountable for what? Who’s paying for what? Who’s charging for what? This has not only business implications but also compliance implications. The MSO must charge at fair market value and this has to be documented and justified and accounted for.

Another thing that could happen is the brand could be wildly successful, what happens then? Now millions of dollars are made, the brand expands to a second location, then it goes across states. Now who’s in control? Who can terminate whom? Who is actually riding the tiger of the venture? So these are all things that legal counsel can very carefully help you craft, strategize, think about, work through at the outset. If you work them out, if it becomes time for parting of the ways either because the venture didn’t succeed as people hope or potentially because it’s seated beyond anybody’s wildest dreams, then what do you have to rely upon? Do you have all the goodwill that went into the relationship five years ago, two years ago, five months ago, five minutes ago? Let’s be optimistic here, five years ago to rely on. Or do you go back to those contracts that were carefully drafted at the beginning?

I have clients that come to me with boilerplate contract that somebody drafted. This guy wrote a blog post on multidisciplinary healthcare practices or something and suddenly became the expert. They call themselves a healthcare lawyer and maybe they are, maybe they aren’t, anyway, they have these documents and take a careful look. If you’re going to buy an automobile, you’re going to kick the tires, you’re going to look under the hood, you’re going to get a mechanic. If you’re going to enter a venture that is going to be your breadwinning vehicle for you and for your family. If you’re going to put your professional license at risk when you get into a venture, if you’re going to associate, affiliate with other healthcare practitioners, if you’re going to get investment dollars, and then you’ve got of course all the potential 10 to five liability securities law liability for representations.

If you’re going to hire staff, if you’re going to operate any kind of venture, get the expertise that you need to develop your systems, your procedures, your business, you won’t regret it if and when things take a different turn than what you expected or even if they thrive, you’re going to want to have that wind at your back.

You can want to have that legal support.

And again, if you need other resources, if you want to drill down on anything I’ve said during this broadcast, please go to my website Go to the blog, tons of resources and if you want to reach out, we’d love to hear from you.


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