Creating or joining a partnership or business with another doctor or medical professional can be a great way to expand your practice, pool resources, and increase revenue. However, before entering a partnership, there are several important things that you should know and consider. Here are some of the key factors to keep in mind:
- Compatibility: You and your potential partner should have compatible personalities, work ethics, and communication styles. It is important to be able to work together effectively and have a shared vision for your practice.
- Roles and Responsibilities: You and your partner should clearly define your roles and responsibilities, as well as how decisions will be made. This includes financial responsibilities, management duties, and clinical responsibilities.
- Finances: You should have a clear understanding of your partner’s financial situation, including their credit score, debts, assets, and liabilities. It is important to have a solid financial plan in place, including how profits and losses will be divided, how expenses will be managed, and how taxes will be handled.
- Legal Structure: You should consider the legal structure of your partnership, such as whether it will be a limited liability company, a corporation, a general partnership, or limited partnership. Each structure has its own advantages and disadvantages, so it is important to seek legal advice before planning.
- Exit Strategy: You should have a clear exit strategy in place in case the partnership does not work out. This should include how the partnership will be dissolved, how assets and liabilities will be divided, and how patient care will be managed during the transition.
- Insurance: You should ensure that you and your partner have adequate insurance coverage, including malpractice insurance and disability insurance. It is important to review the policies carefully to ensure that they provide adequate coverage for your practice.
- Contracts: You should have a written partnership agreement in place that outlines all the terms and conditions of your partnership. This should be reviewed and approved by legal counsel before signing.
Importantly, these decisions should be memorialized in writing in either the Operating Agreement, the Corporate Bylaws, or the Partnership Agreement, depending on the type of business relationship you are joining.
While partnering with others can be beneficial, it is important to carefully consider these factors to ensure the business arrangement created is enforceable, mutually beneficial, and has a strong foundation for success.
As a former owner of medical practices with his physician wife, business attorney David Trevett understands the importance of creating a sound business organization that allows your medical career to flourish. If you have questions about forming a new entity, or joining an existing one, including the ideal legal structure and the documentation to support that structure, contact David and let him guide you through the successful navigation of the complexities of a forming the ideal legal entity to protect your interests.
