The health care industry has been undergoing major changes in recent years. In response to the pressures that are causing these changes, many doctors are forming partnerships or merging existing practice groups. These arrangements can help physicians by enabling them to share expenses and take on additional patients. However, too often, physicians in Pennsylvania fail to consult an experienced Philadelphia health care lawyer, which can complicate partnerships in the long-term. Planning in advance can help avoid costly litigation and crippling financial loss in the future. It is critical that the partnership agreement is set forth in writing, and that the essential terms are clearly defined. All partnership agreements should also include a detailed Buy-Sell Agreement that addresses all possible scenarios.
Listed below are some common problems physicians face when forming a partnership.
- The agreement fails to detail the method for dissolution when a partner wants to exit the practice. If the dissolution terms are not spelled out expressly, problems can arise if a partner retires, passes away, has a business dispute, or becomes disabled, among other scenarios.
- The agreement does not address how new equity partners are to be added.
- The agreement does not address the effect the addition of new equity partners will have on the existing partners’ shares.
- There is no part of the agreement covering conflicts among partners, with no mechanism for the distribution of equipment, staff, or shared patients.
- One or more existing partners refuses to allow addition of a new partner.
- There is no mechanism for valuing the practice group if a partner wants to be bought out. This should be included in all Buy-Sell Agreements. In medical practices, accounts receivable and equipment represent a significant portion of the assets, and are easily quantified. However, the earning power of different partners can be much harder to value.
- The agreement does not cover removal of a partner who engages in unethical conduct, or becomes incompetent.
- The partners wish to merge with another practice group.
- A non-partner doctor wants to leave the group, but their employment agreement is silent or ambiguous with respect to payment of the malpractice insurance tail.
Philadelphia Health Care Lawyers at Sidney L. Gold & Associates, P.C. Help Physicians Prevent and Navigate Through Partnership Disputes
The experienced Philadelphia health care lawyers at Sidney L. Gold & Associates, P.C. are highly regarded lawyers for doctors. We have extensive experience crafting strong partnership and merger agreements, as well as helping partners resolve disagreements if a solid agreement is not in place to address conflicts or concerns. To schedule a free consultation, call us at 215-569-1999 or contact us online today.