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Doctors who are considering starting a new practice should begin planning months in advance of a target date. Not only is a healthcare practice subject to regular business laws, but this type of business must also comply with countless governing laws and regulations for providing medical services.
With stringent regulations and enforcement being the order of the day, putting serious thought into what is required before opening the doors will help you avoid problems as time passes.
Choosing an Entity
The foundation begins with choosing an entity structure for your practice. Every step afterward will depend on selecting the best entity. Generally, there are several options for starting a medical practice:
• General partnership
• Professional limited liability partnership (LLP)
• Professional limited liability company (LLC)
• Professional service corporation (PC)
• Sole proprietorship
Liability Considerations When Forming Your Practice
The type of entity you choose does not change your personal liability for neglectful or wrongful acts that may occur by you or someone under your direct supervision. However, some instances that raise liability issues during the course of business does effect which entity you choose.
For example, a corporate or limited liability entity shields you from personal liability when wrongful act occurs by another provider in the practice. With a general partnership or sole proprietorship, you will not have that same protection. The same applies if someone falls or gets injured on the premises separate from receiving medical treatment.
There are specific laws and processes that apply to each type of entity. Compliance is absolutely necessary if you want to start your practice properly. Taxes and the form of organization also applies to which entity you select and should closely align with what you want to accomplish.
Governing Agreements for Your Medical Practice
Once you have chosen the entity, you will need to begin drawing up the governing agreement. The purpose of this document is to detail key provisions for how your medical practice is run. Provisions in the agreement will cover:
• Control and management
• Profit and loss allocations
• Transfer of interest restrictions
• Rules on how a physician may either choose or be forced to leave the practice
• Professional activities unrelated to the practice such as moonlighting
This agreement must take into account the rules, regulations and laws that govern physician conduct.
Contracting with Other Healthcare Professionals
Contracts with other physicians, hiring employees and renting space are the final steps towards opening your practice. Disclosures, changes in credentialing, inquiries and any other situation that will affect the provider’s ability to perform certain duties must be taken into account.
Failing to make reasonable efforts to guard your medical practice could result in allegations, inquiries and the eventual prosecution of your practice.
Get Legal Guidance from Medical Practice Formation Lawyers
Laws governing fraud and abuse in the healthcare industry are stringently enforced. Even if you disprove allegations, the damage to your practice may already be done. The best course of action is to establish the business in a manner that minimizes the possibility of violating any laws.
To ensure your business complies with laws about physician conduct, you need an experienced medical practice lawyer who will assist you through every stage of the formation process.