Business Asset Protection: Often Overlooked

Physician's Money DigestMay 31 2004
Volume 11
Issue 10

A misconception that most physicians have isthat they should only protect their personalassets from potential lawsuits. Nothingcould be further from the truth.

In fact, the practice's important assets are the mostvulnerable to lawsuits, especially in a group practice.This is because any malpractice or employee claim (eg,sexual harassment and wrongful termination) againstany of the doctors threatens all of the practice's assets. Inother words, if you're in a group practice, you're underwritingall of the acts and omissions of all partners to theextent of your practice assets.

What are the most important practice assets?Certainly, the practice's accounts receivable (AR) ismost important. Your AR is what you, in fact, workfor. This is your cash flow for the next 30, 60, or 90days. What most physicians don't realize is that a lawsuitagainst the practice, created by a wrongful act ofany of the partners, threatens all of the AR in a typicalpractice setup. There have been cases where physicianshad to work for free for a number of monthsbecause a lawsuit judgment—resulting from the act ofone physician—created a loss of AR for the entirepractice. Don't let this be you.

Other important practice assets include the practicereal estate, if any, and expensive, valuable equipment.If your practice has valuable real estate orequipment, it must separate these assets from themain practice. While the details of advanced assetprotection strategies go beyond the scope of this article,it suffices to say here that there are a number oftactics you can use to protect real estate and valuableequipment from potential lawsuits against any of thephysicians or the practice itself.

Too many physicians concentrate on shieldingonly their personal assets, such as their homes andinvestments, from potential claims. But their mostvaluable assets are in their practice. Proper asset protectionmeans shielding business as well as personalassets. Be sure to protect both.

Christopher R. Jarvis and David B. Mandellare coauthors of The Doctor's Wealth ProtectionGuide and cofounders of Jarvis &Mandell, LLC ( a free copy of the 40-page special report,"What to Do About the Medical MalpracticeCrisis," call 800-554-7233.

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