The first misconception that most physicians haveis that they should only protect their personalassets from potential lawsuits. However, nothingcould be further from the truth. In fact, the practice'simportant assets are most vulnerable to lawsuits,especially in a group practice.
One for All
Any malpractice or employee claim (eg, sexual harassment,wrongful termination, etc) against any of the doctorsin a group practice threatens all of the practice'sassets. In other words, if you are in a group practice, youare underwriting all of the acts and omissions of all ofyour partners, to the extent of your practice assets.
A practice's accounts receivable (AR) are its most importantassets. Your AR are what you work for. Therein liesyour cash flow for the next 30 to 90 days. What mostphysicians don't realize is that a lawsuit against the practiceitself, created by a wrongful act of any of the partners,threatens all of the AR in a typical practice setup. Therehave been cases where physicians had to work for free fora number of months because the lawsuit judgment resultingfrom the act of one physician created a loss of AR forthe entire practice. Don't let this happen to you.
Other important practice assets include practice realestate, if any, and valuable equipment. If your practicehas valuable real estate or equipment, it must separatethese assets from the main practice. While the detailsof advanced 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 shielding onlytheir personal assets (eg, home, investments, etc) frompotential claims, when their most valuable assets, suchas AR, are in their practice. Proper asset protectionmeans shielding business assets as well as personal. Besure to protect both.
and David B.
Mandell, JD, MBA, are coauthors of The Doctor's
Wealth Protection Guide and cofounders of Jarvis
& Mandell, LLC. Visit www.jarvisandmandell.com
for more information. Mr. Mandell is the sole
shareholder of the Law Offices of David B. Mandell,
PC. Call his office to obtain a free copy of the 40-page special report
"What to Do About the Medical Malpractice Crisis," normally
$49.95. Mr. Mandell welcomes questions or comments at 800-554-
7233 or email@example.com.
Christopher R. Jarvis, MBA,