Hard-working physicians devote a great deal of their time to running their practices, yet they often fail to plan ahead and take simple steps to properly protect and structure their practices for maximum efficiency. A well-designed practice can reduce professional liability and help shield the physician from threats such as squabbling with medical partners, predatory claims, untimely deaths, taxes, and lawsuits.
While the professional corporation (PC) does not protect the individual physician from malpractice liability, there are some structures that may help lower insurance costs. In a typical group practice, the PC owns all the practice assets and employs the physician and nonphysician employees. Everything is at risk to any physician-employee's malpractice, staff negligence, and real estate liability claims, as well as every claim a lawyer can bring against doctors, employees, practice equipment, or real estate for injury.
Another drawback of a PC is that all decisions must be made at a PC level, meaning each physician's needs are subject to the vote of the medical partners
From an asset protection and decision-making point of view, this structure lacks flexibility for tax purposes. Thus, considerable improvements can be made in the design of the practice entities.
While a PC will not shield the physician from negligence claims, it is useful in protecting the physician from liability from other claims, such as employment practices and claims made by staff.
An improved practice structure allows each individual doctor to decide at their individual PC level their own advanced planning options and compensation arrangements without having to get group approval. By allowing individual physicians to make their own decisions, the frustration of having to always obtain group approval is alleviated, and should a split in the practice occur, the circumstances are greatly mitigated.
Many physicians do not think about the details of the configuration of their individual or group practice until they encounter a major problem. At that point it is usually too late. Consider consulting a practice management professional and discussing these issues and solutions with your medical partners to make sure your practice design best protects your interests and is operating efficiently.
Strategies for Restructuring
Alan R. Eber, LLM, is a pioneer in asset protection. He practices law in the fields of asset protection, estate planning, trusts, and business structuring. To get a free copy of a new booklet by Alan Eber, How Physicians Can Protect Their Assets, call 800-800-9191 or visit www.assetprotectionlaw.com/physicians.htm.