Before selling your practice, bringing on a new partner or investor or entering into a new practice management relationship or joint venture, you should first determine if there are any business or regulatory risks present in your practice, as they could jeopardize your transaction or put a portion of your proceeds at risk.
Getting your house in order in advance of a potential transaction is crucial to maximizing value and ensuring a smooth and efficient transaction process.
Your transaction counterpart will likely conduct a robust diligence review of your practice; your goal should be to minimize the issues or surprises that turn up during that review.
If there are issues or surprises, your counterpart may require any number of remedies before consummating the transaction, including requiring you to change your ownership structure, obtain or revise licensure, terminate or modify arrangements with referral sources or remediate billing and coding errors or any Stark Law violations.
There are certain fundamental corporate and tax issues that will be evaluated by your transaction counterpart.
Not surprisingly, there are many legal and regulatory risks that must be carefully evaluated before proceeding with a transaction.
Many states’ laws prohibit the corporate practice of medicine (lay person ownership of a medical practice). This could be implicated, for example, if (i) a practice offered its practice administrator shares in its group practice; or (ii) a practice has a management agreement with an outside vendor to manage the center (state laws may restrict the level of control exercised by the management company and may restrict how the management company is paid). If corporate practice of medicine issues are present, you may be required to restructure or pursue applicable licenses.