Over the past five or more years, physicians practice mergers have risen according to industry studies. For financial and many other reasons, more doctors are employed by hospitals. Solo practices have been declining and many are merging with others to form larger, more financially stable practices.
The process of merging can be quite involved and require assistance from experienced physicians attorneys. To avoid physicians partnership issues, your merger should be carefully completed using the required legal process.
1. Decision to Merge
If you have decided to merge your practice with another one, your first step must be to seek other potential practices to consolidate with. Based on your goals and requirements, physicians attorneys recommend looking for practices that will complement yours in a wide variety of ways, making it possible for both to operate under the same group name.
2. Assessment of Consolidating Practices
Once you have found a group to merge with, your practice and the group with whom your practice will consolidate must assess both businesses. You must: discuss professional, financial, and market goals; go over non-compete restrictions and liability issues; perform an accounting analysis of both practices; and cover all other pertinent details. This step must be handled carefully and thoroughly to prevent future physicians partnership issues.
3. Letter of Intent
After the discussions are complete and you have agreed how the new, consolidated practice will operate in the future, a letter of intent should be drafted and signed by both physician groups.
This letter of intent should document all agreed upon details involved in your physicians practice merger and document each group’s financial and professional commitment to the consolidation.
In an effort to expose any potential liability issues not initially realized during the assessment, physicians attorneys generally progress with a period of diligence once the letter of intent has been signed by each group. This should include a billing and coding audit.
Once potential liabilities have been discussed and negotiated in order to prevent later physicians partnership issues, the various agreements can be drafted. The contracts typically include:
- A consolidation agreement.
- A shareholders agreement.
- Physician and non-physician employment agreements.
- Any required third-party agreements with vendors, building owners, etc.
5. Closing and Post Closing
At closing, your group will exchange documentation with the consolidating group and any financial transfers will occur to finalize the merger. Then the most critical part of all physicians practice mergers will take place:
- Development and agreement of new company policies.
- Relocation or modification of existing facilities.
- Required improvements or additions to business equipment.
- Notifying patients of the merger.
- Other procedural details to get the two merged practices up and running as one.
The decision to merge with another practice can be beneficial to both practices when the transaction is properly executed to avoid future physicians partnership issues. If you are considering a merger with another practice, discuss your intent with experienced physicians attorneys who can guide you through the legal process. Smooth physicians practice mergers allow physicians to get back to doing what they do best!
The Stevenson Law Firm, PC
6302 W. Broadway, Suite 120
Pearland TX 77581
Phone: (832) 481-4548