Doctor-Executive Management
Staff Reporters
Some doctors tend to eschew checklists as a form of unthinking “cook-book” medicine. Some attorneys, financial advisors and medical management consultants, on the other hand, embrace them. Our position is a hybrid of both postures suggesting their use as a cogent starting-point template, for modifications and embellishments, as needed.
Checklist Template
Therefore, the following is offered with this customizing goal in mind, as the agreement addresses the following events requiring a buy-out: Death, Disability, Retirement and Voluntary and/or Involuntary termination:
-
Agreement specifies the number of months of disability after which an owner is required to give up ownership in the practice.
-
Agreement specifies (if owners so desire) the age requirement before a physician can retire from the group (for example, to qualify for retirement, a physician must be at least 65 years old; otherwise the withdrawal is considered voluntary).
-
In the case of a voluntary withdrawal, agreement specifies how much notice is required.
-
In the case of a voluntary withdrawal, agreement specifies whether there will there be penalties to the buy-out price if the owner forms a competing practice, joins a competing practice, or violates the employment contract.
-
In the case of an involuntary withdrawal, agreement specifies how much notice is required.
-
Agreement specifies the required vote to admit a new physician into the group.
-
Reasonableness of the buy-out price of an ownership interest has been reviewed.
-
If the buy-out price is to be based on an appraised value, the qualifications of the appraiser have been assessed.
-
Agreement specifies, based on the current practice environment, whether goodwill should be paid to a departing owner.
-
The manner in which the buy-out price will be paid has been established and reviewed.
-
The tax consequences of the buy-out provisions have been reviewed.
-
The buy-out amount has been calculated for each owner using the current formula in the agreement.
-
Each owner has reviewed the calculations.
-
All parties agree to the reasonableness of the buy-out amounts.
Assessment
What should be added to, or omitted from, the above list?
Conclusion
Your thoughts, opinions and comments are appreciated.
Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759
Physician Financial Planning: http://www.jbpub.com/catalog/0763745790
Medical Risk Management: http://www.jbpub.com/catalog/9780763733421
Healthcare Organizations: www.HealthcareFinancials.com
Health Administration Terms: www.HealthDictionarySeries.com
Physician Advisors: www.CertifiedMedicalPlanner.com
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com or Bio: www.stpub.com/pubs/authors/MARCINKO.htm
Subscribe Now: Did you like this Executive-Post, or find it helpful, interesting and informative? Want to get the latest E-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Copyright 2008 iMBA Inc: All rights reserved, USA, unless otherwise noted. Use is restricted to Executive-Post subscribers only. No redistribution is allowed. To avoid violation of iMBA Inc copyright restrictions and redistribution policy, please register for your own free Executive-Post membership. Detailed information and registration links are available at:
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Referrals: Thank you in advance for your electronic referrals to the Executive-Post.
Filed under: Career Development, Healh Law & Policy, Practice Management, Risk Management | Tagged: buy-sell agreements
Non-Competition Clauses in Medical Agreements
The basic non-competition agreement is one that precludes one party from engaging in competition with another. Since non-compete contracts interfere with a person’s ability to make a living, courts may refrain from enforcing the agreement. A properly drafted noncompete agreement should be limited in its breadth and scope. To be enforceable, a noncompete clause should specifically address what activities are prohibited, define a narrow geographic area, and define a limited time period.
Recently, a Kansas court of appeals upheld a noncompete contract restricting Michell M. Louis, DO from practicing for three years in the same county as Wichita Clinic PA, unless the physician paid 25% from her earnings during those three years.
In another instance the trial courts questioned the noncompete of two Evansville cardiologists who worked for Ohio Healthcare Inc. The 17 page decision from the court noted the AMA opposition of non-compete agreements. They wrote:
“The implications that flow from the disruption caused by enforcing covenants include increased costs of care, decreased quality of care and decreased patient satisfaction.”
In addition, in the case of New Castle Orthopedic Associates v. Burns, the Supreme Court of Pennsylvania held that a noncompete agreement between an orthopedic practice and its former physician employee would not be enforced. The court based its decision largely on the fact that there was a shortage of orthopedic specialists in the geographic area encompassed by the noncompete agreement, as evidenced by referring physicians who testified that it took anywhere from four weeks to four months to obtain appointments for their patients.
Non-compete agreements are used to protect the employers from allowing a high profile employee from leaving and retaining some clients. In addition, it helps protect the good will of the firm and its financial stability. And, recent regulations enacted by the Stark Laws will also call into question the enforceability of physician’s non-compete agreements in certain situations.
Therefore, do we protect the medical provider and provide protection for them to create value in their medical practices; or do we protect the publics’ consideration, right to freedom of choice and the right to continue current relationship with their physicians?
-Amaury Cifuentes; CFP®