When one medical practice agrees to sell to another, there are a lot of legal aspects that come into play. The traditional matters involving mergers and acquisitions are of course involved. Among them, the structure of the transaction, financing components, tax implications, liability and indemnification, etc. There are additional items that must be addressed when medical practices are involved, and they depend to an extent on the type of medical practice; dental, physician, surgery center, nursing care facility, hospital, and psychiatry, to name a few.
A merger often translates to an expanded market, increased negotiating power, and additional revenue sources. It can also mean more control of on-call hours for physicians. An experienced broker focusing on the sale of medical practices can be instrumental in finding compatible parties. Once it is likely a deal may be struck, an attorney can guide these matters.
Licensing often plays a big role. Particularly when a practice in one state is buying a practice in another state, whether or not a license can be transferred will dictate timing. When such a license is not transferrable, a merger, rather than a buy-out, might be advantageous, although it would then affect the structure of the deal (making it a stock transaction instead of an asset purchase). Often there are state and federal licenses to consider, including Medicare and Medicaid applications and participation agreements.
Compensation for physician and medical employees is an item for negotiation which must be worked out as the details emerge. Employment agreements and covenants not to compete are often utilized to set the framework for how the practice will be run from an employment perspective.
The parties must be sure to notify insurance companies of the merging offices as well as the effective date. Each insurance company will need to be addressed to work within their system to make the change. Each practice should identify its managed care plans and work toward physician credentialing in each plan.
As the concept of merging practices is discussed, there are legal pitfalls to avoid. Specifically, the decision-makers need to carefully analyze Stark and Anti-Kickback laws, antitrust laws, conflicts of interest, and pre-existing relationships. Each of these should be examined by an attorney to ensure compliance.
If you or anyone you know has questions or concerns on the topic of merging medical practices contact Goosmann Law Firm here.
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