Physician Practice Acquisition Agreements 2018-04-23T20:04:46+00:00

Physician Practice Acquisitions Agreements

As in any other business, acquisitions and mergers frequently occur in medicine. A physician may retire and sell their practice to an out-of-state entity, or a partner may buy out a portion of the practice. These transactions are highly complex, involving numerous ramifications for both parties involved, which means it’s vital to make sure the agreement is carefully structured.

When it comes to physician practices, there are a number of highly specific laws that come into play, including STARK and Anti-Kickback laws (fraud and abuse), the Texas Patient Solicitation Act , and the Prohibition Against the Corporate Practice of Medicine. Ensuring full compliance with these laws in the course of acquiring or restructuring a practice is of utmost importance since neglecting to do so can have serious legal ramifications.

Texas Restrictions on the Corporate Practice of Medicine

For those seeking to either sell or buy out a licensed physician practice in the state of Texas, one of the rules that comes into play is the restriction on the “corporate practice of medicine.” In essence, the purpose of this law is to prevent medical judgment or practice from being controlled or influenced by non-physician corporate entities, and it employs numerous restrictions and regulations in order to prohibit non-physicians from owning healthcare practices or employing licensed physicians.

There are exemptions to this rule, but they are highly specific and only a few entities will satisfy the requirements of owning a medical practice. When determining whether an entity is able under Texas law to operate a licensed medical practice, it’s absolutely vital to consult with an experienced health law attorney first.

Structuring Physician Practice Acquisitions Agreements

Even moving beyond the legal regulations over physician practice acquisitions, the agreement itself needs to be carefully worded and structured in order to prevent harmful ramifications. A few of the issues that must be considered when structuring these agreements are:

  • Corporate and ownership structure
  • Tax implications of the sale/purchase
  • Asset purchase vs. stock transfer
  • Licensing requirements
  • Liability and indemnification protections
  • Insurance coverage
  • Employment issues
  • Non-competition restrictions
  • Due diligence and access to financial information
  • Assumption of contractual obligations

Depending on the structure and scope of the agreement, you can face widely varying impacts in terms of the above categories, which means skilled legal representation is an absolute must when negotiating and drafting physician practice acquisitions agreements. Larry “Max” Maxwell, who is board certified in health law by the Texas Board of Legal Specialization, can provide you with the legal advice and representation you need when putting together acquisitions documents.