Hi Jennifer,

I'm under the impression that medical practices can only be owned by physicians.  I've had some long-term employees that would love to know they had "skin in the game" as a minor owner of the practice. And it's a terrific incentive for retention beyond retirement accounts.    Any thoughts? 

Appreciate it. 

Dr. L


When you live in a corporate practice state (most states in our north-east region...), that means there’s a restriction against non-physicians owning any portion of the practice entity, which essentially makes it illegal for employees to participate in any equity position in a medical practice. There are a number of ways around this to create alignment with your team members who are not physicians. 

The first and easiest way is to create a bonus construct to share monies with the team.  There are many key performance indicators (KPIs) you can use to bonus, however, be careful not to pay based on volume or value of referring patients or services, as there are strict restrictions by state and federal law for paying for referrals.  Participation in a bonus pool will not create ownership - but it may create a right of payment for participants, depending on how the bonus is rolled out.  Let's be careful how we word the benefit, and the qualification metrics.  

Another way around corporate practice restrictions, we see frequently is the establishment of a management company, which is typically a third-party le entity, formed for the purposes of rendering administrative services, on behalf of a professional and today.  The management company may be owned by lay people, and since it makes its money by rendering services to the medical practice revenue from the medical practice blows up to pay for services in the management company.  Which is why business people form management companies to take revenue for medical practices because they can on that entity when they cannot own the actual medical practice.   In the formation of a management company team members were not doctors can have an ownership piece. Caveat emptor the creation of a management company and management of a management company is a lot of work.  Management company requires a separate payroll, separate insurance legitimate services, build a fair market value and proper bookkeeping among other things.  

Happy to discuss your best path. Remember where we started; a bonus program may be easier….

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