What Happens to Your Medical Business/Practice After You Retire?

What Happens to Your Medical Business/Practice After You Retire? By Ian R. LifshutzRetirement plans for physicians and other healthcare professionals often carry unusual issues that do not affect regular businesses. This is because medical practices, Article 28s or other healthcare-related businesses have special licensure requirements attached in order for an individual to operate that type of business. These types of healthcare delivery-related businesses carry a number of additional concerns because there are often either approvals required by an oversight body for the new owners (Department of Health) or the healthcare business must be transferred to a very specific licensed professional which does not always permit inter-family transfers to guide a provider’s decision.

There are numerous options which may involve structuring an estate plan or will in such a way that for certain facilities (Article 28 surgical centers, pharmacies, etc.) there are contingent owners in case the preferred or first choice owner(s) are not approved and back-up plans for a transfer, if there is no approval for any of the parties named to operate the healthcare facility. Often a more appropriate alternative is for a young employee of the appropriate license to come in and provide a buy-out during the retiring physician’s lifetime so that the retiring physician receives some value for the transfer of the business and security in knowing that their estate planning desires are met with respect to the continuation of the practice. Numerous structures involving “sweat equity” or certain buy-in/buyout payments over time affect this, and are attractive since they can provide an option that otherwise would not be available. All such structures however need to be compliant with any applicable fee splitting, anti-kickback or Stark laws governing that type of healthcare business.

Ian Lifshutz
[email protected]

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