Retirement 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.
In many northeastern states, including New York, as well as many other states across the country, the theory behind the Corporate Practice of Medicine Doctrine is the belief that a medical practice not owned by a physician or medical professional, is not going to function and provide the same quality of care as a physician-owned practice or similar health care provider. This belief is due to the fact that the practice would become beholden to non-doctor shareholders who would dictate treatment based upon economics rather than quality of care.
In these troubled economic times, a regular cash flow can mean the difference between a successful practice and going out of business. Certain aspects of creative financing can help a medical office (or health care provider) create a regular cash flow.
A health care facility is in a unique position to take advantage of creative financing as it has assets and receivables paid by a third party that offer an enticing option for a lender.
Physicians can typically finance:
- Regular receivables to generate a specific minimum cash flow into the practice
- Expansion into a new office or adding new modalities
- Costs of filing with the State for expanded and special services (Article 28, OASAS, OMH Clinics, etc.)
- Purchase of another practice or merging with another group
It is important for physicians to be open to creative strategies in the health care field and aware of what advantages their practice and specialty have to offer. Doing so can help a practice thrive in this heavily regulated industry even in these poor economic times.
The Office of Mental Health (OMH) recently revised the application process to streamline the procedure for obtaining an outpatient mental health clinic operating certificate (New York Mental Hygiene – Article 31) making it possible to obtain approvals again in areas of need. The approval process has always been there, but the OMH simply stopped processing applications for a while.
The strengths of the Article 31s are:
- Outpatient mental health clinics can be owned by someone other than a doctor (non professional), however similar to an Article 28 Diagnostic and Treatment center, there are regulations regarding the staff needed to run the clinic.
An Article 28 facility is approved by the New York State Department of Health through the Certificate of Need process. The same application process and law (Article 28 of the New York State Public Health Law) also applies to Surgical Centers and Nursing Homes as well as general hospitals. There are similar and specific requirements as far as what the Department of Health is looking for from each facility. Understanding the process and these requirements is important in order to obtain a Certificate of Need to own and operate a Diagnostic and Treatment Center. An Article 28 Diagnostic and Treatment Center can be the proper tool for you to operate your practice. Much about them is misunderstood leading to many misconceptions about what they are and are not. The following are the four most important factors to consider when determining if a Diagnostic and Treatment Center is right for you: