Houston Medical Practice Set-Up & Merger Attorney
Serving Health and Medical Professionals Across Texas
Establishing a solid foundation when starting your own health care practice, merging with another entity, or engaging in a joint venture is critical to future success. Because the health care industry is governed by a range of regulations – including those involving fraud and abuse, corporate practice of medicine, and more – ensuring compliance requires a comprehensive view of a practice’s structure, business and employment relationships, liabilities, and proactive measures to reduce risks and healthcare fraud.
Hendershot Cowart P.C. is well-versed in the complex laws surrounding the health care industry, as well as the practical needs health care providers of all types have when starting or making structural changes to their businesses. For over 30+ years, we have earned a reputation as one of Texas' preeminent law firms handling setups, mergers, and acquisitions of medical practices for healthcare professionals. Because of our knowledge and experience, other attorneys routinely refer their most complex health care matters to our firm.
Learn more about our services. Call (713) 909-7323 for an initial consultation.
Managing the liabilities of a health care practice demands a client-specific focus on all relevant legal issues, including those involving choice of entity, real estate transactions, employment relationships, and contractual agreements. Navigating these issues during a set-up or merger also requires effective risk-management and compliance with regulations tailored to the unique needs of a practice.
- Set-ups – When setting up practices, our services focus on providing step-by-step assistance to health care providers. This includes helping practitioners select the most appropriate business structure that provides protection against liabilities, including improper medical billing practices and violations of fraud and abuse laws. Our legal team also provides assistance in reducing exposure to conflict and liabilities that may arise in the form of disputes between employees and directors by establishing clear and enforceable agreements at the outset of formation.
- Mergers – In addition to managing liabilities inherent to any medical or health care practice, our team also helps clients navigate liability issues that may arise from mergers and acquisitions, including billing and recoupment matters, employment and partnership structure, and determinations for initiating stock purchases, which transfer liability, or assets purchases, which often provide more protection but not always the same benefits.
Protecting Your Practice From the Unexpected
From entity selection to contractual agreements, we help create a foundation and policy-driven structure to facilitate handling of any future issues. This includes compliance with Texas law against corporate practice of medicine, establishing rights and duties of stakeholders, control of the business, employment, and exit strategies.
- Corporate Practice of Medicine (CPOM) Doctrine – Texas law prohibits the corporate practice of medicine, which means physicians generally may not be employed by individuals without medical licenses or by business entities governed by laypeople. Although there are certain exceptions, including nonprofit corporation employment, this doctrine has far-reaching implications for how medical entities must be structured and governed. Failure to comply, especially when starting a business, going through a merger, or establishing a joint venture, can expose medical providers and entities to significant penalties, including fines and adverse actions against their medical licenses.
- Choice of Entity – In addition to affecting health care compliance with Texas' prohibition on the corporate practice of medicine, choice of entity sets the stage for how taxation and liability will be addressed throughout the life of the business. Each type of business entity comes with its own advantages and drawbacks that must be carefully assessed based on the specific circumstances of each business's needs and goals.
We help clients explore the most appropriate entity selection, including:
- Professional Limited Liability Companies (PLLCs) – PLLCs provide limited personal liability for members, including those actively involved in management, and favorable partnership-style tax treatment. You must have the appropriate license to take advantage of this entity.
- Professional Associations (PAs) – These provide favorable tax treatment and easy transfer of ownership interests. Shareholders are not personally liable for business debts or for damages claimed in lawsuits against the entity. This entity also requires shareholders to have appropriate licenses.
- Limited Liability Partnerships (LLPs) – Limited partners (who cannot be actively involved in management) have limited personal liability for business debts; this entity also enjoys favorable tax treatment.
Selecting the proper entity is only the first step. Practices will also need documents to ensure professionals and the business are fully protected. For example, a PLLC or PA needs agreements detailing how the entity will deal with transactions, purchase and sales of interest, expelling members, tagalong and drag-along rights, and buyouts.
Licensing, Contracts and Regulatory Compliance
There are many licensing, contractual, and regulatory issues to address before a successful practice or medical business can begin to grow and thrive, and avoid future complications, business disputes, and even violations of fraud and abuse laws. We draw from collective experience in health and business law health to address all pertinent matters, including:
- Licensure – Individual compliance with state licensing requirements, as well as business entity compliance with corporate practice of medicine provisions, must be carefully examined to proactively avoid liability.
- Contracts – Medical contracts must be negotiated, drafted, and reviewed meticulously. This includes medical director agreements, management services agreements, physician employment agreements, space and equipment leases, mobile diagnostic testing agreements, non-compete agreements (including non-competes for executives and professionals), and many other types of agreements that are clear, executable, and enforceable.
- Credentialing – We advise clients on credentialing and peer review proceedings at hospitals, credentialing for managed care plans, and quality of care issues for managed care plans.
- Compliance – It is imperative to not only comply with regulatory requirements governing transactions and business dealings, but also to establish compliance plans and policies to remain in compliance with the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH), and all other applicable state and federal regulations.
Joint ventures are subject to extensive state and federal regulations. Affected by the terms of the business's operating agreement, partnership agreement, or other applicable contracts, physicians who own clinics, diagnostic labs, imaging centers, emergency medical centers, and other types of medical practices can find themselves burdened by a range of economic factors.
Before you take the first step in forming a joint venture or expanding your investor base, let us answer your questions regarding:
- The best corporate structure for your partnership or joint venture
- How to ensure good investor and shareholder relations
- Whether state licensure requirements will affect your partnership
- Protecting yourself with employment agreements and non-compete agreements
- The best commercial real estate agreements for your practice
- How Stark laws and/or fraud abuse laws, regulatory compliance and compliance programs will impact your practice
- How medical contracts may affect partnership agreements
- How third-party billing will affect your practice
Freestanding Emergency Centers (FECs) and Ambulatory Surgical Centers (ASCs)
FECs are becoming increasingly common in Texas. They can be separate and distinct from hospitals and are generally equipped to diagnose and provide emergency treatment like hospital emergency departments. We advise and represent investors in all aspects of establishing FECs, from choice of entity and joint ventures to fraud and abuse regulations and the Stark Law. This includes determining whether FECs may benefit from the Series LLC, a Texas business entity which allows investors to incorporate one entity, spin off other businesses from it, and retain limited liability in each of the businesses. We can advise whether a Series LLC or another entity is the most advantageous for you.
Ambulatory surgical centers (ASCs) focus on providing same-day services such as diagnostics, preventative care, and surgical procedures. A growing number of physicians are investing in these centers, and they are being acquired by or merged with hospitals. We have represented numerous ambulatory service centers in establishment, mergers, acquisitions and other business transactions, as well as hospitals in the sale and acquisition of ASCs, and have advised on regulatory compliance through these matters.
Get the Advice and Advocacy You Need: Schedule a Consultation Today
Hendershot Cowart P.C. is a recognized Texas leader in health care and business law. By operating on the belief that an “ounce of prevention is equal to a pound of cure,” we leverage our insight and experience to help health care providers across the state navigate the unique hurdles of their start-ups, mergers, and joint ventures with an eye on future viability.
To learn more about our services, contact us to request a consultation with a medical practice setup attorney today.
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