A medical group divorce, whether the group is large or small, can generate at least as much suspicion, distrust and anger as a family dissolution. Much confusion, distress and expense can be contained if not eliminated through a well thought out shareholder agreement between the principals of the medical group practice. It is much easier to address important post separation issues while the parties still respect and trust each other than when the bloom on the relationship has faded.
Critical issues to be addressed in a shareholder agreement includes mutual buy-out provisions. If one party wants to leave or wants another to leave, what are the terms for selling or purchasing the other's practice? What happens in the event of disability or death? How will buyouts be funded? Is there a mandatory "put" or a "call? " In what circumstances? Is there a formula to determine the price for a buy/sell? Is there a simple, prescribed procedure for arriving at a fair sales price? Is a "Chinese Auction" procedure permitting the continuation of the practice by the highest bidder a useful option? Are their restrictions on the resale or transfer of a doctor's interest in the group? Are there non-competition, non-solicitation and or non-disparagement provision protecting the ongoing business? Are the restrictions reasonable in the circumstances and likely to be upheld by a court?
In the event of dissolution, who gets what assets and what employees to continue operation separately? Who gets the name, the location or the telephone number? Who will be entrusted with the winding up of the practice? How will the medical records be divided, secured and maintained? Is the creation of a MSO a viable option to continue the lay management of the practice in separate modalities in the event things do not work out? How is the mail to be collected and divided and by whom? How is the equipment to be divided? How are the debts to be assumed and paid? Is there a simple dispute resolution mechanism agreed up by the parties to quickly and cheaply resolve disagreements and misunderstandings? How, if at all, are the physician's to be compensated during the transition into separate practices? How are the patients of the practice to be notified of the separation and the changes?
Agreed upon and early answers to these and other transitional questions can greatly moderate the trauma and uncertainty in a medical group breakup.
Comments