By Pamela Miller, OD, JD
Before you add an associate doctor to your practice, take legal measures to safeguard both your interests and those of your new associate. Success over time often hinges on reviewing the fine print first.
Establish and Record Mutual Expectations
When an associate is added to a practice, a common misunderstanding is for the associate to believe he or she will be made a partner within a set time frame, while the employer doctor has no intention of doing so. To ensure that misunderstanding does not occur, have a lawyer draft an employment contract stipulating that at the end of a set period of time, such as a year, the employer doctor and the associate doctor will evaluate their professional arrangement. If this relationship may lead to a partnership, that needs to be part of the contract. Any partnership agreement should then be carefully drafted to protect the interests of all parties. The associate will then have the security of knowing at the end of that period whether there is a future for him or her as a partner at the practice. The senior doctor will be protected because he or she has only agreed to give the associate an answer about partnership after an agreed on period of time, rather than to automatically make the associate a partner.
Establish First Right of Refusal
It is common for older doctors nearing retirement to take on an associate with the intention of having the younger associate become a partner, and then, eventually, to take over the practice. It is important that the senior doctor and associate specify in their contract that if the senior doctor becomes incapacitated or dies, then the first right of refusal to purchase the practice will go to the associate. Adding this detail relieves the senior doctor’s family of the burden of worrying about selling the practice, and gives the associate or new partner the security that the practice won’t be sold out from under him or her. In case the associate does not want to purchase the practice, the contract also should spell out how the practice will be evaluated for sale, and who will cover the cost of operating the practice until an owner is found.
Provide Associate with Employment Terms in Contract
Once the doctor and associate have laid out the parameters of their arrangement in terms of how long, or if ever, the associate will have to wait to become a partner, and what will happen should the senior doctor die or become incapacitated, it is important to legally document the following regarding the associate’s terms of employment, including but not limited to:
–How much will the associate get paid? How often will they get paid? And what deductions and taxes will be taken out per paycheck?
–On what basis will they be paid? For instance, will they be paid per patient? Or per day? Or based on some other arrangement?
–What personal equipment, if any, is the associate is expected to bring to the practice?
–What is the associate being brought into the practice to do (e.g. if they have a specialty such as low vision or vision therapy)? Imagine the associate’s distress if she thought she was brought in to provide vision therapy and instead found herself working half the day in the dispensary or strictly doing refractions.
–Will the associate pay for malpractice insurance?
–Will the senior doctor pay for the associate’s continuing education?
–Will the associate receive paid vacation days? Will they get a paid hour off for lunch?
–What days of the week and what hours will the associate work?
–What additional obligations, if any, will the associate have outside the office? Does the senior doctor, for example, expect the associate to attend Chamber of Commerce breakfasts, or other community meetings, on behalf of the practice?
–Will exam fees be waived for members of the associate’s family?
Agree on Criteria for Voluntary Exit and Termination
The senior doctor and associate should decide and legally document how voluntary exit or termination from the practice will be handled. How much notice does either of the doctors need to give to exit the practice? Stipulate in the associate’s contract how many days in advance, such as 30 days, for instance, the associate and/or doctor should provide when planning to exit.
At the same time, both parties should document by what criteria the associate can be terminated, and, if the associate has been made a partner, by what criteria the partnership can be dissolved. The associate’s contract should also list possible reasons (“but not limited to”) for immediate termination such as stealing from the practice, abuse of patients and illegal drug use. The senior doctor should be mindful of the state sexual harassment laws, and as such, may need to provide sexual harassment training to the associate, as he or she would for any other employee. Bad personal habits should also be listed as criteria to either terminate an associate or dissolve a partnership. I have heard of situations, for instance, in which the older doctor suffering from the beginnings of senility does not adequately bathe, which may affect the practice worth.
Do Due Diligence
Preliminary research and due diligence by both the senior doctor and the associate is necessary before signing any contract.
The senior doctor should verify:
–Associate has a legitimate degree from optometry school.
–Associate has a valid license to practice in the state.
–Whether the associate is in good standing with the state board.
–Whether the associate has the malpractice insurance the doctor and associate agreed he or she must have.
The associate should verify:
–Whether there are any pending lawsuits against the doctor.
–Whether the senior doctor has purchased insurance to cover the practice as a whole. The associate needs to know what kind of coverage beyond his or her own malpractice insurance can be relied on should a patient decide to sue as many people at the practice as possible. The senior doctor should also have professional liability coverage.
–Whether the practice is financially solvent if he or she is entering into a partnership. In that case, it is wise to have a practice appraisal, and to talk with a qualified accountant and lawyer.
By legally protecting both the associate and the senior doctor, both parties can be assured of a satisfactory working arrangement, and patients can be assured of a well-functioning office.
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Pamela Miller, OD, FAAO, JD, DPNAP,has a solo optometric practice in Highland, Calif, and is a licensed attorney at law. She also holds a therapeutic license, is California State Board-certified to prescribe eye medications, and offers comprehensive vision care, contact lenses, visual therapy and low vision services. To contact her: firstname.lastname@example.org