For many chiropractors, the idea of opening a chiropractic practice is very appealing. The chiropractor can be his/her own boss, control his/her hours and vacation time, make his/her own decisions regarding patient care, as well as control the business operations of the practice. However, before a chiropractor goes forward with opening a chiropractic practice, there are numerous complex issues, legal and otherwise, that a chiropractor needs to consider. This article is intended to help chiropractors recognize these issues with the goal of making the transition run more smoothly and to limit potential exposure relating to opening a chiropractic practice.
Among the first decisions a chiropractor must make is to determine the type of business entity through which the practice will be conducted. This is a very critical decision that should be made on the advice of competent counsel because the choice of entity has a major impact on several aspects of the practice including the chiropractor’s liability exposure, and tax treatment. In New York State, a chiropractor must conduct his/her practice through a professional entity including for instance a professional service corporation (“PC”); a professional limited liability partnership (“LLP”); or a professional limited liability company (“PLLC”)1. Once a chiropractor selects the type of entity and name of the entity, the appropriate paperwork must be filed with the New York State Secretary of State and New York State Department of Education in order to begin the corporate formation process. Once the entity is formed, the entity will have to obtain a tax identification number, hold meetings, and have the appropriate governing agreements drafted (ie an operating agreement/partnership agreement/shareholder agreement). In the event that a chiropractor decides to “partner” with another provider(s), these agreements will govern the relationship between the parties. Furthermore, as per New York State law, it is imperative that these entities keep correct and complete books. As such, chiropractors must ensure that they hold annual meetings, conduct elections for managers/officers/directors, and review and update any agreements relating to the entity.
1 In New York State, chiropractors are not precluded from practicing as sole proprietors or in a general partnership. However, these arrangements are not advisable from a liability perspective.
Failure to comply with these requirements may result in one of the entity’s creditors being able to “pierce the corporate veil” and therefore collect from the entity’s owners.
Practice Location/Equipment and Supplies/Technology:
Identifying an office location is also an important aspect of starting a practice. Things to consider when looking at office space are as follows: square footage, price per square foot, local referral sources, competition, accessibility, parking, expansion opportunities, and local demographics. Furthermore, chiropractors need to consider whether they want to rent the office space or purchase the property. Either way, the practice will have to negotiate a good real estate agreement which protects the practice.
The practice will also need to obtain equipment and supplies. A chiropractor can often rent large equipment, which may be more practical. In this case, it’s important to have the equipment lease reviewed in order to ensure that liability is limited.
Technology is another area that is often overlooked although a practice’s IT infrastructure is often vital to the success of a practice. In addition to the decision of whether or not to invest in an Electronic Medical Records (EMR) System, chiropractors need to consider having phone lines, computer systems and appropriate computer networks in place.
For many chiropractors, it is vital to be on insurance panels in order to get referrals from those panels. In the event that a chiropractor wants to be an in-network provider, he/she needs to determine which health insurance plans to participate with. The chiropractor then needs to go forward with becoming credentialed with the plans-this is not an overnight process and requires advanced planning. Once approved, the chiropractor will then need to sign a participation agreement which needs to be reviewed as well. The chiropractors will also need to obtain a National Provider Identifier (“NPI”) for the practice, as well as for each chiropractor practicing at the practice.
When starting a practice, it is especially important to have trustworthy and reliable staff, including clerical staff (ie billers, receptionists) and professional staff (ie other chiropractors, chiropractic assistants). Prior to hiring these individuals, it is important to check all references and ensure that those individuals are a good fit with the practice as these individuals will have access to the practice’s confidential information and will have direct contact with the patients of the practice. Employment agreements must also be drafted (or independent contractor agreements if applicable) for these individuals as well. Furthermore, when hiring staff, chiropractors need to consider obtaining health insurance, workers compensation insurance, unemployment insurance, disability insurance, and of course malpractice insurance. In order to further protect the practice, it is recommended that all practices have a comprehensive employee manual in place that clearly articulates expectations, as well as the practice’s policies including consequences for violating these policies.
There are many healthcare rules and regulations that a chiropractor is expected to comply with-HIPAA, Stark and Anti-Kickback to name a few. Due to recent initiatives by Medicare, the Office of Inspector General, Medicaid, the Office of the Medicaid Inspective and Third Party Payors to uncover fraud, waste and abuse in the healthcare system, it is inevitable that almost all chiropractors will be involved in an audit in the future. In order to decrease the chance of audit and mitigate and potential audit results, it is advisable that all practices implement a compliance plan. These compliance plans outline reasonable standards and procedures that the practice should comply with that are in compliance with the myriad of healthcare rules and regulations. For instance, the practice should have appropriate HIPAA policies in place, as well as other safeguards to ensure against inappropriate relationships and billing practices. Before implementing a compliance plan, chiropractors should consult with legal counsel regarding steps the practice should take to ensure compliance.
Staring a practice can be very exciting, however, it is a big task as there are many issues that need to be taken into account. To that end, it is in the best interest of the chiropractor to retain a team of professionals specializing in health care – attorneys, accountants, IT professionals, etc. – to assure that the new practice has limited exposure and increased profitability. Opening a chiropractic practice takes time, and it is advisable for chiropractors to begin planning in advance. If you should have any questions with regard to opening a chiropractic practice, please contact Mathew J. Levy, Esq. at (516) 627-7000 or MLevy@weisszarett.com.
About the Authors:
Mathew J. Levy, Esq. is a Principal of Weiss Zarett Brofman Sonnenklar & Levy, PC. Mr. Levy is nationally recognized as having extensive experience representing healthcare clients in transactional and regulatory matters. Mr. Levy has particular expertise in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, criminal law, healthcare fraud & billing fraud, insurance carrier audits, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-627-7000 or email@example.com.
Stacey Lipitz Marder is an associate at Weiss Zarett Brofman Sonnenklar & Levy, PC with experience representing chiropractors in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts and commercial real estate leases, stock and asset acquisitions and general corporate counseling. Ms. Marder also has experience advising healthcare clients on a wide range of regulatory issues including Stark, the Anti-Kickback Statute, fraud and abuse regulations, HIPAA, reimbursement and licensing matters.