Download Medical Practice Acts and State Boards

Medical Practice Management
Systems
Lesson 2:3
There are four basic types of
medical practice
•
•
•
•
Sole proprietorship
partnership
Professional corporation
Group Practice
Medical practice Management
Systems
Sole Proprietorship – ‘solo practice’, they take all
the profits and bore all the risks associated
with the sole proprietorships. Gone are the
days where the physician did all the patient
services from receptionist work, to medical
treatment, to billing, to house calls. Today,
some physicians still practice alone (with the
help of employees to perform receptionist and
patient care tasks.
Sole Proprietorship
A disadvantage to this type of practice is that
the physician practicing alone has unlimited
personal liability
Associate Practice
• A more common arrangement where two or
more physicians may decide to practice
individually but agree to share office space
and employees is known as associate practice.
This allows a sharing expenses not a sharing of
profits and Liability.
Partnership
• When two or more physicians decide to
practice together, they may form a
partnership, based on a legal written
agreement specifying the rights, obligations,
and responsibilities of each partner.
Advantages to Partnership
Sharing the workload and expenses, and pooling
profits and assets.
Disadvantages to Partnership
• Each partner has equal liability for the acts,
conduct, losses, and deficits of the
partnership, unless specific provisions are
made for these contingencies in the initial
agreement.
Professional Corporation
A corporation is a body formed and authorized
by law to act as a single person, although
constituted by one or more persons and
legally endowed with various rights and
duties.
Who governs corporations?
• State law governs corporations, so
requirements may vary from state to state.
• The corporations may own mortgage, or sell
property; manage its own business affairs; and
sue or be sued.
Advantages to Corporation
• Physicians who form corporations are
shareholders and employees of the
organization.
• There are financial and tax advantages to
forming a corporation.
• Fringe benefits to employees may be more
generous than with a sole proprietorship or
partnership.
Forming a corporation also means that the
incorporators and owners have limited liability
in case lawsuits are filed.
Group Practice
• May function as a corporation or a
partnership.
• Health care services by a group of three or
more licensed physicians, engaged full-time in
a formally organized and legally recognized
entity.
• Share the group’s income and expenses
• Share facilities, equipment, records, and
personnel
(group practice)
• May be engaged in the same specialty.
• Or provide care in two or three specialties.
• Offer a variety of services
Advantages of Group Practice
• Same as those of a corporation PLUS one
added benefit that the legal implications are
not so far-reaching or complicated.