Physician Partnership Agreements: Understanding Your Rights and Protecting Your Interests

Entering into a physician partnership is a significant decision that can shape your medical career and professional life. A well-structured and carefully drafted physician partnership agreement is essential to ensure that all parties involved understand their rights, responsibilities, and obligations. 

Key Factors in Physician Partnership Agreements

Taking the time to consider and negotiate the following important elements will set the stage for a successful and mutually beneficial physician partnership.

1. Clearly Defined Roles and Responsibilities

A robust physician partnership agreement should clearly define the roles and responsibilities of each partner within the practice. This includes outlining the specific duties, expectations, and limitations of each physician. Clarity in defining roles ensures that there are no misunderstandings or conflicts regarding responsibilities, patient care, decision-making authority, and management of the practice.

2. Financial Arrangements

Financial arrangements are a crucial aspect of any physician partnership agreement. It is essential to address how profits, losses, and expenses will be shared among the partners. This may include determining the distribution of income, allocation of overhead costs, and provisions for handling financial disputes or changes in the practice’s financial structure. Additionally, the agreement should outline procedures for admitting new partners or buying out existing partners.

3. Non-Compete and Restrictive Covenants

Physician partnership agreements often include non-compete and restrictive covenant clauses to protect the practice’s interests and prevent unfair competition. These clauses specify the geographic area and duration of restrictions should a partner leave the practice. It is crucial to carefully review and negotiate these clauses to ensure they are reasonable and don’t unduly limit your future professional opportunities.

4. Governance and Decision-Making

The agreement should establish a framework for governance and decision-making within the partnership. This may include provisions for partner meetings, voting rights, and procedures for making significant practice-related decisions. Clearly defining decision-making processes and voting thresholds can help avoid conflicts and ensure that major decisions are made collectively, taking into account the best interests of the practice and its partners.

5. Dispute Resolution

In the event of conflicts or disagreements, having a mechanism for resolving disputes is essential. The partnership agreement should outline procedures for dispute resolution, such as mediation or arbitration, to avoid costly and time-consuming litigation. Including a dispute resolution clause can provide a structured process for addressing conflicts and preserving the partnership’s overall stability.

6. Termination and Exit Strategies

It is crucial to address termination and exit strategies within the physician partnership agreement. This includes provisions for voluntary and involuntary termination, retirement, disability, or death of a partner. The agreement should outline the process for winding down the partnership, distributing assets, and handling patient transitions. Clear guidelines for partner departures help minimize disruptions and provide a fair and organized exit for all parties involved.

A well-drafted physician partnership agreement is crucial for protecting your rights and interests in a medical partnership. By understanding the key aspects of the agreement and working closely with experienced legal professionals, physicians can ensure that their roles, responsibilities, and financial arrangements are clearly defined. Additionally, addressing non-compete clauses, governance, dispute resolution, and exit strategies in the agreement helps maintain a stable and harmonious partnership.

Teri Robins

Teri received her BBA from Emory University in Atlanta, GA, her MBA from Columbia Business School, in New York, and her law degree from University of Cincinnati. When she’s not working, she likes to spend time with her family, including her husband, 2 almost grown and flown kids, and her dogs, reading, and needle pointing.

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