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.