South Florida Hospital News
Sunday April 11, 2021

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January 2018 - Volume 14 - Issue 7

Do Not Forget to Review These Items in the New Year

With the holidays behind us, the world should become a more orderly place. In fact, that frequently is not the case. In addition to remembering to use 2018 as the correct year for checks, etc., every new year seems to be the point in time to start new diets, new exercise plans, and other well-intentioned resolutions. The start of the year is also an excellent time for medical practices and other healthcare businesses to either review or make plans to review a number of important matters. Here are a few of the issues that merit review, either early in the year or at a later pre-determined time.

Licensure and Certification
Even if the time for renewing professional or business licenses, permits, or certifications is not early in the year, now is the time to add these items to your calendar to be done at a later date. DO NOT rely on receiving and timely acting once the notice for renewal is received from the Board of Medicine, Secretary of State, or another licensing or accrediting organization, like the Medicare program. If those licenses and permits are not timely renewed, the business will be harmed with little opportunity or relief, especially inexpensive relief.
Business Organization
Typically, a healthcare business is organized as a professional corporation, limited liability company, or partnership in order to take advantage of certain federal tax benefits available to these entities. In any case, it is prudent to review the businesses’ articles of incorporation/organization, operating agreement/bylaws, etc., at least annually in order to ensure that they accurately reflect both what the owners want and what the business is doing.
Example 1: When it was originally formed, a medical practice’s operating agreement/bylaws or articles of incorporation/organization may have stated that the business of the practice is to provide medical services. Such a statement is both legally and factually incorrect, may expose the practice to unintended exposure in a medical malpractice case and should be amended.
Example 2: These documents may not reflect the current state of the law concerning the ownership of medical records, the practice’s ability to impose a restrictive covenant, or include/fail to adequately address certain committees that have been overlooked, such as a quality assurance or compliance committee.
Employment/Retention and Key Vendor Agreements
A healthcare business may regularly retain staff members who are either employees or independent contractors. The business also may retain billing services, software vendors and other third parties for specific purposes. All of these agreements should be reviewed on a regular basis – but no less frequently than annually. Parties often forget when their employment or independent contractor agreements expire. For a number of healthcare regulatory and tax reasons it is important that all of these agreements are regularly reviewed and updated. For example, to ensure that each compensation formula complies with the federal and Florida illegal remuneration/kickback/fee-splitting restrictions and these jurisdictions’ physician self-referral restrictions.
Also, determine whether the agreement includes provisions protecting the practice’s referral sources, other trade secrets, and intellectual property that reflect the current state of the law.
Business’ Federal Tax Status
The Senate and the House of Representatives passed their own versions of legislation that will impact both federal business and personal income tax liability. It appears that both versions include provisions that may adversely impact many “small” service businesses, such as medical practices, that have enjoyed favorable treatment under the Internal Revenue Code. As a consequence, once the legislation is enacted into law every healthcare business should review the impact of the new provisions on it and its owners.
It is not possible to identify, much less eliminate, all of the risks a healthcare business will face in 2018. What is important is to recognize the risks that appear to be most likely and take steps to reduce the likelihood of having them adversely impact the business. Working with professionals with experience in the relevant laws, accounting practices, billing and collection practices, etc., is the most prudent way to address, evaluate, and reduce these risks.

Stephen H. Siegel, Esq., Of Counsel, Broad and Cassel, LLP, can be reached at or (305) 373-9424.

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