Office Sharing Agreements
By Matt Dickstein
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You use an Office Sharing Agreement for separate practices that share the same suite of offices. Here is an outline of the basic terms of an Office Sharing Agreement.
No Appearance of Partnership
From a lawyer’s perspective, priority #1 is to draw clean lines between the co-habitating practices. You do not want anyone to believe that the practices are a partnership or a combined practice. If a patient has reason to believe that you and your office-mates are partners, then you can be liable for each other’s malpractice.
To maintain the appearance of separate practices, each practice must have its own telephone number. Be sure that each practice (or the common receptionist) answers the phone using the individual practice’s own name, not a generic “Hello, medical [dental, etc.] offices.” Post clear signs on the outside door or plate glass that show the separation of practices. State in the Office Sharing Agreement that no party may imply the existence of a partnership or combined practice to any third party. On a related note, all doctors must carry malpractice insurance.
Telephones and Computers
Own your telephone number and computer system. If you move, you must be able to take your phone number and all of your data and patient records. It’s OK to share electronic health records software, so long as your data is segregated from the other practice’s data, and you can remove your data immediately when you leave.
In the Office Sharing Agreement, maintain a schedule that states the ownership of all shared equipment and the responsibility for costs, maintenance and repair. State who gets each piece of equipment if the office mates split up, or who may continue to use the equipment and under what terms.
It’s best not to share personnel. If you share personnel, state in the Office Sharing Agreement (i) who is the employer of the personnel, that is, who is responsible for employer obligations, (ii) work priorities for the shared personnel, (iii) cost sharing for the personnel, and (iv) supervision, disciplining and firing of the shared personnel. Train the shared personnel to always give the impression to patients that the doctors have separate practices.
Someone has to be in charge of the little things. Otherwise no one will do anything, and one decent person will be stuck with all the work. This includes dealing with the landlord, maintenance and cleanup, the kitchen, the coffee pot, the copy machine, the fax machine, and anything else that is shared. The Office Sharing Agreement should state who is in charge, and the compensation for this thankless responsibility. Hint: Delegate to outside contractors as much of this work as possible, and have the doctors split the cost.
It’s crucial that the Office Sharing Agreement states penalties for failure to timely pay any shared cost; and you must enforce these provisions every time. For example, a doctor’s late payment of rent on a shared Lease will force the other doctors to cover the late doctor’s rent to avoid a default under the Lease. A doctor must pay up if she puts the others at risk in this way.
Solo doctors need call and coverage help. Frequently office sharing comes up between an established doctor and a young doctor so that the young doctor can cover the older doctor’s patients, including call duties, overflow, weekends and vacations. When a doctor refers patients to another doctor in the office, the referring doctor should not receive any compensation for the referral (due to the Stark and other referral laws). The doctor providing the coverage help should directly bill and collect for the services, and keep 100% of the payment.
If it turns out that some patients migrate from the referring doctor to the coverage doctor, so be it. The referring doctor, graciously and without resentment, should accept that some patients will like the coverage doctor more. There’s enough for all of us in this world.
Doctors come and go. The Office Sharing Agreement needs a notice period for leaving the office, getting out of the office Lease (if possible), removing the departing doctor’s equipment, or paying a doctor off for her share in jointly purchased equipment.
As a final note, pay attention to the office Lease. The Lease is a contract that can bind you independent of the Office Sharing Agreement. If a doctor is a party to the Lease, the doctor might not be able to leave until a substitute tenant is found. It’s simplest if one doctor holds the Lease, and that one doctor sub-leases space to the other doctors. Be aware, however, that the master tenant / doctor will now have enhanced power and liabilities vis-à-vis the other doctors. It’s a trade-off.