| Read Time: 7 minutes | Healthcare Business Law

How to Sell a Medical Practice in 2021 [Step by Step]

This comprehensive guide explains how to Sell a Medical Practice in 2021. We will review the most important things to consider before you move forward with your decision. A physician may sell their medical practice for a variety of reasons. For some, a well-deserved retirement is on the horizon, while others may be seeking a better opportunity elsewhere. A sudden illness or relocation are also motives to sell. Our guide is intended to help physicians navigate this complex process. Related Article: How to Buy a Medical Practice in 2021 [What You Should Know] Build Your Team Selling a medical practice involves many legal, financial, and practical considerations. To navigate through these issues, you should recruit a team of professionals to assist you. Having experts to guide and advise you through the process will maximize the value of your practice.  The key is to build your team early in the process. While it may be tempting to jumpstart the sale process by guesstimating your practice’s value and seeking potential buyers, you could get stuck in an unfavorable situation. What may start as an informal negotiation could end up as a legally binding obligation. At a minimum, your team should consist of an attorney, accountant, and valuation expert.  Healthcare Business Law Attorney A competent healthcare attorney, experienced in the purchase and sale of medical practices, is invaluable. An attorney can assist you with the following: Compliance with state and federal healthcare laws, Due diligence, Employee and staff relations, Management of patient records,  Open contracts with third parties, and All legal documents related to the sale. Your attorney will help negotiate the terms of the sale and ensure that you do not have any unexpected obligations after it is complete. Certified Public Accountant (CPA) A CPA is integral to determining the accurate value of a medical practice. Having a CPA to create financial statements will provide a clear picture of the business’s financial status. Your CPA will also explain the tax implications of the transaction, which will help determine the type of agreement you enter into and how to structure the sale. Valuation Expert  Your medical practice’s value is the core of the entire transaction. The value affects the list price, attracts buyers, and sets the standard for the final purchase price. A health care valuation expert will perform extensive research and analysis on your medical practice to determine its fair market value, considering both tangible and intangible assets.  Valuing Your Medical Practice The valuation of the medical practice is what drives most of the negotiations toward a final purchase price. The fair market value (FMV) is the standard for valuing a practice. FMV is defined as the result of an arms-length transaction between an informed, willing buyer and an informed, willing seller. To value a medical practice, an appraiser will consider many factors, including: The nature and history of the business, Book value and financial condition, Economic outlook, Earning capacity, Fixed assets such as equipment and real estate, Goodwill and other intangible assets, Post-transaction compensation, and  Market comparables.  It is important to note that the FMV of the medical practice is not the same as the purchase price. Rather, the FMV is the basis upon which the parties determine the purchase price.  Find Multiple Buyers Having multiple offers could increase the value of your practice. The best way to locate potential buyers is to contact prospects, such as hospitals, colleagues, and competitors, and let them know you are considering selling your practice. Pre-Purchase Steps Many preliminary steps lead up to the final purchase of the medical practice. Preliminary Agreements To provide security for yourself, there are several preliminary agreements you should consider before investing time and money into the potential sale.  Letter of intent  Once you have a prospective buyer, consider executing a non-binding letter of intent. The parties can preliminarily resolve issues within the letter and outline the tasks to complete before entering into a purchase agreement. The letter of intent serves as a roadmap for the transaction.  Confidentiality and non-solicitation agreement As part of the due diligence process, the buyer will have access to confidential information of the practice, such as financial statements and employee and patient lists. To protect this information, you may want the buyer to sign a confidentiality and non-solicitation agreement. The terms of the agreement would prohibit the buyer from disclosing the information for purposes other than performing due diligence. The agreement would also bar any solicitation of employees and patients of the practice until after the sale. Structure of the Sale  You and the buyer must agree on whether the medical practice’s sale will be a stock purchase or asset purchase. A stock purchase is when the buyer purchases the entire business, taking complete ownership and acquiring all assets and liabilities. In an asset purchase, the seller remains the practice’s legal owner and the buyer purchases only specific assets, such as equipment, licenses, inventory, and goodwill. There are significant legal and tax implications to either type of sale. Your CPA and attorney can guide you on this and advise on which option best suits your needs. Due Diligence Both the buyer and seller will go through their own due diligence process. The buyer’s due diligence will involve learning the ins and outs of the medical practice to ensure that the business is accurately portrayed. To accomplish this, the buyer will do the following:  Examine financial records, including tax returns and financial statements; Review all assets and liabilities;  Ensure compliance with applicable healthcare laws and regulations; Understand the billing and coding process of the practice; Assess all current working relationships; Review all open contracts, such as supply contracts and lease agreements; and  Analyze any ongoing litigation matters. The seller’s due diligence is not quite as lengthy as the buyer’s but just as important to the transaction’s success. Ensure compliance with the corporate practice of medicine The corporate practice of medicine (CPOM) is a legal doctrine that limits who can practice medicine and provide medical services. For example,...

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| Read Time: 6 minutes | Healthcare Business Law

How to Buy a Medical Practice in 2021 [Step by Step]

This is a step-by-step guide on How to Buy a Medical Practice in 2021. Purchasing a practice is an incredible undertaking and a complex process. In this guide, you will learn how to acquire a medical practice and better understand the factors you should consider before making a final buying decision. Whether you want to expand your current practice or go completely solo, there are many practical, legal, and financial considerations. Our guide is intended to help you navigate this purchasing process. Related Article: How to Sell a Medical Practice in 2021 [Step by Step] Decide What You Are Looking For When considering a practice to purchase, you need to determine whether it fits your lifestyle and personality, not just your medical expertise. Here are some important considerations: Culture—do you see yourself working in that kind of atmosphere? Location—are you happy with the location of the practice, from the neighborhood to the actual building itself? Management style—are the services, policies, practices, and procedures within your skillset and something you are comfortable with? Staff—will the staff remain with the practice, or will you have to hire new employees? Patients—are the current patients the demographic you are comfortable providing medical care to long term? You also need to know whether you want a stock purchase or asset purchase. In a stock purchase, the buyer takes full ownership of the entire practice, including all assets and liabilities. In an asset purchase, the buyer purchases only certain assets, such as customer accounts, medical equipment, and services contracts. There are significant legal and tax consequences to both options. An experienced healthcare attorney can walk you through both purchase types and make recommendations based on your goals.  Corporate Practice of Medicine There are limitations on who can practice medicine and provide medical services. The Corporate Practice of Medicine (CPOM) is a legal doctrine that protects patients from the commercialization of medicine. Creators of the CPOM feared that health care providers would make decisions based on increasing profits as opposed to providing quality care. Under Texas’s CPOM doctrine, unless they meet an exception, corporations and business entities cannot practice medicine in the state. Additionally, corporations and non-physicians cannot employ a physician to provide health care services in Texas.  The CPOM is applicable when choosing how to structure the purchase of a medical practice. If the transaction is an asset purchase, you need to select an entity type that will be buying the assets. This entity must comply with the CPOM. Letter of Intent Once you choose a medical practice to purchase, you may consider agreeing to a non-binding letter of intent. The letter memorializes certain expectations and obligations of the parties. It is also a way to preliminarily resolve issues before going further into the purchase process. A comprehensive letter of intent sets the groundwork for the purchase agreement. Valuation The practice’s valuation is at the center of most negotiations in the purchase of a medical practice. Appraisers use the fair market value standard, which is the price that results from a bargained-for exchange between a willing, informed buyer and a willing, informed seller.  It is best to hire your own valuation expert to confirm the seller’s value of the practice. Do not blindly agree to the seller’s valuation. The seller’s broker may inflate the valuation because most brokers are commission-based, so they have an incentive to increase the value. Additionally, medical practice owners often include their sweat equity in the valuation. When you work with an appraiser, as a neutral party, he or she can provide a more accurate valuation.  Due Diligence Due diligence is an investigation of the facts and details of a company. The buyer’s due diligence process is more extensive than the seller’s. For the purchase of a medical practice, the buyer’s due diligence typically requires a review of the following: Financial statements, Assets, Books and records, Tax returns, Accounts receivable, Personnel files, Employee agreements, Patient charts, Insurance policies, and List of creditors. The buyer will also want to perform a physical inspection of the premises where the medical practice is located. The building and premises should be in compliance with all applicable building and zoning ordinances, For any third-party leases or contracts belonging to the medical practice, the buyer should know which contracts are assignable. Some contracts are essential to the operation of the practice, so the buyer will want to include those as part of the purchase. Examples include equipment and services contracts, real estate leases, software licenses, and marketing and advertising agreements. The most important contract is the real estate lease. Do not make assumptions about the property on which the practice is located. It is best to negotiate a new lease with the landlord, which may be as simple as the seller assigning his interest to the buyer.  Another part of the due diligence process is conducting a search on the medical practice as an entity and the principal owners to learn of any liens or lawsuits. This information will help you spot potential risks and give you tools to negotiate a fair purchase price and sale terms.  Lastly, the buyer should ensure that the practice is in compliance with all applicable state and federal healthcare laws and regulations. An experienced healthcare business attorney will be invaluable at this stage based on the volume of information to be evaluated. The Purchase and Sale Agreement Once all due diligence is complete, the parties will negotiate the terms of a purchase and sale agreement to finalize the transaction. This document encompasses all due diligence findings, negotiations between the parties, and legal responsibilities and obligations.  Basic Terms  As with any contract, the purchase and sale agreement will have basic provisions regarding the sale, like what is being sold, the type of sale, and the sale terms. Some of these terms might include Consideration,  Purchase price,  Time limits on financing,  Important dates, and  Consequences of failure to secure financing. The parties must fairly negotiate the purchase and ensure it is in compliance with federal laws and regulations. For example,...

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| Read Time: 4 minutes | Business Law

Partnership Agreements in Texas: Why Using a DIY Template Is a Mistake

There are dozens of websites that offer legal document templates for low or no cost. The cost of a lawyer may tempt business owners to use these templates rather than hire legal counsel, especially when it comes to forming a simple business entity like a partnership. Unfortunately, however, using a legal DIY template can pose several problems. Because Texas partnership agreements are important documents, business owners should treat them with care. Finding and using a template online comes with a number of risks that could make doing so a costly mistake. For assistance, please don’t hesitate to contact us online or call our firm at (512) 410-0343. Our Texas business lawyers will explain what you need to know about partnership agreements in Texas. Types of Texas Partnerships A partnership is one of the most basic types of business organizations. All you need to form one is two or more people engaged in a for-profit business. Legally speaking, a Texas partnership agreement is not strictly required. However, having this governing document is the best way to avoid internal issues as the business grows. There are several types of partnership, and each will require a slightly different partnership agreement. Texas partnerships can be: General partnerships (GP), Limited partnerships (LP), Limited liability partnerships (LLP), and Limited liability limited partnerships (LLLP). Each type of partnership has different advantages. Generally speaking, which type of partnership you form depends on the role that each partner has in the business. Massingill Attorneys & Counselors at Law can help you decide which type of partnership suits your business the most. Problems with Using a Partnership Agreement Texas Template As mentioned above, using a partnership agreement template is not without risk. If you’re considering using a template for your Texas partnership agreement, here are the issues you may run into and the reasons why we strongly suggest against them. Partnership Agreements Are Not “One Size Fits All” From one business to another, there are certain things that remain relatively similar. However, the governing documents for those businesses may be very different. This causes a problem when you consider that most DIY templates are designed to cover as many situations as possible. As a result, using a template partnership agreement likely means that you miss out on some of the fine tuning you may need. For example, a “partnership agreement” template may have some parts that apply to both a general and limited partnership; but at the same time, that single agreement will not work particularly well as either a Texas limited partnership agreement or general partnership agreement. Texas business owners should therefore be wary of how broad the templates are. You Won’t Know What’s Missing If you’re using a DIY template, then you probably don’t have much experience with these agreements to begin with. If that’s the case, then it is important to recognize that even if you understand what is in the template, you may know what is not in it. In other words, there could be crucial provisions missing that you are unaware of. This is one area where the benefit of an attorney cannot be overstated. By having an attorney draft your partnership agreement, you can rest assured that the agreement contains every part that it should. You Don’t Know Who Drafted the Template Even on websites that appear reputable, there is no guarantee that a lawyer or legal professional drafted the template. In fact, in many cases it is just as likely that someone drafted the partnership agreement Texas template while referencing another online template. When that happens, misinformation or poor drafting can propagate from one template to the next if various sites all use each other as a source. Unfortunately, there’s simply no way to know for sure. You Won’t Receive the Personalized Advice or Drafting a Lawyer Provides When it comes to drafting a limited partnership agreement, Texas business attorneys do more than just write out the document for you. Remember that one of the reasons a lawyer is expensive is the knowledge and training they have. Drafting any kind of business document, whether it’s a contract or a partnership agreement, is a complex process. Consequently, attorneys receive training to spot relevant issues and understand the complexity of a given legal situation. If your partnership is unique in some way or if you have specific ideas about the direction of the business, a lawyer is available to discuss those ideas with you in real time. An attorney can provide you with a custom agreement tailored specifically to your needs. While you may save some money, you won’t have access to any of that added value by using a template. You Might End Up Needing a Lawyer Anyway There are two reasons why a business owner might end up hiring a lawyer after using a template. First, businesses frequently need legal help with a variety of issues unrelated to their formation. For example, a partnership may need help negotiating a contract with another business. If you’ve already hired a lawyer to help you draft your Texas partnership agreement, then it will be that much easier if you need other legal help later on. As an added bonus, a lawyer who has been with you from the start will be more familiar with you, your business, and your goals. This can allow them to provide more efficient and effective service. More significantly, you may end up hiring a lawyer because of issues with the partnership agreement template you used. If the agreement is drafted improperly, you may run into conflicts with your business partner down the line. Depending on what the problem is, you may end up paying more than if you simply hired an experienced Texas business lawyer in the first place. Templates Are Less Flexible Than You Think Partnership agreement templates look like a good option because of how easy they seem to be. After all, what is simpler than filling in the blanks? Unfortunately, if there are larger changes you want to...

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| Read Time: 4 minutes | Business Law

Employment Contracts in Texas: Mistakes for Small Business Owners to Avoid

Contracts exist to help businesses and individuals set expectations for their professional relationship. Texas employment contracts are no different and are an important part of any small business. When drafting an employment contract, Texas businesses must be careful. Not everything that a business owner may want to include is enforceable. Therefore, having a basic understanding of Texas employment contract law is crucial, especially if drafting an employment agreement yourself. Texas Employment Agreements: Overview Texas, like most states in the U.S., is an “at-will” employment state. With at-will employment, the employee or employer may terminate the business relationship without notice at any time. They may do so for no reason or any reason not prohibited by law (for example, it would be illegal to fire someone for a discriminatory reason). When there is an employment agreement, however, the parties will instead be bound by the terms they agree to. Many businesses use some sort of employment agreement when hiring a new employee. Doing so ultimately protects both parties by clearly setting the ground rules for the employment. With that in mind, here are some common pitfalls small business owners may make in their contracts and how to avoid them. Overly Broad Non-Competition Clauses This is perhaps the most significant mistake employers make with respect to their employment agreements. Particularly in competitive industries, business owners often want to restrict their employees’ ability to work for competitors. However, Texas law places limitations on these provisions. Specifically, a agreement not to compete must be reasonable with respect to The time it remains in effect after the termination of employment; The geographic area (like a state or a county) to which the non-compete applies; and The scope of the activity covered by the non-compete. If a contract fails to be reasonable in any of these ways, a court may find it unenforceable. This may be a problem for businesses that use the same non-competition clause or agreement for all their employees. For example, a non-compete probably could not restrict a low-level sales rep the same way it could a co-owner or high-level executive. Accordingly, small businesses are better off providing a fair and balanced non-compete that a court will uphold. Business attorneys familiar with Texas employment contract law can help you draft an appropriate non-compete to protect your business. Non-Compete vs. Non-Solicitation Non-compete clauses often include a “non-solicitation clause.” While non-competes cover an employee’s competition with the business, non-solicitation clauses protect a business’s existing clients and employees. While not always strictly necessary, non-solicitation agreements are useful in industries where a former employee may try to “poach” clients or coworkers from their former employer. Ambiguous Conditions for Termination Clarifying the events or conduct for which the business may fire someone is a significant part of a well-drafted contract. Not only does it make clear to the employee what kind of conduct they should avoid, it can protect your business if an employee challenges their termination. Texas businesses have many options when it comes to termination clauses and what they include. If you’re unsure how to draft an employment termination clause, our Texas business law attorneys can help. Unclear Descriptions of Duties A common mistake business owners make is not including a sufficient job description in their Texas employment contract. While it may seem unnecessary if both you and your future employee understand what will be expected of them, clearly defining their duties can avoid headaches later on. In addition, being absolutely clear about the scope of an employee’s job can protect the business from liability later on. Under the doctrine of “respondeat superior,” courts may find an employer liable for the acts of their employees working within the scope of their employment. Whether respondeat superior applies depends on the specific facts of a given case; however, a clear job description in the employment agreement may make that determination easier if necessary. Missing or Incomplete Confidentiality Clauses When it comes to an employment agreement, Texas business owners may not always think to include a confidentiality clause. While not all businesses will need one, business owners should consider it if the employee will handle any sort of sensitive information. Texas employment agreements with a confidentiality clause should be sure to address confidentiality both during and after employment. Employees may be clear on the expectation of confidentiality while employed but may not understand their responsibility when they leave. Texas employment agreements should therefore include information about how long the confidentiality will last after an employee leaves. If you’re concerned about your employees handling sensitive information, we can help you draft a strong confidentiality agreement. Minimal Compensation and Benefits Information In the context of an employment contract, Texas businesses have the upper hand when it comes to bargaining power. As a result, employers can take advantage of opportunities to make new employees more comfortable with their position within the company. One such opportunity is clearly defining any offered compensation and benefits in the employment agreement. Doing so allows the business to explicitly establish the base salary or wage, insurance options, and how the business handles holidays and vacation time. As an added bonus, this may also allow a business to protect itself from challenges by an employee about what the company offers. Unclear Drug Testing Policies Not all employers require drug testing. But when they do, making that clear is important. Because Texas has a medical marijuana program, employees may be under the impression that their use of medical marijuana is shielded from any employer drug test. However, this is not necessarily the case. Explaining drug testing policies in the employment agreement can help businesses avoid training an employee who may take issue with those policies. Ready to Draft Your Texas Employment Contract? At Massingill Attorneys and Counselors at Law, we believe in making sure our clients understand the legal answers to their questions, no matter how complex. If you’re ready to take your business to the next level with a robust employment agreement, we can help. Contact us today...

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| Read Time: 2 minutes | Business Law

Commercial Leases and COVID-19: What You Need to Know

The novel coronavirus pandemic is making life difficult for small business owners. Many of our clients are struggling to manage newly-remote employees who have been forced to work from home due to shelter-in-place orders, applying for emergency financing, weighing employee layoffs, and fighting to keep their doors open. For many businesses, monthly rent is the largest line item in the budget. One of the most stressful and complex problems these business owners are facing is how to meet their commercial lease obligations as their business operations are crippled by the pandemic. STRUGGLING BUSINESS OWNERS SHOULD ADDRESS THIS PROBLEM HEAD ON, AND QUICKLY. WAITING WILL ONLY MAKE THINGS WORSE. If you find yourself in a similar situation, here are a few things to consider… 1. Look for a force majeure provision in your lease. “Force majeure” is a French term for “superior force” used to describe a type of contract provision that excuses nonperformance of a contractual obligation if the nonperformance is caused by certain events beyond the party’s reasonable control (floods, earthquakes, hurricanes, tornadoes, acts of God, etc.). Force majeure provisions are fairly common in commercial leases, so you should review your lease to see if it includes such a provision. Depending on the wording of this provision, you may be able to avoid certain lease obligations during the current crisis. An attorney can help you decipher your lease agreement and explain your options. 2. If your lease does not include a force majeure provision, certain common law doctrines (impossibility or impracticability) may provide some relief. These are complicated, so you’ll need to contact an attorney for assistance. 3. Finally, you might opt to negotiate temporary rent reductions or abatements with your landlord. During the financial crisis of 2008-2009, landlords commonly offered significant concessions to keep tenants in place because doing so was preferable to engaging in mass evictions. Landlords are business owners too. They’ll be making hard choices in the coming months just like their tenants, and it may be possible to negotiate a win-win lease “workout” that benefits all parties. It’s possible to do this on your own, but an attorney experienced in commercial lease negotiation may offer the best solution. IF YOU HAVE QUESTIONS ABOUT YOUR LEASE OR NEED ASSISTANCE WITH A COMMERCIAL LEASING NEGOTIATION, GIVE US A CALL AT (512) 410-0343.

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| Read Time: < 1 minute | Healthcare Business Law

Texas Chiropractors: Protect Your Practice During the COVID-19 Pandemic

On Monday, March 23, Texas healthcare attorney Joshua Massingill joined Darla Sees, an organizational development and human resources consultant, in a webinar hosted by the Texas Chiropractic Association: Protecting Your Practice During the COVID-19 Pandemic. The webinar featured important legal, financial, and human resources updates related to the novel coronavirus crisis and is essential viewing for Texas chiropractors. Also, the Texas Chiropractic Association maintains an up-to-date COVID-19 resource page, which doctors are encouraged to visit frequently for important updates and helpful resources. Finally, doctors should stay current by visiting the Texas Board of Chiropractic Examiners (TBCE)  web site. TBCE continues to post helpful information for its licensees during this pandemic. If you have questions about complying with state or local rules related to COVID-19, contact an attorney.

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| Read Time: 3 minutes | Business Law

Five Things to Know Before Selling Your Business

EDITOR’S NOTE: THIS IS A GUEST POST BY JOHN FINCHER, A CERTIFIED BUSINESS INTERMEDIARY IN AUSTIN, TEXAS. JOHN IS NOT AN ATTORNEY, BUT WE ASKED HIM TO SHARE SOME THOUGHTS WITH OUR READERS WHO MAY BE CONTEMPLATING SELLING A BUSINESS. CLICK HERE TO LEARN MORE ABOUT JOHN. 1. SELLING A BUSINESS IS A COMPLEX PROCESS AND CAN TAKE 9 MONTHS OR LONGER Selling a business is not like selling a house or any other personal property you that you own. I always say, “Selling a business has a lot of moving parts.” Those moving parts require the guidance of someone who is experienced in the process and can effectively move the deal from step-to-step. Planning is step number one and includes understanding the owner’s goals for a transaction, your company value, and signing an engagement agreement with a Sell-Side M&A Advisor. Step number two is providing the information requested from your Sell-Side M&A Advisor to prepare a Confidential Business Memorandum (CBM) with many details about your company, the market, your competition and the financials recast to show the true earnings of the business. A marketing plan is activated and buyers are contacted and required to sign a Non-Disclosure Agreement (NDA) before being presented with the CBM. On the third step, once interested buyers are located, there is a flow of additional information requested and questions answered. There are site visits after hours or on weekends to protect confidentiality that the business is for sale. A Letter of Intent (LOI) is negotiated with a buyer in this deal making stage. Finally, there is a move toward a Close that includes coordinating all of the due diligence requested from the buyer that includes your Sell-Side M&A Advisor setting up a secure data room that the buyer can access. Your Sell-Side M&A Advisor will work closely with your transactional attorney to resolve any open issues as your attorney negotiates and finalizes a Definitive Purchase Agreement. These four steps that I’ve briefly outlined require approximately nine months of time, which is the average, although deals have concluded in shorter time-frames and longer. 2. KNOW THE RIGHT TIME TO SELL When is the right time to sell your business? It would be logical to say that the right time to sell is when your business is worth the most money or selling it will achieve your financial goals. The short answer is to sell when your business has at least three years of upward trend in revenue and profitability and certainly before the next downturn, unless your business is recession proof. However, some sellers have to sell rather than want to sell. I call these the five bad D’s – Death, Divorce, Disease, Downturn and Disgruntlement and they don’t have a choice as to the timing. 3. USE YOUR LEGAL AND ACCOUNTING PROFESSIONALS TO CLEAN UP THE BUSINESS PRIOR TO THE SALE Cross your t’s and dot your i’s with expert legal advice to make sure your business is saleable from a legal perspective and with your CPA to make sure your business is saleable from an accounting perspective. Are your contracts assignable? Is your lease? Have you kept the proper annual shareholder meeting minutes if required by your legal entity? Do you have any pending lawsuits or legal matters that need settling? Do you have any regulatory or environmental issues? Do you have any tax liabilities that may need the help of your CPA professional to solve? Are your books and records accurate and will they hold up during due diligence? What is a likely tax scenario of how much you will owe upon the sale of your business and is there a compelling legal reason or tax reason to sell stock instead of assets? 4. BE MENTALLY PREPARED Are you willing to think win-win with a buyer? There are several ways to structure a sale and some will benefit the Buyer but not the Seller and others will do just the opposite. There will be much to negotiate throughout selling a business and oftentimes you will need to move toward the middle as will the Buyer. Contain your ego and emotion and use your Sell-Side M&A Advisor as an emotional buffer when necessary between you and the Buyer. Keep in mind that you will need a good relationship with the Buyer after the sale as there is much to transition from one owner to the next after the Close. 5. KNOW YOUR PATH AFTER THE SALE Know what you are going to do, after selling your business. Some people want to stay engaged with the business in some capacity and others are ready to walk away. Do you have other interests and passions to pursue that will give you purpose? John Fincher is a Certified Business Intermediary with Corporate Investment in Austin, Texas. He is a former entrepreneur who has bought, sold and merged companies and has been working for over twelve years representing sellers in M&A transactions.

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| Read Time: 4 minutes | Healthcare Business Law

Texas Stem Cell Law Update

THE FOLLOWING IS AN EDUCATIONAL ARTICLE INTENDED TO HIGHLIGHT RECENT DEVELOPMENTS THAT MAY BE OF INTEREST TO PHYSICIANS AND OTHER HEALTHCARE PRACTITIONERS. IT IS NOT A LEGAL OPINION AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE. THE HEALTHCARE INDUSTRY IS CONSTANTLY CHANGING SO FACTS, CIRCUMSTANCES, RULES AND REGULATIONS MAY CHANGE THAT WOULD ALTER THE ANALYSES BELOW. In recent weeks, the Texas Medical Board (“TMB”) has notified several physicians of complaints it has received alleging that the physician has been “aiding/abetting the unlicensed practice of medicine.” Specifically, the complaints allege that the physician is supervising midlevel practitioners (APRNs/PAs) who are “administering stem cells illegally in violation of HB 810” (emphasis added). TMB, like all licensing boards, has a duty to investigate complaints that are filed against its licensees. After receiving a complaint, TMB notifies the physician identified in the complaint, who is then given an opportunity to “furnish a narrative” responding to the allegations. Many complaints are dismissed at this stage, without TMB having ever initiated a formal investigation. In other words, these complaint letters do not necessarily indicate discipline is forthcoming. Nevertheless, they are a troubling development. The most pressing question is whether TMB’s reference to midlevel practitioners “administering stem cells illegally in violation of HB 810” is a mere restatement of the complaint it received (which is certainly possible) or whether it is telegraphing an aggressive new interpretation of HB 810 as precluding the delegation of all “stem cell” treatments. The legislation referenced in TMB’s complaint, HB 810, was passed by the 85th Texas Legislature and became effective on September 1, 2017. This bill – nicknamed “Charlie’s Law” – concerned “investigational stem cell treatments” and specified that patients are only eligible to receive such treatments if they have “a severe chronic disease or terminal illness” and their physician has “considered all other treatment options currently approved by the [FDA] and determined that those treatment options are unavailable or unlikely to alleviate the significant impairment or severe pain associated with the severe chronic disease or terminal illness” and if their physician recommends or prescribes the treatment in writing. Tex. Health & Safety Code § 1003.053. This statute defines “investigational stem cell treatments” as “adult stem cell treatment[s] that [are] under investigation in a clinical trial and [are] being administered to human participants in that trial [and have] not yet been approved for general use by the [FDA].” Tex. Health & Safety Code § 1003.051 (emphasis added). Texas stem cell laws are not a model of clarity. Nevertheless, it has been widely presumed that HB 810’s onerous restrictions do not apply to the types of “stem cell” products most commonly used in regenerative medical clinics and integrated medical-chiropractic practices, which are regulated by the U.S. Food and Drug Administration (“FDA”) as Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) under Section 361 of the Public Health Service Act (PHSA). There are several reasons to conclude that HB 810 does not apply to these so-called “361 products.” First, HB 810 specifically refers to treatments “not yet approved” by the FDA. 361 products do not require FDA approval; they must simply be registered with the FDA and comply with infection-control procedures. And because clinical trials are not required for 361 products, it seems unlikely such products would meet the definition of “investigational stem cell treatments” in HB 810. Second, it is abundantly clear that the purpose of Charlie’s Law was to circumvent FDA restrictions and thereby increase patient access to certain stem cell treatments. Again, the particular FDA restrictions at issue in the legislation do not even apply to 361 products and interpreting the law in this way would necessarily decrease patient access to such products. Third, TMB published a bulletin in May 2019 lamenting “concerns, highlighted by several recent news stories, related to a lack of proper supervision while patients are receiving treatment for certain cosmetic procedures and purported stem cell treatments.” Dr. Sherif Zaafran, M.D., FASA, Message From the TMB President: Mental Health Questions and Supervision Issues, TMB Bulletin, May 2019, at 2 (emphasis added). TMB’s concern relating to improper supervision, leads one to assume it believes that the procedure is, in fact, delegable under proper supervision. If HB 810 applies to every type of “stem cell” product, the use of all such products is restricted to physicians only, and it would therefore be illegal to delegate the administration of any “stem cell” product to a midlevel practitioner. If that were the case, it seems unlikely that TMB would suggest it is concerned about “a lack of proper supervision” when such treatments are delegated. Fourth, 361 products have been in widespread use in Texas and are commonly administered by midlevel practitioners. HB 810 became effective nearly two years ago, and until recently it did not appear that TMB was concerned about the legality of this arrangement. In short, a plain reading of the statute, a basic understanding of the legislative intent of Charlie’s Law, the recent statement published by TMB in its May 2019 bulletin, and common sense all suggest that HB 810 does not preclude a physician from delegating the administration of 361 products to midlevel practitioners. However, it is possible that TMB and/or a reviewing court might disagree with this analysis and subject delegating practitioners to discipline. Time will tell.

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| Read Time: < 1 minute | Business Law

Labor Poster Scams

Forming a business entity provides business owners with many advantages: liability protection, tax flexibility, access to capital, and more. But there is at least one downside: occasional junk mail. If you’ve recently incorporated, an “Important Notice” may arrive in an official-looking envelope informing you that you must post various labor notices in your workplace or face fines. Conveniently, they include an order form so you can purchase these forms immediately. Many of these letters are designed to mimic government notices and are intentionally deceptive (and possibly illegal). While it is true that some businesses are required to post certain notices for employees, companies that do not have employees do not have posting requirements. And for companies with employees, all of the required posters are available for free at twc.texas.gov. If you are unsure which posters you need, the U.S. Department of Labor has a Poster Advisor that will provide you with a list of required posters applicable to your business. Don’t be a victim. If you are unsure whether a mailing you have received is an official notice or misleading scam, contact an attorney.

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| Read Time: 3 minutes | Healthcare Business Law

Sex and Subluxation: A Legal Guide for Texas Chiropractors

Engaging in sexual activity with patients is, as we say in the legal field, a very bad idea. Sexual misconduct can trigger severe disciplinary action by the Texas Board of Chiropractic Examiners (“TBCE”) and civil liability for damages. Doctors who behave responsibly with patients can nevertheless face liability for sexual discrimination and harassment in the workplace. And even doctors whose personal conduct is unassailable can face liability for the actions of their employees. The risks are real. Learn how to protect yourself. SEXUAL MISCONDUCT WITH PATIENTS TBCE Rule 78.1 prohibits sexual misconduct with a patient within the chiropractic/patient relationship. “Sexual misconduct” is defined broadly to include both sexual intimacy (any conduct that is intended to cause or reasonably interpreted to cause stimulation of a sexual nature) and sexual impropriety (any behavior, gestures, statements, or expressions through any medium of communication towards a patient which may reasonably be interpreted as inappropriately seductive, sexually suggestive or demeaning). The following are examples of prohibited sexual intimacy: sexual intercourse; genital contact; touching breasts; masturbation; and any bodily exposure by licensee of normally covered body parts. The following are examples of prohibited sexual impropriety: inappropriate sexual comments about or to a patient or former patient including sexual comments about an individual’s body which demonstrate a lack of respect for the patient’s privacy; requesting unnecessary details of sexual history or sexual likes and dislikes from a patient; making a request to date a patient; and initiating conversation regarding the sexual problems, preferences, or fantasies of the licensee. There is one affirmative defense to disciplinary action enshrined in rule – if the patient is “no longer emotionally dependent on the licensee when the sexual impropriety or intimacy [begins] and the licensee [terminates] his or her professional relationship with the person more than three months before the date the sexual impropriety or intimacy [occurs].” Notably, the following excuses are not a defense to disciplinary action: the patient’s consent; the activity occurred outside professional treatment sessions; or the activity occurred off the premises regularly used by the licensee for the professional treatment of patients. HOW TO PROTECT YOURSELF FROM PATIENT COMPLAINTS Thoughtful, proactive behavior can minimize your risk of patient complaints. Communicate clearly with your patients before performing procedures in sensitive areas. Most complaints allege unwanted and inappropriate touching of breasts, buttocks, or genital areas. Before palpating pectoral muscles or lymph nodes, or treating iliopsoas muscles or anterior hip flexors, tell the patient what you’ll be doing and why. Consider having a chiropractic assistant present when treating patients of the opposite sex. If you don’t have a chiropractic assistant, consider leaving the exam room door open. Do not ask patients to disrobe unless it is absolutely necessary. If you determine that a patient should disrobe, Rule 78.1 (1)(E) obliges chiropractors to “respect a patient’s dignity at all times and […] provide appropriate gowns and/or draping and private facilities for dressing and undressing.” SEXUAL HARASSMENT In 2017, the Equal Opportunity Employment Commission (“EEOC”) recovered sexual harassment damages totaling over $46 million for aggrieved employees – and this amount only includes cases that were settled with the EEOC and does not reflect monetary benefits obtained through litigation or other means. Put simply, sexual harassment is a major problem for employers. There are two types of sexual harassment: quid pro quo harassment (in which the employee faces a negative employment consequence for refusing to submit to a harasser’s demands) and hostile work environment harassment (gender-based conduct that is pervasive or severe and interferes with an employee’s work performance). Even jokes about exchanging sexual favors for a raise have led to employee complaints against chiropractors for quid pro quo harassment. And doctors may be liable for hostile work environment harassment to an employee even if he/she was not the target of the inappropriate behavior. HOW TO PROTECT YOURSELF FROM PATIENT COMPLAINTS In general, doctors should be wary of the following: Making disparaging comments to women; Displaying sexually explicit or female-objectifying materials in the office; Showing employees and co-workers inappropriate images on your phone or other device; Using sexually explicit language in the office; Making inappropriate comments to female employees about their appearance (e.g., telling a female employee that she “has a good body”); Staring at employees in a sexually suggestive manner; Asking sexual questions of an employee; Inappropriate touching, including pinching, patting, rubbing, or purposefully brushing up against another person; and Making offensive comments about someone’s gender or sexual identity. CONCLUSION In the wake of recent scandals in Hollywood and the burgeoning #metoo movement, our culture is reconsidering the “rules” of workplace behavior. Actions that may have seemed appropriate in previous eras are now considered taboo. Doctors should exercise caution to avoid liability for sexual harassment. Sexual misconduct – it goes without saying – should be strictly avoided. Doctors should familiarize themselves with TBCE’s (justifiably) broad definition of the term and employ the common-sense strategies in this article to mitigate the risks of patient complaints.

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