I am a Practicing Physician and I Want to Start an “Education and Support” Business. What Legal Issues Should I Consider?

We have experienced an increase in physician clients who want to grow their business to include “education” and “coaching.” However, in these “businesses” they do not want to “practice medicine” or “prescribe medications.” They simply want to “provide education and support” related to their specialty areas. The most frequent inquiries we receive are from psychiatrists; however, other specialties inquire, e.g., primary care physicians. There are legal issues that must be considered, and we cite examples below. Please note that this is not an exhaustive list.

Consider Creating a Separate Legal Entity

Creating a separate legal entity to provide education and coaching support is recommended for liability and asset protection. Under this strategy, if the practice entity is sued, a judgment cannot reach the assets of the educational entity and vice versa. The key to remember here is to truly keep the entities separate – separate bank accounts, separate contracts with employees, if necessary, and separate agreements with the practice entity for shared assets such as equipment, office space, etc.

Another benefit to having separate entities is that the educational entity is not required to be registered with the Illinois Department of Financial and Professional Regulation (IDFPR) and, therefore, needs no separate entity license. Other states may vary.

Finally, if there are potential plans to sell either the practice or the educational portion in the future, having separate entities for each business will make it easier to sell to a future purchaser.

Consult with an Expert about Liability Insurance

Liability insurance is a necessary concern in this type of endeavor. However, the TYPE of insurance needed should be determined by an insurance expert (broker). It should not be assumed that a medical malpractice insurance policy will apply.

Use a Consent Form with a Disclaimer

The consent form should specifically state that clients who use the education and coaching services are not entering into a physician/patient relationship; understand that medical treatment is not being provided; that the services are not reimbursable under any health insurance program; and that these services are intended solely for education and clients requiring professional medical services should consult a licensed professional in their state.

For further information contact us.