This webinar covered various topics related to healthcare law including business entity structures, employment classifications, professional contracts, management service agreements, employee handbooks, and lease considerations. It provided overviews and comparisons of sole proprietorships, partnerships, LLCs, LPs, corporations, employees, and independent contractors. Professional contracts such as professional services agreements and physician recruitment agreements were also summarized.

1. Fundamentals in Healthcare Law Curriculum
2021 – 2022 WEBINAR SERIES
PA R S O N S B E H L E . C O M
N AT I O N A L E X P E R T I S E . R E G I O N A L L AW F I R M .
Physicians and Practices
Wednesday, July 20, 2022

2. 2
Upcoming Schedule

3. 3
Legal Disclaimer
This webinar is based on available information as of July 20, 2022, but
everyone must understand that this webinar is not a substitute for legal
advice. This presentation is not intended and will not serve as a
substitute for legal counsel on these issues.

4. 4
Agenda
• General Overview of Business Entity Structures:
◦ Sole proprietor
◦ Partnerships
◦ LLC, L.P., L.L.P.
◦ Corporations
• Differences Between Employment, Employees & Independent Contractors
• Professional Contracts
◦ Professional Services Agreements
◦ Physician Recruitment Agreements
• Management Service Agreements
• Employee Handbook
• Leases

5. 5
Presenters
Bryan L. Elwood
801.536.6781
belwood@parsonsbehle.com
Kelsie A. Kirkham
208.528.5234
kkirkham@parsonsbehle.com
Jon A. Stenquist
208.528.5228
jstenquist@parsonsbehle.com

6. General Overview of Business Entity
Structures:

7. Sole Proprietor
Pros Cons
• No Paperwork/Formalities
• Simplicity
• Exposure to personal
assets
• Requires Asset Sale to
Transfer
• Still some paperwork for
name & business
registrations

8. Partnership
Pros Cons
• 2 or more Sole Proprietors
• Easy to form (Often
accidental)
• Each partner binds the other
• Requires Partnership
Agreement (preferably in
writing)
• Personal liability remains (like
Sole Proprietor)
• Blurred lines
o Duties to others
o Involvement in other
businesses

9. Limited Partnership (L.P.)
Limited Liability Partnership (L.L.P)
Limited Liability Company (LLC)
Pros Cons
• No personal liability
• Pass through taxation
• Ownership transferrable
o Partnership Interest
o Membership Interest
• Formation documents
o Partnership Agreement
(L.P., L.L.P)
o Operating Agreement
(LLC)
• Registration Requirements

10. Corporation
S Corp
Pros Cons
• No personal liability
• Pass through taxation (S.
Corp.)
• Shares Transfer
• Regular Governance
• Formation documents
oArticles / Bylaws
• Elections
• Registration
Requirements

11. Employment: Employees &
Independent Contractors

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Who is an Independent Contractor?
What do you think?
What does the public think?
Why does it matter?
Who cares?
Can the employer choose?
Can the employee choose?

13. 13
Who is an Independent Contractor?
Generally, an independent contractor is a worker who:
• Offers their services to the public or an industry for a fee
• Is not economically dependent on any single company
• Is not an employee
• This is a legal category—the employer and employee don’t get to
“decide”

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Who is an Independent Contractor?
An independent contractor typically:
• Charges a fee for their services
• Is engaged only for the term required to perform a specified service or task
• Retains control over the method and manner of work
• Retains economic independence and is free to offer their services to more than
one company
• Is responsible for paying their own income taxes, social security, Medicare
taxes, worker’s compensation insurance, and the like
• Is not covered by most federal, state, or local laws designed to protect
employees

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What is an Independent Contractor?
An independent contractor typically does not:
• Receive company-sponsored benefits, such as paid vacation, health
insurance, or retirement benefits
• Perform the same work as the company’s employees
• Have the “indicia” of an employee, such as company uniforms, name
badges, or business cards

16. 16
Employees
An employee, by comparison, is subject to significant oversight and
control by the company and:
• Is paid wages and receives company-sponsored benefits
• Benefits from worker’s compensation insurance paid for by the employer
• Is employed for a continuous period and performs whatever tasks the company
requires
• Pays their income, social security, and Medicare taxes through the amounts
their employer is obligated to withhold from their wages
• Is economically dependent on the employer
• Is protected by applicable federal, state, and local employment laws

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Typical Classifications in Hospitals
• Independent Contracts
◦ Physicians
• Employees
◦ Nursing staff
◦ Administrative staff
◦ And most other hospital specific employees
• Hospital Forms
◦ Distinction should be noted in admission forms as a standard term, signed by
patient

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Agency and Legal Liability
• High level and very generalized distinction:
◦ Employees are agents of the company and the company can be vicariously
liable for the acts of its agents, which are performed within the scope of
employment
◦ Independent contractors are generally not considered agents of a company,
and the company is generally not legally liable for the acts of independent
contractors

19. 19
Best Practices
• Use an independent contractor agreement to establish the terms
• Avoid using independent contractors to perform work that is integral
to the business
• Require independent contractors to complete a Form W-9, Request
for Taxpayer Identification Number and Certification
• Keep independent contractor files separate from employee files
• Pay contractors by the project or by an agreed-on flat fee at regular
intervals, not by the hour, week, or month

20. Professional Contracts

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Professional Contracts
Professional Services Agreements:
1. A contract typically entered into between a healthcare practice and
a hospital (or other healthcare entity) to provide professional
services in return for a fee.
2. Often the hospital or other healthcare entity will provide the
practice with administrative support, including billing, cash
management, and employment of staff.
3. Can be complex given Stark, Anti-Kickback, Internal Revenue
Service guidelines, and Professional Employment Organization
compliance issues.

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Professional Contracts, cont.
Physician Recruitment Agreements:
1. Used when a hospital or other healthcare provider seeks to incentivize a
doctor to relocate to a particular geographical area in need of healthcare
services (especially specialty services).
2. Must be a documented need for the healthcare services.
3. Often include a guaranteed minimum salary to start a new practice in the area
(which is usually in the form of a loan payable by the doctor).
4. Usually includes a requirement that the doctor stay in the area for a minimum
number of years.
5. If the terms are met, then the guaranty/loan is forgiven. If not, then the doctor
must repay the guaranty/loan.

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Management Service Agreements
• An agreement whereby a healthcare practice contracts with a company to provide the practice
with non-clinical administrative services in return for a fee.
• Arises out of the corporate practice of medicine and fee splitting prohibitions.
• Clinical vs. Non-Clinical Services:
◦ What constitutes the practice of medicine varies from state-to-state.
◦ All medical decisions must be left to the doctors.
◦ In some states the practice of medicine includes functions that would appear to be
administrative in nature but are in fact clinical.
◦ Decisions regarding hiring clinical personnel must be made by the practice/doctor.
• Can include a simultaneous purchase and leaseback of equipment and other non-clinical assets
and the lease/sublease of office space.
• Non-clinical employees often become employees of the administrative service provider.

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Management Service Agreements, cont.
• Management services provided to healthcare practices often include:
◦ Accounting/bookkeeping;
◦ Budgeting;
◦ Billing and collecting;
◦ Accounts payable management;
◦ Marketing;
◦ Human resources;
◦ Supply and inventory management;
◦ IT/technology;
◦ Training; and
◦ Call center services.

25. Employment Handbook

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Employment Handbook
• Sets forth all general terms relating to employment
• Employees should sign acknowledgment of receipt and
understanding of the handbook
• Independent contractors are not bound by an employment handbook
• Keeping the classifications separate in company documents is
important
• Overlap creates risk of misclassification

27. 27
Lease Considerations
• HIPAA Compliance
• Hazardous Waste
• Consistent with practice?
• Part of succession planning?

28. Questions?

29. 29
Thank You
Bryan L. Elwood
801.536.6781
belwood@parsonsbehle.com
Kelsie A. Kirkham
208.528.5234
kkirkham@parsonsbehle.com
Jon A. Stenquist
208.528.5228
jstenquist@parsonsbehle.com