What is the advantage of a California Professional Corporation for your medical practice or professional practice in San Diego, or anywhere in the State of California? Why should you consider working with the Watkins Firm if you are a medical practice or healthcare business in California?
Key Takeaways About a California Professional Corporation for Your San Diego Medical Practice:
- California has specifically established the Professional Corporation or PC for those with advanced licensing and degrees in California, including physicians and healthcare professionals.
- The California Professional Corporation or PC provides additional protections for shareholders as well as expanded deductions and financial advantages that is unavailable in other corporate entities.
- An MSO is an excellent addition to consider if you are a licensed professional, medical practice, or healthcare business.
Why is a California Professional Corporation or PC the Best Entity for Licensed Professionals?
Why is a California PC a better legal entity than an LLC, S-Corporation or C-Corporation? California has specifically established the Professional Corporation or PC for those with advanced licensing and degrees in California such as:
- Doctors, Physicians and MD’s
- Dentistry Practices
- Attorneys and Lawyers
- Certified Public Accountants
- Architects
- Engineers
The California Professional Corporation or PC provides additional protections for shareholders as well as expanded deductions and financial advantages. The first protection of a PC is the separation of liability between shareholders of the Professional Corporation. Each shareholder is held separate and not liable for malpractice or negligence and the associated liabilities caused by another shareholder in the PC.
The California Professional Corporation for a healthcare business allows physicians and licensed professionals to make increased retirement contributions to the company 401(k) when compared to other corporate entities. Under the structure of a California PC, healthcare professionals are able to take advantage of additional tax deductions for a variety of benefits including health insurance, malpractice insurance, disability, life insurance and dependent care.
An MSO Makes an Excellent Compliment to a California PC
An MSO or Management Services Organization is a legal and ethical strategy for streamlining supporting services and facilities for licensed professionals in California. It provides the ability to explore new opportunities for reducing costs and increasing profitability during one of the most challenging periods in recent history. There are risks for licensed medical practitioners and it is important to understand those risks and develop strategies to reduce or eliminate exposure.
The MSO allows medical professionals to draw upon the broad base of available investment capital searching for entry into the healthcare industry. It also allows medical practitioners to partner with business operations experts who can provide streamlined operations to reduce cost and increase profits. An MSO works with a healthcare entity by modernizing the business practices and supportive services and streamlining expenses. It provides integrated services which ultimately should allow an entity to provide better healthcare services to its patients, improve the “experience” of the patient with the facility and it’s providers while reducing overhead and improving profitability.
The Watkins Firm has served the medical professional and the healthcare industry in San Diego for decades. Our attorneys have extensive experience and expertise in the formation of healthcare related businesses and medical practices, such as physician groups, urgent care and surgery centers, hospitals and dental practices. We provide sound general business counsel to healthcare related businesses to ensure compliance with the complex federal, state and local legal and regulatory requirements including OSHA and HIPPA compliance. We are familiar with insurance terminology and billing codes and the unique legal issues associated with employment agreements for physicians, dentists, nurses, and medical technicians.
Pro-Tip: “It’s wonderful. It’s complicated, and it is completely involved. Unlike any other law we do. We’ve been doing this since the 1980s, representing doctors and medical entities, and physicians are the smartest people on the planet and they operate in laws that are the most complicated for any business I’ve ever heard of. My first job as an attorney I started working for an attorney named Chris Popov, who’s with me today. And that’s what his practice was, forming, selling and buying healthcare providers, companies, forming medical corporations, PT clinics, MRI centers, psychiatric groups that operated in multiple states, all kinds of complex laws, medical rules and regulations. And it, it took many, many years to master this area of law. I’m still learning.
The medical practice act, business and professions code section 2052 and the California business and professions code section 2400, generally cover a lot of what you can and can’t do. And one of the things you have to understand is who and can’t own a healthcare practice and what types of procedures you can use to facilitate the sale of a healthcare practice, to other licensed professionals. And also, how can we involve other business entities that aren’t licensed professionals in such a transaction?
The California Professional Corporation is a healthcare provider’s only business vehicle. Healthcare providers can’t be limited liability companies. They can’t be these other types of entities. They can be general partners, which is severe liability, or they can be professional healthcare corporations, which shields them from personal liability. To some extent, although a licensed doctor, the one who’s doing the work is always going to be personally liable. That’s why they have to spend so much money on malpractice insurance, but it also is a vehicle where you can bring in other shareholders who qualify. And there are a list of exceptions. Usually most of the owners of a professional corporation providing healthcare have to be licensed healthcare personnel, but there’s a list of exceptions to that law, but it is what doctors use to do business.
Most healthcare businesses have realized the cost savings and profitable advantages of Management Services Organization or MSOs. They can enter into agreements with other corporations or other business service providers. They can buy their own ancillary service providers as long as they comply with all the requirements for that too. So a sole medical practice through their medical corporation can branch out into other forms of business if they know how to do it. And if they work with an experienced lawyer at the Watkins Firm, we can structure everything so that they’re in compliance with Medicare and also the licensing rules and regulations for California, and any other state they’re in.” – Dan Watkins, Founding Partner
If you would like to learn more about the advantages of the California Professional Corporation for your San Diego Medical Practice we invite you to review our Podcasts “Episode 7: Medical Practices and Healthcare Businesses, Episode 30 – Management Services Organizations or MSOs, and Episode 37 – Medical Practice and Healthcare Governance and Compliance,” as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
Meet Daniel Watkins:
Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through. Dan enjoys digging into the facts and finding creative solutions to problems. He contributes his insights candidly and constructively.
Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.
Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.
He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.
THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR
Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.
In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.
