May 10, 2011



I get your emails and try to read what’s out there and I’m having a hard time understanding what actual contracts I need for my practice and why?



Well, without more guidance on specific areas of practice or even the type of practitioner, I’m happy to provide one of my general rules of thumb, which is that you need a contract anytime there is an unaccounted transfer of money.

Why? From my perspective, when I look at how a practice, or even more generally how a practitioner is set up (whether that practitioner is an MD, DDS, RN, PA or DC), I’m looking at the practitioner from a liability standpoint. Oftentimes, and most commonly, the potential liability I identify first will be monetary liability from an insurer. So, I follow how money is billed out from the practitioner and how money is flowing in to the practitioner (Billables/Account Receivables). Then I look at where the practitioner is paying money out (Overhead). Once I have my flow chart in front of me I see (from one perspective) where contracts are needed, and the answer is, contracts are needed anywhere money is flowing and should be accounted for, but isn’t. Part of your general compliance should include keeping clean books and understanding how your ARs are generated: what you bill out, how much is coming in and where its going out to.

My concrete answer to Jamie is contracts should be in place for any employment arrangement or independent contractor arrangement, lease of space or equipment, license of equipment, space or personnel, marketing services or billing services arrangement. This is certainly not an exclusive list, nor has this email addressed the multitude of reasons for having contracts in place.

Because healthcare is the most highly regulated profession (which may lose that title to finance in the near future), and auditors are out in force checking billables, referrals sources and the fair market value of arrangements, I strongly recommend that when in doubt of whether you need a contract, ask.

The above is intended to serve as a general answer to Jamie’s general question, not as an exhaustive list of those contracts you may need or an analysis of the benefit of contracts.


Copyright © 2011 by Kirschenbaum & Kirschenbaum, P.C.

All Rights Reserved. This email is provided for news and information purposes only and does not constitute legal advice or an invitation to an attorney-client relationship. While every effort has been made to ensure the accuracy of the information contained herein, Kirschenbaum & Kirschenbaum PC does not guarantee such accuracy and cannot be held liable for any errors in, any reliance upon this, or losses caused by the information. Under New York’s Code of Professional Responsibility, this material may constitute attorney advertising. Prior results do not guarantee a similar outcome.