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Understanding The Process of Leaving A Large Mega Group or Hospital After a Merger

On Behalf of | Mar 17, 2017 | Articles, Business Law, Healthcare Law, Healthcare Transactions

By: Mathew J. Levy, Esq. & Stacey Lipitz Marder, Esq.Weiss Zarett Brofman Sonnenklar & Levy, P.C.Email the Author

For many physicians, the idea of merging their practice with a hospital or large mega group was very attractive due to promises of increased take home pay while not having to deal with the day to day administrative duties of running a medical practice. However, after merging their practices, many physicians recognized that being part of a hospital or large mega group was not necessarily the best fit for them as they lost their autonomy and no longer had control over their own destinies. It is important to understand that physicians are not “stuck” if the merge did not meet their expectations, and that physicians certainly have options. Although a physician can certainly go back to solo practice, in today’s healthcare climate it is recommended that physicians join together in order to benefit from economies of scale and better negotiating leverage with third party payors, while still being able to control the business.

Although leaving a hospital or large mega group after a merger may seem daunting, it is completely doable and will ultimately lead to greater satisfaction going forward. To that end, if a physician is contemplating leaving a hospital or large mega group, it is in the best interest of the physician to retain a team of professionals specializing in health care, including attorneys and accountants, who have processes and procedures in place, as well as proven success. By reviewing the applicable documents and addressing potential issues while recommending solutions, the team will work with the physician toward a seamless exit taking into consideration the best interests of the physician.  Furthermore, the team will assist the physician with respect to setting up a subsequent practice.

As noted above, in order to have a smooth transition there are several items that need to be addressed. For instance, in the event that a physician is contemplating leaving a hospital or mega group, it is imperative that the documents governing the initial transaction be reviewed in order to ensure that the physician complies with the terms involving withdrawal, including giving the requisite notice.

Furthermore, physicians contemplating withdrawal need to make certain, amongst other things, that they are able to either have their old lease be reassigned or enter into a new lease at a desirable location. It is also important to make sure that a physician is not in violation of his/her restrictive covenant.

In the event a physician previously sold his/her assets of the medical practice, and those assets would have value as the physician embarks on a new path, the physician would need to consider potentially “buying-back” those assets.  The physician would also have to orchestrate the transfer of the patient records.

It is also important to evaluate the current malpractice insurance policy in place in order to ensure that the physician is protected with respect to potential claims.

In sum, if a physician is having second thoughts about a merger and is thinking of getting out, the physician should not feel trapped. There are several options available, and many physicians have successfully exited from a merger.

About the Authors:

Mathew J. Levy is a Partner of the firm and co-chairs the Firms corporate transaction and healthcare regulatory practice. Mr. Levy has particular experience in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline including OPMC and OPD, healthcare fraud & billing fraud, insurance carrier audits including prepay and post payment review, litigation & arbitration, and asset protection-estate planning. You can reach Mathew Levy at 516-627-7000 or email: [email protected].

Stacey Lipitz Marder is an associate at Weiss Zarett Brofman Sonnenklar & Levy, PC, with experience representing healthcare clients in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts and commercial real estate leases, stock and asset acquisitions and general corporate counseling.