Most patients will nod their head and sign the waivers stating they understand the risks involved with having a surgery performed outside of a hospital. Yet, when events take a turn for the worst it’s you – personally and professionally – that will be left with exposure to liability for that “risky” procedure.
What we’ll talk about here is the risk you, a surgeon or ambulatory surgery center owner, take every time a patient is wheeled into your O.R. ready for surgery. If any item on your pre-op checklist is not followed, or if a critical clerical error on a patient’s chart goes unnoticed, there can be reasons for a surgery to go awry, and you can face serious legal and financial consequences when they do.
At a traditional hospital, a surgeon has the support and resources of a larger medical facility ready and on hand during every surgery. You also have no assets tied to the rendering of the procedure and thus surgeries in hospitals are often less risky for surgeons and patients.
In the case of surgeon-owned surgery centers, however, this is not the case. The patient is under your medical care, in your facility, interacting with your staff, and using your equipment. For this reason, if you are a surgeon with a private practice, you should consider working with an asset protection attorney to help protect your assets.
One client put it best when he said, “It’s not a matter of IF I will be sued, it only a matter of WHEN.”
Asset protection attorneys have the experience needed to help clients use legal means to protect their assets from lawsuits, creditor claims, bankruptcy, and structure themselves in the smartest way to protect those assets and avoid incurring unnecessary excess tax liability. This legal advice culminates with an asset protection plan for our clients, where we go about preserving your nest egg in the United States without worrying about going offshore unless, of course, offshore asset protection is the best method of protection based on your individual situation and risk tolerance.
Hiring a lawyer to protect your assets may not seem important today, but the benefits of proactive planning vastly outweighs the alternative potential of financial loss some day in the future. This article will provide you with an understanding as to why protecting one’s assets with professional help is essential for surgeons and surgery center owners, and give you an idea as to what you can expect when working with an asset protection attorney.
Why an Ambulatory Surgery Center Owner Needs Asset Protection
Ambulatory surgery centers are often hailed as being a more convenient option when compared to a standard hospital; however, ambulatory surgery centers cannot always provide the same level of care that would be available in a hospital setting. This is largely due to the absence of high-cost infrastructure which is typically only found in hospitals. That said, ambulatory surgery centers do offer distinct benefits. For example, surgeons can devise their own procedures without hospital administration oversight and stringent regulations. In fact, in 2019, it was reported that ambulatory surgery centers perform well over half of all surgeries in the U.S. each year.
Your ability to provide superior care in specialized areas comes with additional risks to you, both professionally and personally. Many of these risks are derived from laws related to illegal referrals with penalties, which can result in serious civil penalties and statutory fines.
True, you can find plenty of tools online to help you get your assets in order yourself. But as you know, researching symptoms online never really gets a patient the answer they are looking for, and they often then seek medical advice from a medical professional.
Without the guidance of a comprehensive legal strategy and roadmap created by an asset protection attorney, you run the risk of being unnecessarily exposed. You need to hire a professional familiar with the laws regarding structuring a medical practice, advertising for a surgery center, managing the surgery center operations, retirement planning, and growing your private practice. Weighing some of those risks and reviewing the complex laws relating to surgeon-owned surgery centers may provide perspective as to why legal expertise is a must. Here are some risks to keep in mind:
- Tax Risks: Suppose your surgery center operates in a commercial condo that you also own, or suppose the expensive medical equipment being used by you and your staff is owned directly by your medical corporation. All of these things could be subject to unnecessary taxation if not intelligently segregated and structured in a way that provides you with the most protection and tax advantages. The technique of “building a wall” between you and your surgery center is paramount and will be expanded on later in the article. Taxes, wills, trusts, and liability will all come into play and no resource can help you understand their complexities as well as an asset protection lawyer.
- Legal Risks: Lawsuits can do great damage to a surgery center. To start, your own reputation is on the line – not just as a surgeon but also as a trustworthy member of your community. Second, even small lawsuits can be devastating and costly to both you and your medical practice. Although medical malpractice insurance will cover a physician from liability in many instances, it’s better to hire a law firm to create “walls” of legal protection between you and your risky surgery center. Then, even if insurance denies your claim, your assets are still protected.
- One-Shot Insurance: After a claim is filed, and if your insurance carrier pays out the claim, it’s very unlikely for that insurance company or any other to continue to offer you a policy. You may be left in a situation where it’s almost impossible or cost prohibitive to find liability coverage for the rest of your career.
The Complexities of Legislation: AKS and Stark Law
To illustrate the difficulty posed by complex legislation, let’s have a look at some legislation which is notorious for providing much confusion and anxiety among physicians.
The Stark statute is one of these pieces of federal legislation, which is incredibly easy for a physician to violate if not extremely careful. The federal Anti-Kickback Statute (ATS) is similar to the Stark Statute. Both laws regulate the manner in which medical practices can refer patients and receive referrals. The aim of these laws is to ensure that referrals are based on the needs of the patient and not the financial benefit of the doctor or medical organization.
With the federal government spending more and more time prosecuting fraud in the medical field, surgery centers must be increasingly careful not to violate regulatory statutes. The False Claims Act (FCA) encourages anyone involved in a medical business, as an employee, client, or partner, to make the authorities aware of illegal referrals. Incentives are provided for whistleblowers in the form of a percentage of the recovery. Penalties for violating these laws may result in statutory fines, legal fees, interest, and civil penalties. A medical practice may be prohibited from billing Medicare and other federal care agencies, which can be devastating.
The complex nature of Stark Law and AKS is such that without engaging an attorney who has experience serving clients who are doctors and surgeons, you’ll be hard pressed to not violate any part of the statues. Even if a doctor has no intention of taking advantage of their clients or government funds, violations and prosecution can still occur.
Smart Structuring Can Potentially Realize Millions in Working Capital
Slow-paying patients or delays with payment on medical insurance claims can accumulate quickly, and this can result in your practice having millions in outstanding receivables. When this happens, you now have a huge asset sitting in your business that is not being put to work. Further, the receivables are still owned by your medical practice, so any creditor with a judgement will seek to attach those uncollected funds.
As part of asset protection for our doctor-clients, we look at the concept of factoring to see if there’s a need to extract that receivable asset from the business, and there almost always is.
Medical receivables factoring provides you with instant working capital. You, or an entity you own, will also own a medical factoring company, and the factoring company will finance the purchase of the receivables of your medical practice or surgery center. Assigning a factor rate and addressing the mechanics will be handled by an asset protection attorney to ensure you maintain compliance with both state and federal law.
Preparing for Your First Conversation
So, you’ve decided to hire a lawyer to protect your assets – and you have made the right choice. To prepare for your first meeting with a lawyer, consider the following:
- Get documents in order: Although the DIY method is clearly not ideal for the entire asset protection process, you want to do a little legwork to be prepared with information, such as financial statements from your medical practice, knowing who or what entity owns which of your assets, and other details about your financial situation like investment performance.
- Build a wall: Building a wall is a must in asset protection. The concept is quite easy to understand. You own a medical practice which generates profits and those profits are then used by you outside of your practice. A family residence, equities, bonds, other real property investments, and other business investments are examples of places these profits may end up. Building a wall means creating a division between your medical practice and these other assets. Asset protections trusts and entities are a typical way by which a surgery center, and indeed any business, can separate themselves and liabilities from their asset.
- Separate Business Assets: Separating business assets is similar to the act of building a wall described above. A more appropriate metaphor here might be putting your assets in the correct buckets. If you are operating your surgery center or medical practice in a medical building that you own, and you use equipment that has been purchased or leased, it can be beneficial to examine each of your business assets to determine how many and what separate “buckets” are needed. This is done to protect your assets in one business from your creditors in another.
- Be willing to be flexible about your approach: All asset protection is going to involve a similar process. There will be a review of your business practices, including existing entities and any trusts. We’ll also discuss a complete inventory of your assets and your liabilities. There will be little variation in this process as it is the same for any individual owning a surgery center whether it is surgeon-owned, limited partner operated, single-specialty, or multi-specialty. What does vary in the process is your approach. Your approach to asset protection may look different than you originally intended once you learn the options available to you. At Sollertis, we combine legal strategy with financial intelligence to offer you any option that makes sense.
- Be ready for honesty: Your first meeting with an asset protection attorney who will be responsible for your financial security and financial freedom is not the time to worry about sugarcoating indelicate-sounding issues. Being completely open and honest in regards to every aspect of your financial life is essential to crafting the strongest and best solution for you long-term. You want to provide your attorney with the concrete facts without obscuring anything; otherwise, we’re in the dark and unable to help you to the best of our ability.
- Express your needs and desires: Asset protection is not a one and done deal or a do-it-once and forget about it solution. Businesses, and more specifically people, are constantly acquiring and disposing of assets, changing professional relationships, changing personal relationships, and all are fluid aspects which impact your best protection solution. Regardless of your situation, the most important thing is to express exactly what you want and we’ll share with you if and how we can make that possible. If a one-time asset and risk assessment is your wish, make that known. If you are in need of a more full-time asset protection and business management approach, express that too.
As you can see, there are many asset protection tools available to surgeons. Above all else, remember that asset protection is like insurance: it doesn’t work unless you have it in place before the claim. If you wait to take action, anything can happen – and next month may be too late to protect what is already in the sights of creditors or litigants.
What Should I Do Next?
The complexities of running a surgery center or any medical practice are extensive. There is no one-size-fits-all solution when it comes to asset protection because each person and business is unique. You now have a better understanding about why you need asset protection and how an asset protection law firm can work to cover you in all areas of your practice.
Consider the level of legal involvement and oversight you desire, this can help you in determining if asset protection with Sollertis is the right fit for you. If you need a law firm capable of handling complex and continuous work for your practice and other businesses, Sollertis is likely the perfect option for you.
Sollertis is a law firm with a team of attorneys who’s daily focus is on helping our clients achieve financial freedom. Through the process of personal and business asset protection, Sollertis puts to use legal strategies that help you organize, protect and grow your wealth.
We view asset protection not as a three-month project, but rather a lifetime objective. If you are looking for a committed and experienced law firm with partners that form long lasting relationships with clients, turn to the professionals at Sollertis.