Medical Practice Partnership Agreement Draft

Most practices use a combination of net asset value and a multiple of normalized earnings, often referred to as goodwill. You should explicitly choose one method, such as a fair market value appraisal by a specialized healthcare CPA, to avoid disputes. This formula must be clearly written into the draft before final signatures.

Legally, the medical practice entity owns the physical or electronic medical records, not the individual treating physician. The departing partner is typically granted administrative access to copy records for patients who choose to follow them, provided proper HIPAA authorization is signed. Your agreement must outline this transition process to prevent disruptions in patient care.

The agreement must designate responsibility for purchasing medical malpractice tail coverage, which protects against claims filed after a doctor leaves. Common structures require the departing partner to pay the full cost of the tail, or split it with the practice based on their years of service. Specifying this allocation prevents costly litigation when a physician exits the group.

A robust agreement contains an immediate, mandatory buy-out clause triggered by the loss or suspension of a partner's state medical license or DEA registration. This clause strips the individual of voting rights and mandates the sale of their equity back to the practice at a predetermined, often discounted, rate. This protects the clinic's regulatory standing and billing credentials.