Tips for Chiropractors Integrating Their Practices

Inspired by numerous medical integration consultants and coaching organizations, chiropractors have increasingly pursued the integration of medical services into their practices over the past few years. Driven by the dual goals of providing comprehensive healthcare solutions and tapping into the broader healthcare spending of their patients, chiropractors are wise to approach this integration cautiously. Too often, chiropractors, excited and perhaps pressured at integration seminars, sign agreements only to later regret it due to several issues: (1) their lawyers disapprove of the advice they received, (2) they underestimated the complexities and risks involved in expanding their practice, (3) they think integration lone will fix fundamental business issues in their practice (e.g., lack of effective marketing and sales), and (4) the integration ultimately fails due to business needs of their practice that are actually intensified by adding the “weight” of an additional service line. What are some of the most significant areas of disappointment for those whose integrations did not go smoothly?

Addressing Underlying Business Problems

Using integration to solve an existing business problem can be problematic. For instance, if you’re pursuing medical integration because your chiropractic patient volume has decreased, you should first understand why your core business is suffering. Evaluate your marketing efforts – are they effective? Do you have a dedicated sales team comfortable discussing your services and fees with potential clients? Since medical integration patients typically come from your core chiropractic business, a decline in chiropractic patients will undermine the success of any new medical services you offer.  Fewer chiropractic patients will likely mean fewer integration patients.  

Navigating Legal Complexities

Many chiropractors are drawn to the promise of medical integration but often overlook the legal intricacies involved. Are you aware of the self-referral issues related to creating a second Tax Identification Number (TIN) for the medical entity? Do you understand the state and federal requirements for physician supervision? It is illegal for a newly formed entity to refer patients to itself for certain specific services. Chiropractors often find themselves following a “one-size-fits-all” model touted as standard practice with consultants and “their lawyers” who just flow the deal instead of making sure their clients understand the laws, risks and options.  It’s common for practitioners to reconsider medical integration when informed about state and federal self-referral restrictions.  Additionally, not all states require a complex “management model”; some, like Florida and approximately 12 other states, permit simpler direct services models.  Chiropractic leaders must do two important things here:  (1) accept that one size fits none, and (2) measure twice; cut once!

Clients who work with the Florida Healthcare Law Firm benefit from deep industry (both business and legal!) experience and dedicated legal support. Our team doesn’t merely dabble in healthcare law; we specialize in comprehensive representation of healthcare providers and almost every type of healthcare business. Whether you’re a new physician starting a practice or a chiropractor looking to integrate your practice, our attorneys are aligned with your success and committed to navigating the complexities of healthcare regulations to protect your interests.

By: Jeff Cohen

Founder, Florida Healthcare Law Firm

Understand the Impact of HB197

Licensed Massage Therapists (LMT) who hold a Medical Establishment license and serve as their own Designated Establishment Manager must be apprised of the employment and patient recordkeeping requirements outlined in Florida House Bill 197 which became effective on July 1, 2024. Florida House Bill 197 broadens the definition of “Designated Establishment Manager”, “Employee” and “sexual activity”. The broadened language has a critical impact on offices which rent office space to massage therapists who are required to have a Medical Establishment license. A “Designated Establishment Manager” is now defined as a licensed massage therapist or health care practitioner who is responsible for the operation of a massage establishment.  Additionally, the broadened definition of an “employee” includes independent contractors or lessees working within the massage establishment whose duties involve any aspect or capacity of the massage establishment including, but not limited to, preparing meals and cleaning regardless of whether such person is compensated for the performance of such duties. The broadened language is accompanied by ambiguity as it is not entirely clear what is considered to “involve any aspect or capacity of the massage establishment”, or “any aspect or capacity of the massage establishment including, but not limited to, preparing meals and cleaning regardless of whether such person is compensated for the performance of such duties” which leaves medical establishment owners in a state of unease for potential noncompliance despite good faith efforts to adhere to the broadened language. Further, the interpretation of the meaning is then left to the judiciary to employ rules of statutory construction to resolve these ambiguities.

Although certain definitions have been broadened, the patient and employee recordkeeping requirements which employers are responsible for are quite detailed. Employment records must include the employee’s start date, full legal name, date of birth, address, phone number, position, and a copy of their ID. These details must be recorded before the employee can provide any service or treatment. Similarly, patient records must include the date, time, type of service, the employee’s full legal name, and the client’s/patient’s full legal name, address, and phone number. These records must be maintained for at least one year after the service. If an LMT’s duties serve a non-LMT practice, they are considered an employee, requiring the non-LMT practice to comply with these recordkeeping mandates. 

In light of the broad and ambiguous language provided in the bill, non-LMT’s can protect themselves by taking precautionary measures by maintaining independence through a sublease and clear delineation of duties with the LMT who shares the office space. As such, a clear separation of respective duties might lower the regulatory risk that the non-LMT is not considered an “employee”, and the recordkeeping requirements therefore do not apply to the non-LMT subletter. It is at a minimum critical for LMT’s to maintain separate business operations and ensure clear sublease agreements and disclaimers to delineate independence from sublessees so as to not incur liability for a sublessee who is not an employee. This separation lowers the regulatory risk that the non-LMT premises owner or subletter would be considered by regulatory authorities subject to the employment and patient recordkeeping requirements. Non-LMT owners and leasers must understand when these requirements apply and maintain proper documentation to demonstrate the LMT’s independence.  

If you have any questions pertaining to how this bill may impact your specific Medical Establishment, it is important to consult with an experienced healthcare attorney to understand how to best proceed to maintain compliance.

Article By: Rachel E. Broughton | Attorney, Florida Healthcare Law Firm

Resurgence of Medical Practice Acquisitions by Private Equity

Private equity is once again showing a strong interest in acquiring medical practices and healthcare businesses. This wave of acquisitions differs significantly from the activity seen in the 1990s, where public companies focused on aggregating gross income to boost stock prices. Today, private equity investors aim to maximize profitability by achieving efficiencies, consolidating large groups for leverage, and developing new income streams. While stock options, warrants, or shares may be part of the deal, many transactions are all-cash, often based on earnings. To secure the full price, sellers typically must remain involved in the business to maintain or even increase revenues.  

Physicians, in particular, need to understand the nature of these deals and the factors that influence them. “Private equity” refers to private investors, usually a group pooling their capital, who purchase a portion or all of a company. These investments are notably larger than those from venture capital firms and do not involve publicly traded entities. The goal of private equity is to invest in mature businesses, enhance their profitability, and eventually sell their ownership stake to another buyer within three to five years. In contrast, venture capital firms often invest in start-ups, acquire complete ownership, and seek control over the company.

Key Issues for Sellers:

  1. Buyer Experience: Sellers should evaluate the buyer’s experience in their specific industry. Since buyers promise to grow the seller’s profitability, it’s crucial to confirm that they have a successful track record in similar businesses. Sellers should also seek detailed plans on how the buyer intends to achieve growth.
  2. Impact on the Seller: It’s important for sellers to understand how the acquisition will affect their income, their operations and their business operations.  Will there be significant cultural changes? Will there be major shifts at the executive level? What kind of control will the buyer exert? What effective voice will the seller have in the issues that direct impact them?  Speaking with other businesses that have been acquired by the same buyer can offer valuable insights into what to expect post-acquisition.  If the past is any predictor of the future, the happiest sellers in these transaction are the ones who have an eye on retirement within he next 3-5 years.  
  3. Buyer Plans: The timing of additional investment rounds is critical, especially if the transaction involves stock options or warrants. If the buyer is in the early stages of their investment cycle, it could take several years before any stock has real value, as the initial phase often involves significant debt accrual.  And that says nothing at all about dilution or the subordinated nature of the interest.  Unless the sellers pick the right buyer, the sellers with stock or warrants will likely just paper a bedroom closet with them!

Understanding these factors can help physicians and other healthcare business owners navigate the complexities of selling to private equity and ensure they make informed decisions that align with their goals. 

By: Jeff Cohen

Founder, Florida Healthcare Law Firm