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Thinking about starting a healthcare practice with your spouse? From navigating state laws to planning for potential challenges, we offer tips to ensure a smooth and successful partnership — personally and professionally.
When it comes to your partner, you know how they think and work, you’ve intertwined your lives, and you genuinely like them — so why not go into business together? Jackson LLP’s founding partners, Connor and Erin Jackson, often joke that they’re “partners in love, life, and law.” But running a business with your spouse isn’t always the easiest career path, and healthcare providers have unique considerations to weigh before taking the plunge.
If you and your spouse share the same healthcare license, that’s the simplest route to opening a practice together. However, suppose you hold different licenses but treat similar patient populations (e.g., a psychiatrist and licensed professional counselor). In that case, you might also consider opening a joint practice offering more holistic care. Some of the most successful practices we’ve counseled involve a licensed healthcare provider partnering with their unlicensed spouse — one handling the medical side and the other managing the administrative and business aspects.
But before you sign on the dotted line of your corporate formation documents, be sure to do your homework. Can you legally co-own a practice? Who will handle what responsibilities? What needs to be in writing? How might this decision affect your personal lives, including estate planning?
Can Spouses Form a Practice Together?
Forming a Practice With the Same License
For partners with the same license, the path is straightforward, given that you’re both licensed to provide the same services. We’ve worked with couples who are both pediatricians or dermatologists, and this can be an excellent way to ease into private practice. With shared expertise, you can consult on patients together, cover the other’s appointments as needed, and jointly supervise your clinical staff.
Navigating Two Different Licenses
For partners with different licenses, it’s a bit more complex. Even if you’re both mental health providers or rehabilitation providers treating similar clinical concerns, your state’s laws may not allow you to co-own a practice. Some states restrict professional business entities to one type of professional service. For example:
- In Illinois, only licensed clinical psychologists can be members or managers of a PLLC organized to provide clinical psychology services. Thus, if you’re a social worker and your partner is a psychologist, you won’t be able to jointly own a PLLC.
- In New York, a PLLC can offer the services that its owners are licensed to provide. A practice co-owned by a physical therapist and an occupational therapist can offer both physical and occupational therapy services. However, many exceptions exist — especially for licensed medical or mental health providers.
Ensure that your business formation complies with your specific state licensing requirements. Failure to do that could be considered unprofessional conduct in some states.
To get up to speed on the types of business formations, see our article, “Should I Form an LLC? FAQs for Healthcare Practices.”
When One Spouse Is Licensed, and the Other Isn’t
Many states restrict an unlicensed person’s ability to own or even partially own or manage a healthcare practice. These restrictions often stem from a prohibition against the corporate practice of medicine (CPOM). Various interpretations of CPOM doctrines may further limit — or, in some cases, exempt — what you aim to do.
See our related video, “The Corporate Practice of Medicine in Illinois.”
In many states, establishing a Management Services Organization (MSO) relationship facilitates compliance with CPOM. In such an arrangement, the licensed spouse owns the practice (structured as a PLLC or PC), while the unlicensed spouse owns the management company (typically an LLC). The unlicensed spouse’s business then manages the licensed spouse’s practice. While they are jointly responsible for the practice’s success, a management services agreement (MSA) clearly defines their specific roles. To learn more, review our extensive resources on MSOs and MSAs.
Defining Roles: Who Does What in the Practice?
If you and your partner determine that you can form a practice together, defining who is responsible for which functions is crucial. If you have different licenses, remember that each of you must stay within your scope of practice when supervising clinical staff.
For example, suppose you’re a licensed clinical professional counselor, and your spouse is a nurse practitioner. In that case, you can supervise a licensed professional counselor but not a registered nurse. Even if you and your partner have the same license, it’s essential to make it very clear to your employees which of you is responsible for their supervision and discipline.
In a family-run business like yours, an employee handbook can be especially useful, providing a reference point for your team when they’re unsure whom to approach.
See our related video, “Do You Really Need an Employee Handbook for Your Independent Healthcare Practice?”
You’ll also want to consider other responsibilities:
- Who will be your HIPAA Privacy Officer? (Note: your mandatory HIPAA policies and procedures manual must identify your privacy and security officers.)
- Who will serve as the head of clinical operations?
- Under whose name will the practice order supplies, including regulated substances or drugs?
- Who will be responsible for communicating with your accountant, setting aside funds for taxes, and filing documents with the IRS?
- Who will terminate employees who aren’t meeting expectations?
The list goes on. Many aspects of practice management don’t clearly fall within one person’s area of expertise, so it’s important to divide them up in a way that aligns with your individual strengths and licenses. Doing so in a way that is intuitive for your employees can also be beneficial! For example, if one person handles annual reviews while another handles employee terminations, that might create an inconsistent chain of command.
When working with a partner or spouse, it’s tempting to skip formalities and figure things out as you go. However, clarifying each person’s role and division of labor at the start of a joint partnership helps establish solid expectations for you, your staff, and your patients.
What if It’s Not Working Out? (Personally or Professionally)
It can be uncomfortable to discuss the end of a relationship — whether personal or purely professional. However, planning for the worst is crucial, as the impact of a business dissolution can extend beyond just the two of you, affecting your patients as well. In many ways, this preparation is more critical than a prenup.
Once you create a business entity, such as an LLC or PLLC, it assumes a legal identity of its own. So, what happens if one partner no longer wants to be an owner? What if you separate personally and decide to close the business? These are tough questions that become easier to address if considered in advance. When discussed in calmer times, you can make these decisions from a practical and rational perspective.
Well-drafted corporate and succession planning documents can guide you through disputes and high-tension situations. First, having corporate formation documents drawn up for your business at its very start is essential for understanding how the business will operate and how to handle a partner’s departure. These documents are valuable even if the worst never happens — they help maintain the corporate formalities that protect you and your partner from personal liability for business wrongs.
Second, if you need to restructure or close the business, consulting a healthcare attorney can make the transition smoother for you and your patients. An attorney can help you navigate compliance issues, understand your obligations to patients, and mitigate potential risks such as accusations of patient abandonment.
See our related video, “What Is Patient Abandonment in Healthcare?”
Get Legal Support
Entering into business with your life partner is an exciting prospect but requires careful organization and planning. Because the laws about practice ownership and the corporate practice of medicine vary widely among states, it’s essential to start by discussing your plans with a healthcare attorney.
Jackson LLP has worked with many family-run healthcare practices and understands the unique benefits and challenges. If you operate in any of the states where we have licensed attorneys, schedule a free consultation to learn more.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.
