Since 1962, James D. Yurman and his associates have been retained by employers seeking to hire a new physician. Not only does an initial employment agreement need to contain a competitive salary and bonus arrangement, but an attractive fringe benefit program may need to be included. In today’s marketplace, however, just what salary level and bonus potential are necessary to attract the right candidate? What fringe benefits are attractive and yet cost-efficient? For what term should the contract remain in effect? What can be done now to help avoid trouble later if a premature termination becomes necessary?
If you are about to begin an employment search, make sure you contact James D. Yurman for appropriate guidance. James has extensive experience in this area, as well as a network of legal professionals who will review your contracts to help you make the best decisions. We have included some introductory information for your reference below.
Structuring the Ownership Agreements
The relationship between an incoming physician and his Employer usually travels through two stages:
STAGE ONE: The time during which the incoming physician is merely an employee, and
STAGE TWO: The subsequent period when the physician becomes eligible to purchase an ownership interest.
Before signing the initial employment agreement, the incoming physician should be told what his/her future relationship with the Employer is expected to be. Then, as the time for Stage Two nears, various “ownership” documents need to be drafted and presented for both parties signatures:
1. Purchase Agreement
This is the document that details the terms of purchase including a description of what is being purchased, for how much and over what payment period.
Obviously, the document cannot be drafted until agreement has been reached about all of the many purchase variables. Essentially, the newcomer is being asked to buy an ownership interest at a price which may or may not include an inflated value to account for the goodwill of the practice and may or may not include an amount for the accounts receivable. Each different method of handling these items involves significant tax implications and thus, careful attention must be given.
The Purchase Agreement may also dictate how the newcomer’s compensation package will be determined over the next several years. Whether the terms are equitable depends upon what decision was reached with regard to the accounts receivable and goodwill factors.
2. Buy/Sell Agreement
This document typically sets out the terms for the transfer of an ownership interest upon the death, disability, retirement or termination of employment of that owner. All owners benefit from having such a document since it is always easier to arrive at a reasonable and fair decision before being distracted by someone’s death, disability, retirement or termination of employment.
Another document that may be offered involves the benefits that are available upon the termination of employment by an owner. This benefit may consist of some of the unvested retirement plan benefits and/or some of the accounts receivable of the terminated physician.
Call us to arrange an introduction with the appropriate legal professional who can suggest appropriate terms for your ownership documents and educate you by phone about the issues that need to be clarified. The fee for this service is generally based upon an hourly rate.
Contact Jim Yurman:
8500 Station Street – Suite 300G
Mentor, OH 44060
Office Phone: (440) 358 – 0605
MYREPCHAT Text: (216) 232 – 3416
E-mail: jyurman@grandriverllc.com
Other contact information:
VALMARK SECURITIES, INC.
130 Springside Drive, Suite 300
Akron, OH 44333-2431
(800) 765 – 5201