PART 4 OF 4: Choosing and Maintaining the Right Structure

A practical framework for selecting a structure and keeping it sound.

Now that we've gone over the available structures, let's choose among them for a particular practice, aiming to maintain the structure properly over time. The right choice depends on the practice's circumstances and goals, and the wrong maintenance can undermine even a well-chosen structure. This article offers a framework for selecting and sustaining a healthcare business structure.

The factors that drive the choice

Selecting a structure means weighing several considerations against the practice's situation:

• The number of owners and whether more will be added.

• Liability protection and how the structure separates business and personal exposure.

• Tax treatment and the elections available to the entity.

• Plans for outside capital, management, or growth.

• Goals for eventual transition, sale, or succession.

Aligning structure with the practice's stage

The right structure can change as a practice evolves. A solo provider starting out, an established practice adding partners, and a group preparing for outside investment have different structural needs. A structure chosen for one stage may need to be revisited at the next, and building in flexibility where possible eases those transitions.

Maintaining corporate formalities

A structure protects only if it is respected. Professional corporations and other entities must observe ongoing formalities:

• Required filings with the Secretary of State and licensing boards.

• Corporate records, minutes, and governance actions.

• Keeping ownership compliant as providers join or leave.

• Maintaining the separation between the professional entity and any management entity.

Revisiting the structure over time

As I've mentioned repeatedly in other blogs; ownership changes, growth, new partners, regulatory developments, and shifting goals all can call for revisiting a practice's structure. A structure that fit at formation may no longer serve, and periodic review — rather than assuming the original choice remains correct — keeps the structure aligned with the practice and compliant with current law.

Coordinating legal and tax advice

Because structure sits at the intersection of licensing law, corporate law, and tax, the choice is best made with legal and tax advisors together. A structure that is sound in one dimension but not the others creates problems; coordinated advice produces a structure that works across all of them.

How West Coast Health Law Can Help

We help California providers choose the right business structure and keep it sound — from formation and governance through the periodic review that keeps a structure compliant and aligned with the practice's goals. If you are forming, reorganizing, or reviewing a healthcare practice, we can help you get the structure right. 

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every practice is different; consult a qualified attorney about your specific circumstances.