Navigating Legal Structures for Healthcare Practices in Texas
Choosing the right entity and structure for your healthcare practice is a critical decision that directly influences compliance adherence, operational flexibility, tax efficiency, and risk mitigation strategies. Whether you’re a licensed physician, physician assistant, or another healthcare professional, your careful selection of the practice’s legal framework can pave the way for sustainable success and growth.
When you start a medical practice in Texas, understanding your options – LLPs, PLLCs, and PAs – is crucial. Texas law prohibits the corporate practice of medicine, highlighting the necessity for a compliant and liability-conscious legal structure.
Professional Limited Liability Company (PLLC):
In Texas, a PLLC operates much like a traditional LLC but caters specifically to professional service businesses. PLLCs grant members limited personal liability, shielding them from individual responsibility for company debts. Additionally, PLLCs have the option for pass-through tax treatment, ensuring profits are taxed as member income. This structure enables flexibility in management through customized operating agreements.
Professional Associations (PA):
In Texas, licensed physicians establish Professional Associations (PAs) while maintaining the doctor-patient relationship and providing liability protection akin to corporations. PAs, governed by boards of directors or executive committees. They facilitate physician collaboration, enabling resource pooling, expertise sharing, and coordinated efforts to address healthcare challenges. PAs play a crucial role as platforms for effective physician organization, ensuring compliance and upholding high standards of patient care.
Limited Liability Partnership (LLP):
LLPs afford partners limited liability protection, safeguarding personal assets in the face of legal claims against the partnership. With pass-through taxation, LLPs allocate profits directly to partners, who are then individually taxed on their share.
For Non-Physicians:
While non-physicians are barred from practicing medicine in Texas, collaborative ventures with physicians are feasible through joint ventures or management services organizations (MSOs). These ventures necessitate meticulous adherence to the Texas Business Organizations Code and should be established under the guidance of legal counsel.
Ownership for Physician Assistants:
Physician assistants may hold minority ownership interests in PA, PLLC, or LLP entities, provided that physicians maintain control and adhere to regulations prohibiting the corporate practice of medicine. It’s crucial to observe the restrictions outlined by the Texas Physician Assistant Board.
Seeking Assistance:
Considering the unique complexities of each medical practice, it’s highly advisable to consult a seasoned healthcare law attorney to determine the most suitable legal structure. Our dedicated team provides personalized guidance tailored to your needs and objectives, whether you’re an experienced practitioner or new to the field.
Selecting the right entity and structure for your healthcare practice is crucial, influencing compliance, flexibility, taxes, and risk. Regardless of your profession—physician, physician assistant, or other—your choice can lead to sustainable success. Understanding options like LLPs, PLLCs, and PAs is vital when starting a medical practice in Texas due to the ban on corporate medicine. We urge you to consult a seasoned healthcare law attorney for personalized guidance.
For expert advice on legal matters about your healthcare business, consider scheduling a free discussion with Dike Law Group at dorismeet.com.
