A divorce is a major ordeal for the average person who must endure through this stressful process.
A person facing divorce must worry about the stress on children, the financial impact of dissolving a marriage and the general emotional scars that divorce tolls. These worries are amplified for a physician practice owner, who must worry about the financial consequences of a divorce on the medical practice and how patients will be impacted by a distracted doctor. Further adding to the complexities of a physician divorce is when both spouses are physicians and are co-owners of a medical practice. A divorce between two physicians creates a unique set of challenges that a medical practice may be forced to weather.
The Challenges of the Practice of Medicine
From the responsibility of patient care to managing a successful medical practice, physicians face a varying array of stresses in their professional lives. For many of these issues, their stress does not stop when the physician leaves the office. The burden of the practice of medicine is often carried home and creates fissures in a physician's relationship with their spouse and children. Accordingly, physicians have a divorce rate 10 percent to 20 percent higher than the general population due to the additional added stress of trying to be successful in the healthcare industry.
The stress associated with the practice of medicine can feel intensified when both spouses are physicians. Each spouse is facing the same challenges of practice and for many; home may not be an escape from professional stress. Physician spouses who own their own practice together may bring arguments they have in running their practice home and the same core arguments may carry into their personal lives, never having a definitive resolution. This unrelenting stress may cause the relationship, both business and personal, to collapse.
Breakdown
The breakup of a medical practice owned by two separate partners can be as tense as a divorce, especially if there is bad blood between the partners. Both partners are seeking to protect their own interests and to receive the best return from the investment made in the practice. Normally in these cases, a partnership/operating agreement is in place to guide the partners in the dissolution of the practice. These agreements control how much each partner will receive from the dissolution of the practice after paying off all debts and can be governing documents in any disputes between partners.
A dissolving practice that is owned by two married physicians who are also dissolving their practice face an entirely different set of wind down issues. Although these practices may have corporate governance documents, a matrimonial court may look past corporate formalities and instead arrive on a decision that is equitable for each spouse. Nine states in the United States are considered community property states in which all assets acquired during the marriage must be divided equally (i.e. 50-50) between the spouses. This division is even true if one spouse contributed more capital to the business than the other. Although this rule applies in community property states, even states which hold a traditional view of distribution of marital assets, the corporate structure of a medical practice may not be safe upon dissolution of a marriage. Many courts will look at various factors when determining dissolution of a medical practice owned by two physician spouse including whether one spouse performed more household duties (e.g. raising children, etc…) in support of the practice or if a spouse supported the other spouse in business goals while foregoing other opportunities. In these cases, a court may award one spouse a greater share of the jointly owned medical practice than would have been received under a standard partnership/operating agreement.
Another concern when a practice winds down is who owns the practices equipment, software and data. If a medical partnership is dissolving, the partners must determine if the equipment will remain with one partner and if the other partner will receive monetary compensation for the value of the equipment. Additionally, in the terms of Electronic Health Record (EHR) software, the partners should determine what access is needed to for the departing partner to retrieve necessary patient documentation. An EHR vendor would be able to split the patient files into two separate accounts for the old and new practice upon written notice from the partners. It would be important for the partners to determine what records access is needed as a hasty download of patient files from EHR software may be considered a violation of HIPAA and the patients’ privacy.
Divorcing physician practice owners are also faced with questions on the proper distribution of equipment but many times a court will decide what distribution is appropriate. As a negotiated part of a divorce settlement, a court will list in the divorce decree certain assets to remain with the medical practice such as medical equipment and EHR licenses. The results of these negotiations are often influenced by which spouse will remain in the present practice location and how the practice will be best served with the other spouse receiving equitable compensation for the value of the equipment. As with all assets acquired in a marriage, a court in a community property state will treat said assets as marital property and may enforce distribution equally unless both spouses come to an agreement on what will be best for the practice and patients moving forward.
Patient Custody Battle
The last point in the dissolution of a practice that all doctors will face, regardless if they are married to their business partner or not, is how to ensure that patient care is not affected by the disputes between partners. The partners should understand that despite the differences between them, patient care is primary and certain steps should be taken to avoid any disruptions in patient care. First, the partners should notify the patients of the pending split between the partners and what this will mean to them. Second, a data transfer plan should be developed to provide for the seamless exchange of patient information between the remaining and departing partners for any and all patients that will be transferred out of the practice. Finally, the patients’ choices in deciding which partner to see for care should be respected.
Conclusion
Relationships, whether business or personal, end. That's a fact of life. For physicians who are married to their medical practice partners, the end of the relationship has both business and personal implications. Yet if these partners communicate effectively and compromise on details to achieve a fair result, any fallout can be mitigated. Nevertheless, communication and compromise may be hard skills to learn after the breakup of a relationship.