Editor's Note: "DC" has received numerous inquiries generated by a mass mailing from CliniCorp that is soliciting chiropractors interested in selling their practices. To answer potential questions regarding such a transaction, Attorney Michael Schroeder was asked to comment. His involvement with many sales of chiropractic practices and as former legal council for the California Chiropractic Association and California Board of Chiropractic Examiners, coupled with his experience in litigation with Practice Management Associates (PMA), makes him the logical and knowledgeable choice for such a task.
CliniCorp and PMA share the same president and Chief Operating Officer: Peter G. Fernandez, D.C. PMA is in the process of converting its clients to CliniCorp clients and has sold its selected assets to CliniCorp. According to the CliniCorp prospectus, CliniCorp intends to employ PMA's "Practice Starter" as a part of its service to the chiropractic profession.
The first consideration in selling a practice is the amount of the purchase price and the manner in which the purchase price will be paid. If the amount of the purchase price is acceptable, deals that are not all cash deals should be scrutinized with a great deal of suspicion. Typically, when deals are not all cash, the purchasers in question want to secure their debt against your practice. If the purchasers do not make payments to you, the reason usually is that the practice has been run into the ground and is no longer generating enough income to cover the costs of the loan payments. Thus, even if you foreclose you are foreclosing on a practice that may well be useless by the time it is returned to you. Similarly, if CliniCorp offers to purchase your practice and secure it against stock in CliniCorp or your practice, you could be running the risk of never being paid if the financial affairs of either your practice or CliniCorp were to suddenly take a downward turn.
The second thing that needs to be clearly addressed is the status of each piece of property in your practice and whether it is being transferred. Typically, accounts receivable are not transferred and the selling doctor retains title to them. Additionally, if equipment in your practice is leased or if your premises are leased, these leases either have to be assigned to the purchaser or subleased to the purchaser. In many cases, the lessor of your premises or equipment must consent to such an assignment.
Given the myriad of documents that have to be exchanged, it is also prudent to hire an escrow company and have the sale handled through an escrow. It is also important that the purchaser of your practice agree to indemnify and hold you harmless in the event that suits are brought in the future for actions that are done by the purchaser after you sell the practice. It is also important to take into consideration tax implications of a sale. Some items are taxable income when received by the seller and are not depreciable when paid for by the buyer. Further, some items can be depreciated in a single year while other items must be depreciated over a number of years. Thus, the manner in which the sales price is allocated to specific items within the practice can be highly significant from a taxation point of view.
Finally, no unlicensed person, which would include a corporation, may legally practice chiropractic or run a chiropractic practice. In California, the Board of Chiropractic Examiners has already expressed an opinion that would appear to suggest that CliniCorp could not run or own chiropractic practices in California. Thus persons should be extremely careful about getting themselves into any situation where they could be accused of aiding and/or abetting the unlicensed practice of chiropractic.
Michael Schroeder, Atty.
Irvine, California
When sports chiropractors first appeared at the Olympic Games in the 1980s, it was alongside individual athletes who had experienced the benefits of chiropractic care in their training and recovery processes at home. Fast forward to Paris 2024, where chiropractic care was available in the polyclinic for all athletes, and the attitude has now evolved to recognize that “every athlete deserves access to sports chiropractic."
It is estimated that 61% of patients with CTS avoid taking surgical options due to postoperative complications and costly surgical procedures. Chiropractic care offers a comprehensive and effective treatment for carpal tunnel syndrome, addressing the condition from multiple angles. Recent studies also have unveiled a game-changing adjunct to chiropractic treatments for CTS: nerve flossing.
Some doctors thrive in a personality-based clinic and have a loyal following no matter what services or equipment they offer, but for most chiropractic offices who are trying to grow and expand, new equipment purchases help us stay relevant and continue to service our client base in the best, most up-to-date manner possible. So, regarding equipment purchasing: should you lease, get a bank loan, or pay cash?
