A guide to organizing joint ventures with physicians

Catholic health care facilities must consider the business and legal risks, canon law, and other constraints when planning a joint venture with physicians. Participants should first establish goals and compatibility, then determine the venture's type (property, service), form ("true," lease, contract), and structure (corporation, partnership, joint property ownership, trust). The administrator must decide whether the facility will participate directly in the venture or form a separate organization. Participants must determine their relationships with the venture, choosing among many options. The administrator should consider whether a venture raises any canon law issues, especially regarding ecclesiastical and secular assets, approval by the local bishop or Holy See, and need for consultation. Other pertinent legal issues include: Fraud and abuse. The venture should not appear as compensation to induce referrals. Physician referrals. Many states prohibit or restrict referrals by physician participants. Antitrust law. Participants may be liable for actions constituting on antitrust violation. Securities low. Organizers must clarify Securities and Exchange Commission registration exemptions and observe state "blue sky" laws. Tax issues. Catholic health care facilities must consider such factors as tax-exempt status, unrelated business income, taxable subsidiaries, and public charity status. Other considerations include tax ramifications for physicians; tax shelter registration; certificate of need (CON), licensing, and building standards; effects on reimbursement and pension plans; organizational and bond documents; corporate medical practice and fee-splitting questions; and labor and contractual issues.