Operating and Owning with a

non-Optometrist "Partner"

As a general rule, optometrists cannot be partners with non-optometrists. There are some exceptions, such as in California an optometric corporation can have a minority shareholder that is licensed in a number of healthcare professions such as medicine, dentistry, nursing, psychology, etc. But, if you want to have a non-doctor "partner" (including an optician) in most jurisdictions you will need to jump through some proverbial hoops to do it legally. 

Nonetheless, attorneys experienced in this area of law know how to work around most of the restrictions such that a non-doctor can share in the profits (and losses) of an optometry practice and how optometrists and opticians can have a form of "joint ownership" over a business. Here is the general outline of how it is done. 

ASSUMPTIONS

1. One optometrist wishes to have one or more non-doctor partners. 
2. The partners will share in the profits and losses of the optometry practice per their agreement. 
3. The partners will own the furniture, fixtures, equipment, and inventory. 
4. The non-doctor partner(s) will work for the practice as office manager, etc. (optional).

ENTITY FORMATION

1. First, a professional corporation is created for the optometry practice. This will be a "C" corporation, not "S."  
2. The optometry corporation will be solely owned by the optometrist who will also be the sole Director and sole Officer. 
3. Next, a non-professional entity (corporation or LLC) is created to serve as a management company. 
4. The management company will be jointly owned by the optometrist and the non-optometrist "partner." 
5. The optometrist and non-optometrist enter into a written Shareholder's Agreement concerning ownership and control of the management company. 

OPERATIONAL CONTRACTS

At the heart of arranging for an optometrist and a non-optometrist to "partner" in the operations of an optometry practice (or multiple optometry practices) is a set of operational contracts that structure the partnership so that (a) it is entirely legal and (b) it allows the non-optometrist to share in the profits of the optometry practice. With that in mind, here is a brief description of the various contracts that need to be prepared and put in place to ensure full compliance with laws that bar non-optometrists from "owning" an optometry practice. 

1. The agreement begins with a Master Agreement which sets out the intent of the parties. This is essential for dispute resolution should a dispute arise down the line. This agreement also puts certain limitations on how the parties can act. 
2. The Optometrist enters into a Professional Services Agreement with the optometry corporation to be the optometrist for the practice. He/she gets the agreed upon pay as an optometrist. (Could be a per diem, could be salary, could be a % of revenue, etc.) 
3. The non-optometrist partners enter into Employment Agreements with the optometry corporation to pay fair value for the job positions. 
4. The optometry corporation enters into a Billing Services Agreement with the management company.
5. The optometry corporation enters into an Equipment Lease with the management company to lease the equipment.
6. The optometry corporation enters into a Consignment Agreement with the management company for inventory. 
7. The optometry corporation enters into a Business Associate Agreement with the management company. 
8. The optometry corporation enters into a Line of Credit to allow for months/periods in which the management fee exceeds the revenue available to pay it. 
9. The optometrist enters into a Continuity Agreement with the management company to restrict the optometrists from selling the shares of stock he/she owns in the optometry corporation. 
10. For the lease, the management company enters into a lease agreement for the premises and the optometry corporation enters into a Sublease Agreement with the management company. 

OPERATIONS

The fundamental aspect of the arrangement is that the optometry practice operates in the usual and customary way of any optometry practice. It employs the optometrist and the staff, has its accounts, does its billing, etc. The only thing that is different from an ordinary practice is that this practice retains a billing services company that oversees some of the practice's business operations (essentially an office manager/billing company/management company) and pays that company a fee -- a fee which meets or exceeds the profits of the business -- for its services. This results in the profits flowing (in the form of the fee) "upstream" to the management company which is jointly owned by the optometrist and the non-optometrist. They can share those profits however they wish.

Needless to say, this is a seemingly complex arrangement. It involves the drafting of a lot of agreements and it requires a careful implementation so that all involved know their structure and operations do not get confused. But, in the end, you are simply operating two businesses: an optometry practice owned by the optometrist and a management service organization jointly owned by the optometrist and the non-optometrist "partner." The agreements are carefully drafted to ensure compliance with law and that there is no "corporate practice of optometry." 

VARIATIONS

There are several variations of this arrangement which can be implemented. The most common is where an optician wishes to bring an optometrist in as a "partner" so that professional services can be provided and third-party payers can be brought into the fold. Most commonly the optician has an operating optical business and is investing all the money (in terms of equipment, space, inventory). A few additional agreements are needed to protect the interests of the optician in that scenario. 

Another common situation is where the two (or more) partners which to own, not one, but multiple optometry practices. This is readily managed and implemented through the Master Agreement with each optometry practice being a separate entity entering into its own set of agreements, but with a single common management company.

In some of these structures it can be advantageous for the non-professional staff to work for the management company and not the individual optometry practice. This allows for easier management of human resources and better benefit pricing (i.e., less costly health insurance), especially where there are multiple practices involved. That is easily implemented via employee leasing provisions in the Billing Services Agreements. 

NEXT STEPS

If you feel up to the task to implementing this without an attorney's oversight you can purchase the packet of agreements described above in a generic form (blanks where names and dates go, dollar amounts entered, etc., which need to be completed to finalize the structure; and the two corporations need to be created separately) for $8,500 by clicking HERE. You will receive the following documents:

• Master Agreement
• Professional Services Agreement
• Employment Agreement
• Billing Services Agreement
• Equipment Lease Agreement
• Consignment Agreement
• Business Associate Agreement
• Line of Credit
• Continuity Agreement

On your own you'll need to form the optometric and management corporations and have a shareholder's agreement prepared which reflects the terms of your agreement with your partner(s) and what happens if one of you dies, retires, etc. 

If you have an interest or need for this kind of arrangement and want Dr. Steinberg to help walk you through it, form the entities, and complete all the agreements he is available to do so. Dr. Steinberg has arranged and helped in the operations of dozens of these OD - Non-OD partnerships and he can do the same for you. Just reach out to This email address is being protected from spambots. You need JavaScript enabled to view it. and let Dr. Steinberg know what it is you are trying to achieve.