David Foy Gives Presentation to Detroit Area Ophthalmology Residents
On March 24, 2014 David Foy made a presentation “Anatomy of an Employment Contract” to Detroit Area Ophthalmology residents from Beaumont Health System, Henry Ford Health System, and Kresge Eye Institute. A copy of Mr. Foy’s Pre-Employment Due Diligence and Pre-Purchase Due Diligence Checklists may be found here.
PRE-EMPLOYMENT DUE DILIGENCE:
- Preliminary Considerations
- Google the Practice and Doctors or Dentists – 4 Star review * * * *
- Review State of Michigan License Lookup for issues
- Ask colleagues about the reputation of the Practice and Staff
- Staff retention/turnover
- Patient census
- Location, location, location
- Growing Practice or winding down
- Is this a stepping stone or are you looking for a home?
- Contracts/Legal Documents
- Employment Agreement – Key Terms.
- Term of Agreement – “for cause” versus at-will.
- Compensation and bonuses (is calculation/formula based on billings or revenues and overhead). Opportunity to review or audit? Bonus history? How are new patients assigned?
- Health/welfare, retirement & fringe benefits.
(1) Health Insurance, Dental Insurance, Eye Care (review waiting periods, co-pays, coverages and exclusions).
(2) Life Insurance.
(3) Short-term/long-term disability Insurance (review waiting periods and coverage). Any gaps in coverage?
(4) Pension/Retirement (review waiting period and vesting requirements).
(5) Vacation, personal, sick time.
(7) Moving expenses.
(8) Cell phone/pager.
(9) Car allowance. (Don’t bet on this)
- Licenses, DEA certifications, & memberships (paid or unpaid).
- Staff fees and parking.
- Non-Compete and Confidentiality Provisions.
(2) Geographical limitation.
(3) Scope (i.e. type of practice/specialty).
- Medical Malpractice/Professional Liability Insurance.
(1) Occurrence or claims based.
(2) Indemnification and Hold Harmless.
(3) Tail Coverage.
- Stock Purchase Agreement.
- Buy-Sell Agreement.
PRE-PURCHASE DUE DILIGENCE:
- Valuation of Business
- Corporate/Tax Status, i.e., P.C., Limited Liability Corporation, Partnership or Corporation (S or C corporation).
- Owned or Leased Property (review of mortgage or lease terms including leased equipment).
- Appraisal of real estate (if owned) and equipment.
- Patient demographics.
- Patient Insurance (private/Medicare/Medicaid).
- Examination of Financial Records and systems.
- Accounts receivable (collection history).
- Accounts payable.
- Financial statements, including tax returns.
- Bank Records.
- Professionals/staff profiles (hire dates, resumes, employment applications, employment contracts, salaries and benefits). Personnel files. Independent contractors.
- Stock register and minute book, if applicable.
- Articles of Incorporation/By-laws, Partnership Agreement or Articles of Organization and Operating Agreement, depending on entity status.
- Business and professional licenses and permits.
- Patient files – how maintained (HIPAA Compliance).
- Insurance coverages.
- Litigation pending and threatened.