September 18, 2019

Bringing Disparate Ownership Together Takes Center Stage

In a recent orthopedic meeting, no less than a half dozen groups approached CMAC’s team in search of solutions for an issue that is growing more and more common. “How do we roll up properties that have diverse ownerships so that all of the partners in the practice can have an opportunity to own the real estate as one”.  Sometimes the disparate ownership is a result of growth within a single practice while a growing number of cases are generated by the merger or acquisition of practices that have pre-established ownership in their real estate.

There is good reason for these groups to seek common ownership. The benefits are immense. Of primary importance is that it allows the practice to make decisions relative to office utilization based solely on what is good for the whole without concern that the decision may have an economic benefit for one set of doctors while another group suffers an economic disadvantage.

Moreover, it provides an opportunity for all partners in the practice to share equally in the fiscal benefits of real estate ownership where each is already contributing to the real estate income through the practice. Full partner participation also brings the benefit of unifying the practice and eliminating any “have vs. have not” issues or perceived inequity from those that feel the rent is too high. The practice becomes one-minded (at least as far as its rental rates go).

Admittedly, the WHY is easy. It’s the HOW that takes a little more work. The biggest challenge is finding a way by which each subset of owners feels that they have received appropriate value for their respective properties in the process of this amalgamation. Once that is addressed, the tax considerations of the different methodologies must be considered. 

Fortunately, those seeking solutions do not have to reinvent the wheel. There are others that have come before and utilizing those experiences can go a long way in deciding what process will best fit your situation and the best methods of implementation.  There is no "one plan fits all". But there are a number of now-established protocols where at least one of many should fit. 

This very issue hit the CPOMP (Congress of Physician-Owned Medical Properties) agenda at its 2019 conference in Orlando. With CMAC Partners citing examples from case studies of its own clients, physicians discussed the pluses and minuses of various approaches. The takeaway here is that a practice faced with this issue is far from alone. The way has been paved and you need only reach out through organizations like CPOMP to connect with others who have traveled this road.