Q:

Dear Dr. Margolies,

My dad has been a practicing Chiropractor since 1980.  He is now looking at phasing 
himself out of the business.  He and I work together on a variety of real-estate and business 
projects, and now we are investing together to develop a brand new office complex for his 
practice.  I know that it may seem strange that someone who is thinking about retiring soon
would want the huge investment of having a new office built.  However, he has been 
leasing his current office for over 17 years, and he would like to have his own building for 
the last couple of years he's in practice.  We plan on subdividing and leasing out remaining 
sections of the building to other health care related businesses.

My question is this, once he is retired he wants to bring in an associate or IC.  The deal that 
he and I have discussed would essentially have us providing the building rent-free, all 
equipment, all marketing materials, and all utilities to the associate or IC in exchange for a 
60/40 split on collections (their favor).  If something were to happen to my father, and he
became incapacitated or even died, would I still be able to own and manage the business as 
an administrator even though I'm not a D.C.?  I have a friend in Florida who is not a 
doctor, but owns a few medical facilities. He simply hires doctors, pays them a salary, 
covers all operational expenses for the business, and collects the revenue from billed 
services.  I think my situation would be similar if that should ever come about, but I just 
wanted to ask your opinion.

Thanks,

A:

Thanks for the e-mail and question. My first question to you is why would your father 
want to place himself in debt owning a bldg at this stage of the game. I rented a bldg for 19 
years prior to finally buying a bldg and taking out a mortgage for about $200,000. I hope 
to pay it all off in 3-4 years but I am the primary doctor and keep all the money .. if your 
father wishes to retire now and therefore would rather take more time off .. he will be 
dependent on the IC's or associates for income and they can walk away at anytime leaving 
the debt unfilled and forcing him to return to full time work etc. This has to be considered. 
I think equity and property is great for investment purposes and recommend it but these 
questions have to be answered first to determine the comfort level and possible scenarios. 

As far as you owning the practice and being a CEO of sorts .. why not. The only problem 
comes in when you are not the doctor and therefore contract with insurance providers and 
possible liability (lawsuits) etc. I would be careful to have papers drawn up by a corporate 
attorney and be very clear that liability is understood and possibly own some sort of policy 
yourslef .. such as property liability. But as far as you owning the business and being the 
manager .. why not. You hire and you fire and you also have your own CA .. accountant .. 
billing service that everything goes through that allows you accountability. It can work 

Hope this helps. When the time comes there are some DC's that can help you set it all up 
for a fee

Have a Great Day and Holiday Season

Dr. M