Under one roof: When specialist and generalist share space

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Once veterinary specialists complete their training and manage to successfully navigate the board certification process, they have many career paths and opportunities available to them. Increasingly, boarded doctors are highly sought after by large multispecialty veterinary practices, emergency centers and corporate veterinary practice groups.

In addition, there is always the option-though it requires a high risk tolerance and an entrepreneurial streak-for specialists to open their own brick-and-mortar practice. For many boarded specialists, this works out fine, provided that the location demographics support such a career path. Most of these practices, naturally, open in large cities where there is a sufficiently strong patient base to support the overhead costs associated with owning a specialty clinic.

In less densely populated areas, there's another option-sharing space in a general practice hospital.

In this scenario, the boarded doctor practices in a generalist's brick-and-mortar clinic, perhaps as an independent contractor or a subtenant. It can work out well if the location is large enough to house the specialist, who carries out their own private practice within the confines of somebody else's premises, whether owned or rented.

I have some personal experience in how successful this specialist-generalist relationship can be. A few years ago, one of my clinics provided space to a board-certified radiologist who worked one day a week in our community of about 100,000 people. On other days of the week, this gentleman provided similar services to other moderate-sized communities while maintaining a headquarters in a large clinic about an hour away.

It was a win-win-win: Clients didn't need to travel hours in order to obtain expert ultrasonography, we loved having quick access to the expertise, and the other hospitals in our area could fill up the radiologist's dance card for a full day of work-for which he received all of the fees directly-no muss, no fuss.

That radiologist later moved on to another nearby practice with more available space than ours, but we continue to use his services regularly. Our clients love the convenience and we really like being able to offer it.

But not all subtenant or space-sharing relationships work out so well. As with any relationship, there can be glitches and snafus along the way. These can ordinarily be ironed out, then committed to a legal agreement of one type or another. Here are some precautions to consider.

Get insurance figured out

Having been a New York City insurance attorney in a former life, I tend to look at all business relationships from the perspective of liability and risk. Sharing space creates a new insurable relationship among multiple parties. Potential risks must be identified, their coverage costs quantified and the sharing of the related expenses negotiated.

Consider this example: Dr. Cardiologist enters into an agreement with Dr. General to use one of her exam rooms to perform ECGs every Wednesday. Dr. Cardiologist operates as a professional corporation with one employee: himself. One Wednesday, Suzie the receptionist is kind enough to help Dr. C lift an obese mastiff onto the exam table and the poor girl luxates her L4-5 intervertebral disc.

After Suzie's emergency back surgery, the adjuster from Dr. G's worker's compensation carrier investigates and finds out the mastiff was referred to Dr. C for evaluation by some third-party veterinarian. The adjuster determines it is not a worker's comp case under Dr. G's policy. Rather, he believes, the cardiologist's insurance carrier should have to pay the receptionist's hospital bill.

But naturally, operating as a one-man band, Dr. Cardiologist has no worker's compensation policy. The result: a big insurance fight, insurance company lawsuits, and a huge increase in Dr. General's worker's comp policy premium after the company finally covers Suzie. When sued to contribute, Dr. C's liability carrier drops him.

Define the relationship

Before the first heart is auscultated or the first skin scraping examined, the specialist and the generalist clinic owner need to determine exactly what their legal relationship is going to be. For example, does the general practitioner own the building or is she herself a tenant? If she owns the building, is she charging the specialist rent as a landlord? And there are these related issues:

• If the specialist is paying rent to a clinic owner who also owns the building, does the commercial fire and liability policy cover acts and omissions of a tenant?

• If the specialist is paying rent to a clinic owner who leases the building from a third-party landlord, is subtenancy permitted under the lease or is it a breach of the lease terms?

• If subtenancy is permitted under the underlying lease, is there an obligation to obtain written permission from the landlord?

Even if subtenancy is permitted with building owner approval, there may be legitimate reasons for the landlord to deny permission to the subtenant. No. 1 is parking. If the subtenancy is likely to cause a shortage of off-street or on-street parking, the landlord may be adamant in his disapproval. This is particularly true in the instance of a shopping center or multi-occupant commercial space.

Define the roles of the host clinic's staff

Don't get caught in the “Suzie the receptionist” trap. In a perfect world, each space-sharing specialist would bring along his own fully insured technician or helper. But in this imperfect world, it's best for generalist and specialist to agree on who in the practice is authorized to assist the specialist. Technically, that individual should be compensated by the specialist and therefore covered by worker's compensation insurance. Remember that whoever's business (specialist or generalist) pays a comp claim is the one who will get socked for several years with premium hikes.

Another practical issue involving staff: Who collects the fee on behalf of the specialist? Is the specialist paid by each client at the time of service or are the charges invoiced to the referring clinic? The least desirable option is for the general practice receptionist to collect the money. That arrangement adds an extra layer of risk (regarding misappropriation of funds or miscalculation of fees). It also ties up front-end staff and the resulting slowdown can become annoying to the general practice owner-especially when clients begin to complain about “slow service on Wednesdays when that other doctor is here.”

Establish occupancy guidelines in writing

Finally, consider the logistics of shared occupancy. Here are some important questions to work out:

• Will the specialist have a key to the practice? If so, it's best to notify the liability carrier of both the specialist and the generalist.

• If the specialist's fees are billed and collected by the generalist's front-end staff, how will the invoicing be separated? Will the specialist have access to clinic financial records if she suspects foul play by a clinic employee who's billing out her services?

• How will the specialist's occupancy be paid for? Straight rent? A percentage of revenue? Discounted services for the building owner's own cases?

Properly organized, with both parties tending carefully to the details of the relationship, it can work out very well for a specialist veterinarian to “work out of” an established general practice. However, neglecting to work out the details ahead of time can be costly. If a problem arises later, it can leave both parties with a sour taste for the space-sharing concept-and possibly for each other.

Christopher J. Allen, DVM, JD, is president of the Associates in Veterinary Law PC, which provides legal and consulting services exclusively to veterinarians. He can be reached via e-mail at info@veterinarylaw.com.