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  • MRI investment

    Our practice just opened an MRI. There have been disputes about how to divide the income from the unit. The highest referring partners want a proportionate slice of the income. The MRI is owned by an equal partnership with all owning equal number of shares. Those who own a similar venture, how is the income distributed in your practices?

  • #2
    can you enable your PM.

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    • #3
      Sounds ethical.

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      • #4
        Hard to believe this wasn’t sorted out ahead of time through the partnership agreement.

        partnerships generally are able to allocate income disproportionate to percentages owned, as opposed to S Corps

        as to what is fair, and legal, in your situation, I can’t say

        is this a freestanding MRI in an IDTF, or in your clinic?

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        • HandFellow
          HandFellow commented
          Editing a comment
          I think the problem is that everyone knew it was a joint venture and assumed payout would be equal since it was set up in the partnership that pays that way. And of course, the conflict arises 6 months after everything is up and going.

        • HandFellow
          HandFellow commented
          Editing a comment
          Freestanding MRI in a mobile unit

      • #5
        Originally posted by HandFellow View Post
        Our practice just opened an MRI. There have been disputes about how to divide the income from the unit. The highest referring partners want a proportionate slice of the income. The MRI is owned by an equal partnership with all owning equal number of shares. Those who own a similar venture, how is the income distributed in your practices?
        As jacoavlu stated, a partnership allows for the flexibility of just about any income/loss share calculation you can imagine. Hopefully, this was discussed with the attorney who drafted the agreement. However, the allocation/distribution of profits is already set by your partnership agreement. You'll need to refer to it to know how to calculate distributive share. To change it, you'll have to amend the agreement, which will take a vote or decision by your partnership...as stipulated in your partnership agreement.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #6
          For us, similar partnership, the income is proportionate to usage/referrals. You ideally should have decided this already...

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          • #7
            Ownership of the asset and ownership of the profit stream are two points to be addressed.

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            • #8
              Unbelievable this wasnt iron-clad written down and agreed upon before buying it, sounds mental. However, given this oversight, you may have a shot of working things into your favor whichever way that is.
              Proportional to referral is rife with ethical and medical conflicts of interest that guaranteed will lead to unnecessary exams and abuse. Its impossible for it not to to a degree.

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              • HandFellow
                HandFellow commented
                Editing a comment
                We are renting the unit on a monthly basis for almost a nominal fee. So I think we got into the venture quickly to get everything set up without getting into some of the details. We are all partners in our medical practices, so most people just assumed it was going to run like the partnership it was set up in.

            • #9
              Originally posted by Zaphod View Post
              Unbelievable this wasnt iron-clad written down and agreed upon before buying it, sounds mental. However, given this oversight, you may have a shot of working things into your favor whichever way that is.
              Proportional to referral is rife with ethical and medical conflicts of interest that guaranteed will lead to unnecessary exams and abuse. Its impossible for it not to to a degree.
              Inb4 comments about being responsible and etc

              It's hilarious the OP itself already highlights inappropriate medicine where the highest referrers want more money as a kickback

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              • #10
                so, how should the income be divided?

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                • #11
                  It's illegal and unethical to divide profits based on usage and referrals. The way around it would be to sell "shares" of the MRI and give the sports partners 10 shares each and the non-sports like 7 shares each. But, that just creates animosity. Also, MRI profits aren't that much.

                  The best way, 100% split costs and profits amongst the partners. We have one ancillary that about 30% of the partners have more shares since they are older. It really annoys all of us junior partners. But it's a sore subject and senior partners get testy (all the years it was not that profitable or they lost money) when we bring up buying out their extra shares to make everyone equal.

                  Going forward, everything is equal. We're not a "sports" or "joints" group. We are an ortho group, so sometimes different specialties bring in $$ in different spots.

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                  • #12
                    is it illegal if the MRI is in clinic and not freestanding?

                    I honestly don’t know.

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                    • #13
                      So, in the beginning, we did some analyses that showed we could make a profitable MRI (freestanding as a portable unit for the time being). The plan, albeit unspoken, was to have the MRI income be split equally among the partners. It was assumed to be that way because it is set up in the partnership that treats all income as equal for all partners.

                      We have other partnerships (ASC) that are based on shares purchased with distributions allocated based on number of shares. This MRI partnership isn't set up like that. There is at least one partner (the highest MRI orderer) that wants his piece of the MRI.

                      ACN, agreed, the MRI money really isn't all that good compared to other ventures. That's what makes the argument frustrating.

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