September 18, 2019
Bringing Disparate Ownership Together Takes Center Stage
There is 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 all the real estate?" This action would create unity rather than discord. Sometimes the disparate ownership is a result of the development of multiple locations within a single practice, while sometimes it is 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. Primarily, it allows the practice to make decisions relative to office utilization decisions 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 disadvantaging another.
Moreover, it provides an opportunity for all partners in the practice to equally share the fiscal benefits of ownership, since each are already contributing to the real estate income through the practice rent. Full partner participation also unifies the practice. It eliminates 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 in 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; utilizing those experiences can go a long way in deciding which methodologies will best fit the situation. 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 or visit CMAC's website (under the Common Ownership solution) to find models that can be utilized by those with interest.