Business law critical to your practice
Preventive law, like preventive medicine, can make all the difference
How organizational and commercial law affects ObGyns
Physicians are generally members of organizations that are engaged in the business of health care (even nonprofit organizations have business interests). There are 2 major legal building blocks of these business relationships: contracts and agency.7
Contracts are agreements between 2 or more persons or entities that carry with them legally enforceable obligations. The 3 common elements are an offer by one party, acceptance by another, and consideration (exchanging one thing of value for another). Contracts are binding in the sense that, if there is a breach of the promise by one party, the other party may seek monetary damages for the loss of the benefit of the bargain (and in limited circumstances, require that the contract be performed).
Agency is essentially the mechanism that allows a person to legally work for or on behalf of another. A “principal” authorizes an agent to take actions for, and bind, the principal. All employment, partnership, and “agent” relationships create an agency. The principal is generally responsible for the actions of the agent—at least within the scope of the agent’s authority. For example, the principal is responsible for the torts (civil liability resulting from the breach of a socially imposed duty, but generally not arising from a contract) of an agent doing the principal’s business. The agent has the obligation to act in good faith for the benefit of the principal and to abide by the instructions of the principal.
Corporate structures
There are a variety of corporate organizational structures; the basic types are corporations, partnerships, and unincorporated associations. These generally are available to nonprofit and for-profit organizations. As a general matter, corporations limit the owners’ personal liability; partnerships have tax advantages. A number of laws now allow the creation of entities that have both liability and tax advantages (subchapter S corporations, limited liability companies, and limited liability partnerships).
Other areas of business law
Employment law, which now affects almost every aspect of hiring, dismissal, payment, and fringe benefits, is not a single law but a series of state and federal statutes, regulations, and court decisions.8
Competition is regulated through a number of antitrust laws as well as fair business practices. These affect the ability of health care entities to merge, fix prices, and split markets.9
There are literally hundreds of other laws that affect the way health care entities can operate. Conducting a careful compliance review is of considerable importance.10
