Partnership or shareholder agreements should define the practice’s legal structure: sole proprietorship, partnership, professional corporation, limited liability corporation, or hybrid. It will also spell out terms of the buy-in, or how much you are required to pay to become an equity owner. The size of the buy-in depends on the overhead; the lower the overhead the lower the buy-in. Some practices bait physicians with a zero or low buy-in price in exchange for a reduced salary during their years of employment. “The partner is, in effect, prepaying their buy-in,” says Jack Valancy, a practice management consultant. “Rather than charging you $40,000 for the buy-in, they charge you a nominal amount and pay you $140,000 a year instead of $160,000. But what happens if you don’t reach partner? You want to be sure you’re fairly compensated for the work you are doing.”
