Running a healthcare business comes with a unique set of legal and financial risks. Whether you own a medical spa, IV hydration clinic, functional medicine practice, or any other healthcare-related business, having well-drafted contracts in place is essential to protect your interests, ensure compliance, and minimize liabilities. In this post, we’ll discuss four key types of contracts every healthcare business should have:

• Partnership Agreements
• Management Services Organization (MSO) Agreements
• Employee Contracts
• Vendor Agreements

1. Partnership Agreements: Safeguarding Business Relationships

If you’re launching a healthcare business with one or more partners, a partnership agreement is crucial. This contract outlines the roles, responsibilities, financial obligations, and decision-making authority of each partner. Key provisions to include:

• Ownership structure – Define each partner’s percentage of ownership and capital contributions.
• Profit and loss distribution – Specify how profits and losses will be shared.
• Decision-making process – Clarify how major business decisions will be made.
• Exit strategy – Include buy-sell provisions, dissolution terms, and procedures for handling disputes.

Without a well-defined partnership agreement, conflicts can arise, jeopardizing the stability of your business.

2. MSO Agreements: Ensuring Compliance and Business Efficiency

Many healthcare entrepreneurs use a Management Services Organization (MSO) model to separate the clinical and administrative aspects of their business. An MSO agreement is critical in structuring this relationship while maintaining compliance with healthcare regulations.

An MSO agreement should cover:

• Scope of services – Define the administrative and management services provided (e.g., billing, marketing, HR).
• Compensation structure – Clearly outline payment terms and financial arrangements between the MSO and the clinical entity.
• Regulatory compliance – Ensure the agreement adheres to Stark Law, Anti-Kickback Statute, and corporate practice of medicine laws.
• Termination clauses – Establish the conditions under which the contract can be ended or renegotiated.

A properly structured MSO agreement can help protect your healthcare business from regulatory scrutiny while ensuring smooth operations.

3. Employee Contracts: Defining Expectations and Reducing Legal Risks

Your employees are the backbone of your business, and having solid employment contracts in place helps set clear expectations and protect your practice. Essential clauses in an employee contract include:

• Job description and duties – Clearly define roles and responsibilities.
• Compensation and benefits – Outline salary, bonuses, and benefits such as health insurance or PTO.
• Non-compete and non-solicitation clauses – Prevent employees from working with competitors or soliciting patients after leaving your business (subject to state laws).
• Confidentiality agreements – Protect sensitive patient and business information.
• Termination policies – Specify grounds for termination and notice periods.

Well-structured employment contracts reduce the risk of disputes and ensure compliance with labor laws.

4. Vendor Agreements: Protecting Your Business from Supply Chain Issues

Whether you’re purchasing medical equipment, software, or pharmaceuticals, vendor agreements protect your business by ensuring that suppliers meet their obligations. Key elements of a vendor agreement include:

• Scope of services or products – Clearly define what is being provided.
• Pricing and payment terms – Outline payment schedules, late fees, and pricing adjustments.
• Quality and compliance standards – Ensure the vendor meets regulatory requirements.
• Liability and indemnification clauses – Protect your business from damages caused by vendor negligence.
• Termination clauses – Establish how and when the contract can be terminated.

Having well-negotiated vendor agreements helps prevent supply chain disruptions and financial losses.

Protect Your Healthcare Business with Strong Contracts

Strong contracts are the foundation of a legally sound healthcare business. Whether you’re entering a partnership, structuring an MSO, hiring employees, or working with vendors, well-drafted agreements safeguard your interests and ensure compliance. To avoid costly legal pitfalls, consult with a healthcare attorney to draft and review your contracts. Investing in solid legal agreements today can save you from major financial and legal troubles in the future.

If you need assistance with your healthcare business contracts, contact Freedom Thru Business to ensure your agreements provide the protection you need!