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Franchise Agreement in Healthcare Setting : (Training-Manage Franchisor…
Franchise Agreement in Healthcare Setting :
Corporate Practice of Medicine Issue
Limit franchise agreement to support and administration to independent professional corporation.
Scope of Products and Services
(i) securing and constructing a location for the franchisedbusiness which meets the criteria, layout and design required by the franchisor;
(ii) providing,updating and replacing all equipment, supplies and materials needed by the PC to operate the medical component of the business;
(iii) providing financial, bookkeeping and accounting support to the PC
(iv) displaying and properly using the trademarks licensed to the franchisee in connection with operating the franchised business;
and (iv) complying with all other system standards and requirements
Franchise Agreement requires Management agreement entered into between Franchisee and PC is for operation in specific location where PC agrees to provide medical services and care.
Franchise agreement gives Franchisor approval of terms and PC and final terms of the management agreement
The franchise agreement should clearly state that the franchisee is not authorized to
provide medical services or care, but rather the franchisee must contract with a PC (that is
approved by the franchisor) to own and operate the medical component of the business.
Franchisor can reserve approval rights but selection of medical equipment and supplies must be left to the PC
Anti-Kickback and Fee Splitting
-the flow of payments is an issue between franchisor and franchisee or franchisee and PC.
PC pays Franchisee usually a fixed fee of FMV of services or a "cost plus" basis
Franchisee may receive all revenue from PC minus the PC's expenses-salary, benefits, lease, equipment etc.
Franchisor requiring a Franchisee to pay a royalty % on gross receipts, including a management fee, is in most cases permissible.
Avoid referral fees or anti-kickback and fee splitting prohibitions occur
May need multiple variations of agreements to comply
Federal Reimbursement Programs
Statement of requirement to enroll or not enroll in franchise agreement
Required: 1) to not bill than Medicare permits; 2) bill in accordance with compliance for Medicare billing and collection; 3) pricing according to Medicare schedules
Franchisor Notice and Transfer Requirements for Federal Reimbursement program transfer requirements
HIPAA and State Privacy Laws
Business Associates Agreements between Franchisor and Franchisee and Franchisee and PC in order to properly share data.
Certification, Registration & Accreditation
for various state laws
Credentialing is critical to get paid- Payment for insurance (public or private) requires
qualifications of the providers; the licenses, certifications, registrations and
accreditation of the providers; the practice, the business, and/or the facility; and
compliance with various administrative, technical, and technology-based obligations
21 States require licensing of optometrists
Training
-Manage Franchisor providing too much oversight to draw it into vicarious liability.
Require Franchisee to complete 3d party training and accreditation.
Focus training on non-medical-along lines like retail, back office, and support.