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Hi there, welcome to Module 6.

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Long gone are the days
of the solo practitioner,

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the simple country doctor,

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so too are the physician
practices and partnerships.

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Healthcare today is delivered

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by corporations and non-profits.

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This module discusses interesting issues

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around the structure and management

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of healthcare organizations

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and how that impacts
healthcare providers today.

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As you'll see in the
readings and materials,

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a corporation is a legal entity

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that is separate from its owners.

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We call them shareholders.

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It's created by filing legal documents

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with the appropriate government
agency, usually a state,

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and it's governed by a board of directors

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that is elected by shareholders.

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The purpose of a corporation
is to conduct business

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and earn profits for shareholders,

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not for staff and leadership.

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Unlike a sole proprietor or a partnership,

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the liability of shareholders is limited

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to their investment in that corporation,

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which means they're not
personally responsible

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for the corporation's
debts or liabilities,

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even if they're sued.

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Corporations are able to
raise large amounts of money

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called capital through the
sale of stocks and bonds,

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and they can also enter into contracts,

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sue and be sued, own property.

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Additionally, corporations
can have certain

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legal rights and protections.

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You'll read about that
quite a bit this week,

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including that ability
to enter into agreements,

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protect intellectual property,

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and defend themselves against lawsuits.

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Unlike a corporation, a partnership

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is a business structure in which two

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or more people called partners collaborate

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to own and operate a business.

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Each partner contributes money, property,

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expertise into the partnership in exchange

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for a share of those profits and losses.

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Partnerships can either
be general partnerships

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or limited partnerships.

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In a general partnership,

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all partners are basically
equally responsible

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for all the debts and
obligations of the partnership,

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and they share management

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and decision-making responsibilities.

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If you have a limited
partnership, there's two types.

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There's those general
partners who have management

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and decision-making responsibilities

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and unlimited liability,

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and then limited partners

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who basically contribute just capital.

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They don't have management
responsibilities

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and have very limited role in terms

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of their liability for the debts.

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Partnerships are often
used by professionals

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like doctors, lawyers,
so they can join forces,

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open a business, provide
service to clients.

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They're also often used
by small businesses

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like restaurants or retail stores.

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It's a way to pool resources,
share the workload,

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increase your expertise and profits.

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One of the advantages of a partnership

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is they allow for pooling
of skills, expertise,

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and so that means the business
will have greater success

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than maybe an individual
can do on their own.

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However, partnerships
come with certain risks.

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Personal liability being one of those

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for the partnership's debts,
potential for disputes,

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and that liability.

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So we've been talking about getting sued.

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Where does that money come from?

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It's important to remember
that partners in a partnership

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should have a well-drafted
partnership agreement

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that outlines their rights,

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their responsibilities, their obligations,

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especially when it comes to
something like being sued.

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One of the key differences
between the partnership model

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and that corporation model
is the way they're taxed.

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In a partnership, profit
and losses of the business

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are passed through to the partners

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who report them on their tax returns.

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In a corporation, the corporation

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is the one who pays the
taxes on the profits,

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and the shareholders are
taxed on any dividends

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that they're paid, that they receive.

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Another important difference
is the liability of owners.

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In a partnership, the partners

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can be personally liable for the debts

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and obligations of the partnership,

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which means that their personal assets

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could be at risk if the partner is sued

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or can't pay its debts.

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In a corporation, the
shareholder's liability

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is really limited to what they
invested in that business.

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You can see how this could be a big deal.

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If you have two doctors
in a joint partnership

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and one of the doctors
is sued for negligence,

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how does that impact the other doctor?

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We also think about the nonprofit model

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of business this week.

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A nonprofit corporation is a
legal entity that is formed

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for a specific purpose
other than making a profit.

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Nonprofit corporations
are typically organized

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for healthcare, religious, charitable,

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educational or scientific purposes,

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and they're governed by a
board of directors or trustees

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similar to a corporation.

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A big benefit of the nonprofit corporation

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is they are exempt from
paying federal income tax,

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and in some cases, state
and local taxes too.

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Because their purpose is
to serve the public good

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rather than make profit.

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However, this doesn't mean
that nonprofit corporations

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can't make a profit.

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They can, but they should
be using that profit

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to either further fund their charitable

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or educational purpose

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to further expand on what
their nonprofit does.

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To form a nonprofit, it's
very similar to a corporation,

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you file articles of incorporation

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with appropriate state agency.

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That includes a statement that talks about

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what the mission and activities
of the nonprofit will be.

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The nonprofit corporation
must also create bylaws

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and outline the procedure for how they run

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that nonprofit business,
how they have directors,

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leadership structure,

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how they hold meetings
and conduct business.

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Otherwise, very similar to a corporation.

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So those are three basics.

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There's a lot of different
types of partnerships

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and corporations and nonprofits,

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but those are the big general entities

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that we'll talk about this week.

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Historically, many physicians
were sole proprietors.

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They worked by themselves 100 years ago.

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That developed into a
lot of partnership models

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over the last couple of decades

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and then into a corporate model

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that we are seeing mostly happening today.

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However, as you know, a lot
of people in public health

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are often working under a nonprofit.

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So let's talk about these three types

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and I'll see you in the discussion form.