Why they matter more here
Board minutes are the cheapest CPOM defense available. A PC with three years of minutes showing the clinician-owner approving clinical protocols, making clinical staffing decisions, and reviewing quality is very hard to characterize as a shell. A PC with no records at all offers a regulator nothing to contradict the allegation.
The recurring obligations
Per entity, annually
Per entity, ongoing
Steps
1
Set up a minute book per entity
Physical or digital, one per entity. Contains: formation documents, EIN letter, bylaws or operating agreement, stock ledger, all consents and minutes, the agreement stack, and annual filings.Digital is fine and easier to maintain across a fleet. What matters is that it is complete and retrievable.
2
Document decisions by written consent
You do not need to convene meetings for most things. A written consent signed by the directors or members is sufficient in nearly every state and takes minutes to produce.Actions that should be documented:
- Electing officers and directors
- Approving the MSA, and any amendment
- Approving the management fee, and any change
- Opening bank accounts and designating signers
- Approving material contracts, including payer agreements
- Issuing or transferring equity
- Approving intercompany loans
- Approving clinical protocols and policies (the PC)
- Clinical hiring and termination decisions (the PC)
- Approving the annual budget
3
Hold a real annual meeting for each entity
Even a 20-minute call, documented. Elect officers, ratify the year’s actions, review the agreement stack, confirm the fee.For the PC, use it to document the clinician-owner’s clinical governance for the year. That record is worth more than the time it takes.
4
Keep the books genuinely separate
- Separate general ledgers, never a combined one with departments
- Separate bank accounts, always
- Never pay one entity’s expense from the other’s account without an intercompany entry
- Reconcile intercompany balances monthly; they must be equal and opposite
- Identical chart of accounts across PCs, so consolidation is mechanical
5
Paper every intercompany transaction
- Management fee: an actual invoice, monthly, paid from the PC’s account
- Loans: a written promissory note, a rate no lower than the applicable federal rate, a repayment schedule, and board consents on both sides
- Shared costs: a documented allocation methodology
6
Respect the separation operationally, not just on paper
- Separate email domains or at least clear entity identification
- Contracts signed by the correct entity’s authorized signer
- Business cards and signatures identifying the right entity
- Marketing that does not present the MSO as providing care
- Employees knowing which entity employs them
7
Run an annual formalities review
Fold it into the compliance calendar. Are all entities in good standing? Are minute books complete? Are intercompany balances tying? Has the agreement stack been reviewed against current law?
What “good” looks like in a PC’s minute book
For a CPOM challenge, these are the records you want to be able to produce:- Annual consents electing the clinician as sole director and officer
- Consents approving clinical protocols, with the protocols attached
- Records of clinical hiring and termination decisions
- Quality review documentation
- Consents approving payer contracts
- Consents approving the MSA and any amendments, showing the PC considered them
- Records showing the PC’s approval of clinical equipment specifications
- Evidence that the PC’s officer approved payments from the PC’s account
Verify it worked
- A minute book exists for every entity and is complete
- All entities in good standing in every state
- Annual consents adopted for the current year
- Stock ledgers accurate
- Separate bank accounts, with no shared accounts
- Intercompany balances tie
- Every management fee has an invoice
- Every intercompany loan has a note
- The PC’s minute book contains clinical governance records