2003 to 2006

I will try to make this quick.  The doctor (let's start calling him X) after seeing what I did for his business thought I could do the same for other doctors wanting to opening their practices and as a benefit, we would ask them to refer over to X for specific procedures. This is called co-management in the health care business.  So I put together a whole co-management program for doctors in the area.

But the real kicker was that we decided to create a separate corporation to provide a whole group of services to these other doctors, and X and I would split the profits.  There were two big problems that came about from this arrangement, and something I did not foresee.  First, this didn't end up being a 50/50 effort on X's part, as I did all the work.  Secondly, following our attorney's suggestion we provided a variety of services but I took it a step farther and formed an internal buying group for purchasing supplies for the doctors.  I arranged all of the contracts and placed them under the corporation we had formed but I also personally loaned the corporation the hard cash to fund the buying group purchases.

Finally, under my own separate corporation I funded the opening of an additional practice and contracted with X to put his name on it.  I hired doctors and staff to work there and they were all paid out of my corporation. 

After about three years I had 33 employees and 8 doctors under contract.  I was working night and day. Unfortunately the doctors were over reaching on their credit through my buying group on which I was making no profit and I was getting no support from doctor X. All of the credit for the corporation was being shouldered with my personal credit.

So I woke up near the end of 2006 and turned to my wife and said "I am tired of being the doctors bank and I am going to kill the buying group."  I let all of the offices know that they had 60 days to arrange their own contracts with the suppliers.  However, I keep doctor X on and one other doctor. I wish I hadn't.

About this same time the state board began asking questions of a couple of my doctors about the arrangement they had with our corporation and whether X was involved.  That is when I found out from X that CA state law actually prohibited him from being in this type of business because it would be seen as control over another practice.  He and the other doctors were sweating bullets. So they all started telling the board that they had no connection with X in their business.  In other words, they lied.  I on the other hand did not have such a restriction and was told by my attorney that the board could do nothing because I was not governed by the board.

Doctor X resigned from the corporation and released all of his interest in it.  He was glad to get out of it and this is when things began to get really interesting.  At least I now had complete ownership of the corporation, and why not, I shouldered all of the financial risk.