Before two doctors open a clinic together, they should agree in writing who puts in how much capital, how ownership and profits are split, what each partner draws monthly, who does which role, which decisions need both of them, how deadlocks are broken and how a partner can exit. Choose the structure with a CA and lawyer, and have a lawyer draft the deed.
"We were batchmates for five years, Harsh. We trust each other completely. Why do we need a deed?"
Picture two dermatologists saying this while planning their first clinic together. They mean it. And I'd believe them.
But trust isn't the problem in most partnerships I see go wrong. The problem is two good people who assumed different things and never wrote them down. One assumed equal hours. The other assumed equal money. One assumed they'd expand in two years. The other wanted a quiet practice forever.
So here's what two doctors should settle, in writing, before the first rupee goes in.
Why do doctor partnerships need a written agreement?
Because every partnership ends one day. Someone retires, relocates, falls ill, has a family change or simply wants something different. In Rich Doctors Walk Away I list a partnership deed or shareholders' agreement as one of the contracts every practice with partners must have.
The best time to agree how things work, and how they end, is when you still like each other. Every hard conversation is easier at the start than in the middle of a dispute.
Which structure should two doctors choose?
You have three common options: a partnership firm under a deed, a limited liability partnership, or a private limited company with a shareholders' agreement. They differ in personal liability, paperwork, tax and how easily you can bring in a third partner or sell.
I won't tell you which one to pick. Take these questions to your CA and lawyer together:
- How is each structure taxed for two partners at our expected income?
- How much personal liability does each of us carry under each option?
- How easy is it to add a partner, bring in an investor or sell later?
- What compliance and filings does each one need every year?
What money questions must you settle first?
Here's an example. Say Dr A puts in ₹40 lakh in cash. Dr B puts in ₹20 lakh in cash plus a laser machine she already owns, valued at ₹15 lakh. Total: ₹75 lakh.
If you want a 50:50 clinic, you need to decide what happens to the ₹5 lakh Dr A has put in above Dr B. One clean option is to treat it as a loan from Dr A to the clinic, repaid over twelve months, so each partner's capital is ₹35 lakh and ownership stays equal. Another is to split ownership in line with capital, about 53:47. Neither is wrong. Leaving it undecided is.
Then settle these:
| Decision | The question to answer in writing |
|---|---|
| Capital | Who puts in how much, in cash or equipment, and how is equipment valued? |
| Ownership | Is the ownership split equal to the capital split, or different? Why? |
| Future capital | If the clinic needs another ₹20 lakh next year, who pays, and what if one partner can't? |
| Drawings | How much does each partner take every month before profits are shared? |
| Profit sharing | Equal, linked to hours, or a mix? When is it paid out, and after what reserve? |
| Partner loans | If one partner lends the clinic money, on what terms is it repaid? |
On drawings, continuing the example: say the clinic makes ₹7 lakh a month in profit once it settles. Each partner draws a fixed ₹1.5 lakh a month. The remaining ₹4 lakh goes first to the clinic reserve until it holds three months of fixed costs, then gets shared every quarter. Writing this down stops the most common fight: one partner wanting cash out while the other wants to buy a new machine.
Who does what, and how do you decide things?
Equal ownership doesn't mean equal roles. Agree:
- Clinical time. Minimum OPD and procedure sessions per partner per week.
- Management roles. Who runs the team, who handles money and vendors, who owns your educational content and patient channels.
- Leave. Annual leave, maternity or paternity leave, a sabbatical, and how the work gets covered.
- Outside work. Can a partner keep a hospital visiting role, teach, or consult elsewhere? Does that income go to the clinic or to them?
- Big decisions. List the ones that need both partners: borrowing above a set amount, a new location, hiring a doctor, any machine above a set price.
- Deadlock. If you disagree on a big decision, what happens? An agreed independent adviser, a mediator, or a rule for who decides which kind of question. Two equal partners with no tie-breaker can freeze a clinic for months.
Rule: Agree how you'll disagree, before you ever do.
How should the partnership end, if it ends?
This is the section most doctors skip because it feels pessimistic. It's actually the kindest part of the agreement.
- Notice. How much notice a partner must give before leaving.
- Valuation. How the leaving partner's share is valued. Agree the method now, for example a formula based on EBITDA, or an independent valuer, so you're not arguing about the number later.
- Payment. Over what period the remaining partner pays, so the clinic isn't drained in one go.
- Patients and staff. A non-solicitation commitment, so a leaving partner doesn't take staff or approach patients.
- Death or disability. What a partner's family receives, and how it's funded. Many partners use insurance for this; ask your adviser.
- Brand and records. Who keeps the clinic name, the phone number, the website and patient records.
Who should draft the agreement?
A lawyer, not a template from the internet and not a cousin who "did one for his shop". Give your lawyer your written answers to every question above. They'll turn your decisions into an agreement that fits your structure.
Before you see the lawyer, it helps to think through roles, drawings, reserves and growth plans with someone outside the partnership. We do that in growth consulting. Skin clinics are among the most common partnerships we see in our dermatology and aesthetics work.
The short version
- Trust isn't enough; unwritten assumptions break partnerships.
- Choose your structure with your CA and lawyer, based on liability, tax and future plans.
- Settle capital, ownership, future capital, drawings and profit sharing in writing.
- Agree roles, leave, outside work, big decisions and a deadlock rule.
- Agree exit terms now: notice, valuation method, payment, non-solicitation, and what happens on death or disability.
Frequently asked questions
Do two doctors starting a clinic need a partnership deed if they trust each other?
Yes. Trust doesn't prevent different assumptions about hours, money, growth and exit, and those are what usually break partnerships. A written agreement protects the friendship as much as the business. Agree the terms while relations are good, and have a lawyer draft the document.
Should ownership always match the money each partner puts in?
Not necessarily. Some partners put in different capital but want equal ownership, treating the difference as a loan to the clinic. Others match ownership to capital exactly. Either can work. What matters is that you decide it openly, write it down and agree what happens when more capital is needed later.
What happens if two equal partners can't agree on a big decision?
Without a deadlock rule, the clinic can freeze. Agree one in advance: an independent adviser both trust, a mediator, or a split where each partner has the final say on certain kinds of decisions. Write it into the agreement so nobody has to invent a process in the middle of a disagreement.
Can a partner doctor keep working at a hospital as well?
They can if the agreement allows it. Decide in advance whether outside consulting, teaching or visiting roles are permitted, how much time they can take, and whether that income goes to the clinic or to the partner. Unspoken expectations here cause resentment quickly, especially when one partner works more clinic hours.
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