Joining or Buying Into a Clinic or Group Practice as a Physician

Signing with a clinic feels like a professional decision: where you will see patients, who you will work beside, how the call schedule is shared. It is also a financial contract, and sometimes the largest one you will sign before you buy a home. The overhead you agree to, the price of a share in the group and the terms on which you can leave will shape your cash flow for years.

Three arrangements sit under the words "joining a clinic", and they are not the same purchase. You can practise as an associate who pays the clinic overhead and owns nothing in it. You can buy an interest in the group that shares the costs, the equipment and sometimes the decisions. Or you can buy shares in a company that owns part of what the clinic runs on, such as the premises or the equipment. Each one costs something different, exposes you to something different and ends differently.

The money questions follow from there: what a buy-in price pays for, how lenders read it, whether the interest is deductible, where the down payment and the first-year reserve can come from, and what a participating whole life policy can and cannot do in that year. I am paid by insurer commissions when a policy is bought. Reading costs you nothing.

One point comes before everything else. If you are joining a group this year or next, a life insurance policy bought now will not pay for it. A new policy builds cash value slowly. What follows about policy loans applies to a policy you already own, or to a plan for later stages of your career. The wider picture of a physician's money, stage by stage, sits in the collection for physicians.

What exactly are you joining when you sign with a clinic?

You are joining one of three arrangements: an overhead agreement as an associate, an interest in the group that shares the clinic's costs and assets, or shares in a company that owns premises or equipment. Each sets what you pay, what you own, what you can lose and how you leave. Identify yours before you discuss any price.

The labels vary from one province and one clinic to the next. A "partner" in one group can be a cost-sharing member with no ownership; a "shareholder" in another can own a real estate company and nothing else. Read the documents rather than the title on the door.

No row is better in general. An associate pays nothing to enter and builds no equity in the clinic; a shareholder pays the most and owns something that may or may not be worth the price on leaving. The right row depends on how long you expect to stay, how much say you want in decisions and how much risk your household can carry this year.

What should an overhead agreement say before you sign it?

It should say what the overhead pays for, how the amount is calculated and adjusted, whether it is charged on billings earned or received, what happens during leave or disability, who keeps the patient records, and how much notice either side must give. Each of those terms reaches your monthly cash.

Start with the formula. A percentage of billings moves with your income: a slow month costs you less, a busy month costs you more. A fixed monthly fee does the opposite, and it keeps running when you are on leave. A mixed formula sits between the two. The question is which one your cash flow can carry in a bad month.

Then read the base the percentage applies to. Billings earned and billings received are different numbers, and the gap between them can be months in your first year. If the clinic charges overhead on what you billed but the provincial plan has not yet paid you, you pay the clinic from your reserve. Ask which base applies and when the overhead is due.

Then the list of what overhead covers. Rent, reception and nursing staff, the electronic medical record, phones, cleaning, supplies and equipment maintenance can each be inside or outside it. Anything outside is a separate bill. Ask for the cost lines the clinic used to set the rate, and how often it can change them.

Four clauses deserve a slow reading.

• Leave and disability. Does the overhead stop, fall or continue if you take parental leave or cannot work? A fixed fee that continues through a disability needs its own coverage, which the article on disability and the capital plan takes up.
• Billing. Who submits the claims, under whose billing number, into which account the provincial plan pays, and when the clinic takes its share. You should be able to see what was billed in your name.
• Patient records. Who keeps the charts, how a patient who follows you can obtain their record, and who pays for copies. Your college's rules on medical records and the provincial privacy law apply; the agreement should be consistent with them.
• Notice and restrictive covenants. How much notice each side gives, and whether you agree not to practise within a distance or a period after leaving. Whether such a clause can be enforced depends on its wording and the law of your province, which is a question for your lawyer.

Read the whole agreement before you start relying on the income. Once your patients, your family and your call schedule are built around a clinic, your room to change a clause is gone.

What does a buy-in price actually pay for?

A buy-in can pay for a share of equipment and leasehold improvements, of working capital, of the group's organisation and, in some groups, of real estate. Ask the group to break the price down by part, and to show you the method it will use to value your interest when you leave.

Tangible assets are the easiest part to see. Examination tables, diagnostic equipment, computers and the improvements to the premises have a cost and an age. Ask what each item cost, how old it is, what must be replaced soon, and what is leased rather than owned. A share of a lease is a share of an obligation. Specialists whose groups own costly equipment will find more on that question in equipment and the private clinic.

Working capital is the cash the group keeps to pay its bills while revenue arrives. Some groups ask a new member to contribute a share of it. That money is not spent; it should come back to you on leaving, under the agreement's terms. Ask how it is recorded and returned.

The organisation is the harder part to price. A clinic that already has staff, systems, referral relationships and a full schedule saves you years of building. In medicine paid by a provincial plan, a patient's choice of physician stays the patient's, whoever owns the clinic. So any amount described as goodwill deserves a direct question: what exactly is being paid for, and what would a departing member receive for the same thing?

Real estate changes the scale. If the group owns its building through a separate company, joining can mean buying its shares too: a property purchase, with a mortgage and a market value unrelated to your clinical work. Price it as its own decision.

Finally, put the entry price and the exit formula side by side. If you pay a share of equipment at its cost today and receive its depreciated value when you leave, part of your buy-in is an expense. That can be fair. You only want to know it before you sign.

Why is the year you join a group often the year of highest debt?

Because the buy-in loan, your first months of uneven billings, the costs of moving and setting up, and debt from your training can all land in the same twelve months. Payments start before your income settles, so a plan that uses every dollar at signing has nothing left for a slow first quarter.

Any professional who buys into a firm meets this pattern, as a partnership buy-in and the year of highest debt shows. Medicine adds features of its own.

Your billings may take time to reach their full level. Building a patient list, obtaining hospital privileges or settling into referral patterns can take months. Payments from the provincial plan arrive after the service, on the plan's schedule. Your overhead, your loan payment and your household's bills do not wait for any of that.

Some costs are easy to forget because they are not part of the price: fees for the lawyer and the accountant, your medical liability protection, your college and association dues, equipment you bring yourself, and the move. Residency debt does not pause either; residency debt and what to do first covers that earlier stage.

Debt in the year you join is not a mistake. Borrowing to enter a sound group can be a reasonable decision. The mistake is a structure with no room in it. Separate three amounts in your plan: the price, the costs around it, and the reserve that must still be there on the first day of month four.

How do Quebec's rules shape a clinic or group practice?

In Quebec, a regulation on practising medicine in a company sets who may own a company or partnership through which physicians practise, who may direct it, and the liability coverage it must carry. Remuneration follows the agreements between the government and the federations, and the RAMQ pays under several modes. Read your group's structure against those rules.

The regulation is the Règlement sur l'exercice de la profession médicale en société, which LégisQuébec shows as up to date to 1 May 2026. Article 1 allows a physician to practise within a business corporation (société par actions) or a limited liability partnership (société en nom collectif à responsabilité limitée, or SENCRL), on its conditions. In our reading, three of them matter most to a physician joining a group:

• All the voting rights attached to the shares or units must be held by at least one physician, or by a legal person or trust controlled as the regulation specifies.
• Other shares or units may be held only by physicians, by a physician's spouse or relatives by blood or marriage, or by entities they control, as the article lists them.
• The directors of the corporation, and the partners or administrators of the partnership, may only be physicians.

Article 2 adds that a physician struck off the roll for more than three months, or whose permit is revoked, cannot hold shares or units, directly or indirectly, during that period. Articles 11 and 12 require the physician practising within the company to provide and maintain liability coverage for it, by insurance, suretyship or a collective plan, with minimum amounts of $5,000,000 per claim and $10,000,000 for all claims. The Collège des médecins du Québec applies the regulation. Before you buy units or shares, ask the group how its structure meets it, and have your lawyer or notary read the articles or the partnership agreement against the text.

Whether a partner answers for the group's debts with personal assets depends on the form the group takes and on the Civil Code of Québec. A business corporation, a SENCRL and an ordinary partnership do not expose their members in the same way, and a personal guarantee you sign can reach past any of them. Put that question to your lawyer or notary before you sign, with the group's actual documents in hand.

Remuneration is the other half of the Quebec picture. The Fédération des médecins omnipraticiens du Québec (FMOQ) describes its agreement with the Minister of Health and Social Services as setting, in general terms, the conditions of remuneration and practice of general practitioners. The Fédération des médecins spécialistes du Québec (FMSQ) represents and supports medical specialists. The Régie de l'assurance maladie du Québec (RAMQ) pays physicians under several modes: fee for service, hourly rates, fixed fees, sessional rates and, for general practitioners in designated settings such as CLSCs and university family medicine groups, a mixed mode that combines an hourly fee with a supplement equal to a percentage of the fee-for-service tariff.

Why does that matter when you join a clinic? Because your mode of remuneration decides how your income moves from month to month, and the overhead formula should fit it. Some Quebec clinics also take part in the ministry's program for family medicine groups (groupes de médecine de famille, or GMF). Ask the clinic what its status brings, what it requires of the physicians and how it affects what you pay. How fee-for-service income moves through the year is the subject of fee-for-service billing and irregular income.

Quebec residents and Quebec corporations file with Revenu Québec as well as with the Canada Revenue Agency. Any tax question below has a Quebec answer to check alongside the federal one.

What do the other provinces require of a group of physicians?

Each province's college and its corporate law decide who may own a medical professional corporation and what must be reported when the owners change. In Ontario, the College of Physicians and Surgeons describes a certificate of authorization and shareholders limited to physicians and family members. Elsewhere, ask your own college and a lawyer before you buy shares.

In Ontario, the College of Physicians and Surgeons of Ontario (CPSO) answers questions about incorporation on its own site. It describes physician shareholders and family members as the people who may hold shares, and it lists which relatives it accepts as family members. It requires a certificate of authorization for the corporation. It says the Regulated Health Professions Act requires a corporation to notify the College of any change in its physician shareholders. If you buy shares of a corporation through which other physicians practise, that notice is part of the closing, and the corporation's lawyer should handle it.

The other provinces have their own colleges, their own corporate statutes and their own lists of who may own what, which we have not set out here. Provincial rules on who may own the shares of a medical professional corporation apply; ask the college and a lawyer before you sign. A structure that does not meet them can delay the closing or force a change after it.

Billing differs by province too: Ontario physicians bill the Ontario Health Insurance Plan (OHIP), British Columbia physicians the Medical Services Plan (MSP), each with its own payment schedule and rules. Build the overhead formula, the reserve and the timing of your first payments on your own province's plan.

How do lenders look at a buy-in, and what should you compare?

A lender looks at the group's financial statements, the purchase documents, your income history and your existing debts, then offers a loan with conditions: security, guarantees, insurance and reporting. Compare offers clause by clause, because two loans of the same amount can behave very differently in a slow year.

Ask each lender for its written offer, and read it with your accountant and your lawyer before you sign. These clauses decide whether a buy-in loan fits your first years in a group.

If a lender requires life insurance assigned to it, the assignment is security. The lender holds a right to be paid first from the policy, up to what you owe; the policy stays yours, and the assignment is released when the loan is repaid. Under paragraph (f) of the definition of disposition in subsection 148(9) of the Income Tax Act, as recorded on this site, an assignment as security for a loan is not a disposition, so it creates no taxable income by itself.

Choose the offer you can live with in a bad first year. A slightly higher rate with a ramp-up period may serve you better than a lower one with full payments from the first month.

Is the interest on a buy-in loan tax deductible?

It can be, when the borrowed money is used for business purposes or to acquire property used to earn business income. Interest on money borrowed for personal purposes is not deductible. Who borrows, what is bought and how the money is traced decide the answer, so your accountant tests it before the loan is drawn.

The Canada Revenue Agency's page on line 8710, interest and bank charges (modified 31 August 2026) puts the principle simply: you can deduct interest on money borrowed for business purposes or to acquire property for business purposes, and you cannot deduct interest on money borrowed for personal purposes. The rule behind it is paragraph 20(1)(c) of the Income Tax Act, which looks at the current use of the money.

That leaves real questions for a buy-in. Buying an interest in a partnership, buying shares of a corporation and contributing working capital are different uses, and the borrower can be you or your corporation. If borrowed money passes through a personal account on its way to the group, the trail can blur. Keep the loan proceeds separate, pay the group directly where you can, and keep the documents.

The same page covers a policy loan. Interest you pay on a policy loan made under the terms of a life insurance policy can be deducted where the loan proceeds were used to earn business income, as long as the insurer did not add the interest you paid to the adjusted cost base of the policy. To claim it, you have the insurer verify the interest before June 15 of the following year on Form T2210, Verification of Policy Loan Interest by the Insurer; the French version of the page, modified 5 June 2025, says before June 16, so ask early. Quebec has its own form for the provincial return, which your accountant will name. Subsection 20(2.1) of the Act is the source of that verification rule.

None of this makes the interest free. A deduction lowers your tax at your marginal rate; you still pay the interest. And if the money is later diverted to a personal use, the deduction for that part can be lost.

Where can the buy-in money and the first-year reserve come from?

From savings, a lender's term loan, instalments the group accepts, a line of credit, or, if you already own a participating whole life policy, a policy loan from the insurer or a loan from a lender with the policy as collateral. Compare them by what they cost, who you owe and what happens in a bad month.

The down payment and the reserve do different jobs. Money paid at signing cannot also pay your overhead in month two. Decide first how much must still be in your hands after closing, then match each amount to a source. The table compares functions, not rates; your own figures come from each written offer.

You can use more than one source. A sound combination lets you sign, keep a workable reserve and carry your payments if the first year is slower than planned, without counting on dividends or on billings you have not yet earned.

What can a participating whole life policy do in the year you join, and what can it not?

If you already own one with enough cash value, it can supply a policy loan from the insurer, or serve as collateral for a lender's loan, without surrendering the coverage. It cannot fund a buy-in from a new policy, it is not free money, and every dollar borrowed reduces the death benefit until it is repaid.

A participating whole life policy is life insurance first. It has guaranteed cash values set by the contract, and it may receive dividends, which the insurer declares each year and which are not guaranteed. The Autorité des marchés financiers describes a policy loan as borrowing with the insurance and its cash surrender value as collateral, repaid with interest. If the person insured dies before it is repaid, the insurer subtracts the amounts owed, with accrued interest, from the insurance payable. The same page notes that a policy can also secure a loan from another financial institution.

Here is how the policy loan works. The insurer is the lender. It advances its own funds against the cash value, at a rate it sets and may change, and the interest is owed to and paid to the insurer. Depending on the contract, interest you do not pay is added to the loan and then bears interest itself. For tax, a policy loan is a disposition under subsection 148(9) of the Income Tax Act: the part of the proceeds above the policy's adjusted cost basis just before the loan is income in that year, and the loan lowers the basis. If part of a loan was taxed, repaying it can give a deduction under paragraph 60(s) in the year you repay, up to the amount previously included. If the loan and interest overtake the value securing them, the policy can end after the notice the contract provides, and that ending can create taxable income to the extent the proceeds exceed the adjusted cost basis. See how a policy loan works and when a policy loan becomes taxable.

Canadian Wealth Creation Centre Inc., which publishes this educational website, calls the long-term aim Infinite Financial Sovereignty®, a registered trademark of Jose Salloum: building, over many years, a source of capital you can draw on for the large purchases of a career, then repaying it on a schedule you hold yourself to. It is a goal, not a promised result. The idea draws on the financing approach known as The Infinite Banking Concept®, which R. Nelson Nash described. A policy started the year before a buy-in has little loan value to offer, and buying a policy to pay for a near-term purchase is the wrong use of it.

If your professional corporation owns the policy, the loan is an advance from the insurer to the corporation. Getting that money to you personally is a second transaction, such as salary, a dividend or the repayment of a shareholder loan, each with its own tax. Whether you, your corporation or a holding company should own a policy stays open here; your accountant and your lawyer answer it for your facts, and personal or corporate ownership of the contract lays out what each choice changes. The tax rules inside the corporation are covered in the incorporated physician's corporation, and the wider business owners section covers the rest.

What does the arithmetic look like on a $120,000 buy-in?

In this illustrative example, $40,000 comes from savings and $80,000 is borrowed over five years. At assumed rates, a lender's loan at 7% costs about $15,046 in interest, a policy loan at 6% about $12,797. A first-year cash plan then needs a reserve of about $15,352, and up to about $32,416 under stress.

Illustrative example. Every figure is an assumption chosen to show the arithmetic, not a quote from any lender, insurer, clinic or provincial plan, and not a typical result. Interest is calculated monthly on the declining balance over 60 equal payments. The policy loan route assumes you already own a policy whose insurer will advance $80,000; your contract may charge interest differently, for example once a year, which changes the figure.

The differences in that table come only from the rates assumed. Change the assumptions and the order can change. The policy loan route also reduces the death benefit while the loan is outstanding and depends on loan value you already built.

Now the first year, month by month, on the lender's loan. The worksheet uses five inputs, in this order:

1. Billings received each month: nothing in month 1, $16,000 in months 2 and 3, $24,000 from month 4 to month 12. The provincial plan pays after the service; that delay is why month 1 is empty here.
2. Overhead: 30% of billings received.
3. The loan payment: $1,584 a month from month 1.
4. What your household draws, including a set-aside for income tax: $11,000 a month.
5. Cash each month equals billings received, less overhead, less the loan payment, less the household draw. The running total shows how deep the reserve must be.

On those assumptions, you need about $15,352 in reserve at the end of month 3. Two stress tests, alone and together, change that:

• Billings 20% lower all year: the deepest shortfall is about $19,832, and the year still ends about $12,129 short.
• Every payment one month later: the deepest shortfall is about $27,936, and the year ends about $5,791 ahead.
• Both at once: the deepest shortfall is about $32,416, and the year ends about $25,569 short.

The lesson sits in the gap between $15,352 and $32,416. If your total savings were $56,000 and you put $40,000 into the buy-in, the $16,000 left would cover the base case and none of the stress tests. A smaller cash payment at signing, a ramp-up period on the loan or a reserve held apart from the buy-in would each change that. A past slow year is a stress test, never a ceiling.

What happens when you leave the group, or a partner dies?

The partnership or shareholder agreement decides: how an interest is valued, who must buy it, when the price is paid and with what money. If that money is not arranged in advance, the remaining physicians, or you, may have to find it at the worst moment.

Read the exit clause as closely as the entry price. A departure by choice, a retirement, a disability and a death can each trigger a different formula and a different payment schedule. Restrictive covenants and the custody of patient records follow you out of the door. The article on closing or leaving a practice covers the end of the road in detail.

A death is where funding matters most. A group can agree that the remaining physicians, or the group itself, will buy a deceased member's interest from the estate, and fund that promise with life insurance on each physician. Who owns each policy, who pays the premiums and who is named beneficiary change the tax result and who receives the money. When a private corporation receives a death benefit as beneficiary, its capital dividend account is generally credited with the proceeds less the policy's adjusted cost basis; a policy loan still owed at death reduces what it receives, and paying a capital dividend needs an election under subsection 83(2) of the Income Tax Act. The article on funding a buy-sell agreement sets out the choices. Settle them with your accountant and lawyer before any policy is placed.

What are the drawbacks and risks of buying into a group?

You take on debt before your income settles, you may guarantee obligations beyond your own share, and your exit value may be lower than your entry price. If a policy loan is part of the plan, an unpaid loan grows, reduces the death benefit and can end the policy with a tax bill.

• Shared obligations. A lease, an equipment loan or a line of credit signed by the group can carry personal guarantees from each member. Ask who signed what, and whether you will be asked to sign on joining.
• The exit discount. If the exit formula values your interest lower than the entry formula did, part of your buy-in is a cost of joining. Know the number before you sign.
• A group that comes apart. Disputes, departures or the loss of a key physician can leave fewer members carrying the same rent and staff.
• Your own disability. A fixed overhead and a loan payment continue when you cannot work, unless coverage or a clause says otherwise.
• The policy loan. Interest is owed to the insurer at a rate it can change; unpaid interest is added to the balance; the death benefit falls by what is owed; and if the loan overtakes the value securing it, the policy can end and create taxable income. Dividends are not guaranteed, so a repayment plan that relies on them is fragile.

What should you ask before you sign?

Ask the group for the documents and the formulas, your accountant for the tax result and the cash plan, your lawyer for the agreements and guarantees, the lender for its written offer, and the insurer, if a policy is involved, for the loan value, the rate and the adjusted cost basis, all in writing.

For the clinic or group:

1. Which arrangement am I joining, and which documents create it?
2. How is the buy-in price broken down, and how will my interest be valued when I leave?
3. What does overhead cover, on which base, and how can it change?
4. Which guarantees do members sign, and which would I sign?

For your accountant and your lawyer (in Quebec, a lawyer or notary):

1. Should I or my corporation buy, borrow and own the interest? Does the structure meet my college's rules?
2. Is the interest on the buy-in loan deductible, and how do I trace the money?
3. What reserve does my own monthly plan need, under two stress tests?

For the insurer, through a licensed representative, if you already own a policy:

1. How much will you advance today, and are any consents needed?
2. How is the loan rate set, and how is interest charged?
3. What is the adjusted cost basis today, and what income would you report on this loan?
4. How are you paid on this policy, and by whom?

How should you read the figures above?

Every dollar amount and rate in the example is an assumption chosen to show the arithmetic. The fixed amounts from the Quebec regulation and from Assuris come from the pages named in the sources, read on 2 October 2026. Replace each assumption with a figure from a written document before you decide anything.

No real loan rate, overhead rate, payment schedule or cash value appears; those belong to a specific lender, clinic, plan and contract. Keep the worksheet's order and run both stress tests with your inputs. Assuris, which every life insurer authorized in Canada must belong to, protects a whole life policy up to $1,000,000 or 90% of the death benefit, and up to $100,000 or 90% of the cash value, whichever is higher, net of policy loans.

Who this does not suit

A policy loan as part of a buy-in does not suit you if you do not already own a policy with enough loan value, if you would not repay a loan that no one schedules for you, or if your family needs every dollar of the death benefit. Buying into a group this year does not suit you if your plan leaves no reserve after signing, or if you have not read the exit clause. Practising as an associate first is a sound choice too. When you want to talk it through with your own figures, start with the self-check on the Becoming a Client page.