Dr. Phillips, Dr. Patel, and Dr. Blankley want to bring a new practitioner in as an owner. Which action must take place?

• A. The existing owners must each sell some of their shares to the new owner.
• B. The existing owners must dissolve the existing partnership and make a new partnership agreement.
• C. The new practitioner must come in as an employee.
• D. The Board of Trustees must authorize a resolution to accept a new partner.

Answer: (B)

When a professional practice is organized as a partnership, ownership changes require a formal restructuring of the business arrangement. Admitting a new owner means redefining who has a stake, how profits and losses are shared, what capital each party contributes, and how liabilities and professional responsibilities are allocated. To ensure those terms are clear and legally binding for the new ownership mix, the current partnership is dissolved and a new partnership agreement is created that includes the new partner. This avoids ambiguities that could arise if only a minor amendment were made to the old agreement and ensures the practice’s tax and liability structures align with the updated ownership.

The other ideas don’t fit the typical structure of a partnership. Converting the new practitioner to an employee doesn’t grant ownership. In a partnership, ownership isn’t purchased via stock shares, so selling shares isn’t the mechanism. A Board of Trustees’ resolution pertains to hospital or corporate governance, not to private partnership admission of a new owner.