Tax Restructuring for Sustainable Growth at a Multi-Location Healthcare Practice

The Challenge: A Complex Operating Structure with Tax Inefficiencies

As Horizon Spine & Pain Institute expanded, operational growth outpaced the practice’s foundational structure, revealing gaps and inefficiencies. The business structure behind them started to show signs of strain such as: 

• Entity Misalignment: Horizon was originally formed as a partnership, but it was later converted into an S-Corporation. While helpful for certain tax savings, this entity type has limited flexibility—especially around partner expansion, voting rights, and profit-sharing tied to individual locations.
  
• Real Estate Ambiguity: The doctors were preparing to purchase the clinic’s main office space. Their existing investment vehicle, a holding LLC for a surgical center stake, wasn’t appropriate for housing property ownership—both from a tax and operational segregation standpoint.
  
• Lack of Strategic Tax Guidance: Their prior CPA was reliable for compliance but passive on strategy. Drs. Bennett and Cole were seeking a proactive advisory relationship to help them unlock growth through smarter structuring and long-term tax planning.

Gelt’s Strategic Approach: Tax restructuring for Growth

In a series of dedicated strategy sessions, Gelt worked with the Horizon team to deep-dive into their situation and business relationship, clarify goals, identify structural friction, and design a future-proof foundation that aligns with both their professional and personal aspirations.

Restructuring the Business for Growth

The proposed solution: shift Horizon from its current S-Corp setup to a partnership model with disregarded LLCs for each practice location. This structure offered:

• Multi-class ownership capability for nuanced partner arrangements
  
• Easier onboarding of new physicians or investors
  
• Operational separation by location (ideal for financial tracking and risk containment)
  
• Continued access to S-Corp tax benefits by routing income through each owner's individual S-Corp
  

Two configurations were presented:

• Option 1: Each doctor owns their own S-Corp, which participates in the partnership
  
• Option 2: Both doctors own the partnership directly and receive management compensation via S-Corp invoicing
  

Each option was diagrammed to aid decision-making and ensure legal clarity.

Real Estate Structure & Strategy

To ensure the upcoming property acquisition didn’t hinder their tax optimization, Gelt recommended creating a dedicated real estate holding LLC, jointly owned by Drs. Bennett and Cole. This structure:

• Enables cost segregation studies for accelerated depreciation
  
• Allows grouping rules to apply real estate paper losses against clinical income
  
• Maintains ownership independence—preventing automatic equity sharing with future clinical partners
  

The recommendation also emphasized flexibility-first design: if the real estate needed to be restructured later, ownership could be transferred efficiently via entity-level contributions—without triggering a taxable event or title change.

Results & Implementation Roadmap: Tax Savings and Flexibility

With a target implementation date by end of Q3 2025, Horizon Spine & Pain Institute was now positioned to:

• Expand without structural constraints
• Add new partners or clinics without overhauls
• Acquire property with confidence and tax efficiency
• Maintain clarity between operating, investing, and personal wealth decisions

Estimated First-Year Savings: ~$75,000

We had outgrown our original structure and didn’t even know it. Gelt helped us redesign everything with flexibility in mind. We feel much more confident about our next chapter.

— Dr. A. Bennett

Conclusion: Structure That Support Long Term Growth

Horizon’s journey illustrates the importance of aligning legal and tax infrastructure with growth vision. With Gelt’s guidance, they’ve replaced legacy complexity with strategic simplicity—unlocking tax savings, decision-making clarity, and scalable operations for years to come.