Therapy Company Joint Venture

LC Wound Care worked so well that LifeCare decided to go into a joint venture with a therapy company as well. LifeCare was already paying a company, Oak Tree Therapy company, to provide services, so why not form its own company? In that way LifeCare would be able to save on costs, and reap the benefit of the profits earned by the Therapy company. But just like LC Wound Care, LifeCare had to find experts in therapy to provide the services. So$,$ they approached their existing therapy company. They explained that LifeCare would be terminating the contract with Oak Tree Therapy because they wanted to go into this new line of business. They suggested that Oak Tree Therapy enter into a joint venture with them in order to provide therapy services to residents of LifeCare.

Oak Tree was understandably irritated by the request $$which essentially asked them to provide the same services and share the profits with LifeCare. Oak Tree was also concerned about this being violative of the Anti$-$Kickback rule, and therefore, they declined. The termination of the relationship was not amicable.

LifeCare found Pine Top Therapy, a competitor of Oak Tree, and established a joint venture for therapy much like the joint venture with LC Wound Care. The new company formed by the alliance was LC Pine Top, LLC$.$ This new company also had office space in each facility and therefore, they were available for more frequent therapy. Because it was an LLC$,$ LC Pine Top split its profits between the owners $$ LifeCare and Pine Top Therapy.