Health law is the federal, state, and local law, rules, regulations and other jurisprudence among providers, payers and vendors to the healthcare industry and its patient and delivery of health care services; all with an emphasis on operations, regulatory and transactional legal issues.
Many physician groups and health care companies will enter the market at some point to sell their business. In the rare case, the selling group will already have a buyer who is ready and willing to pay and close on the business sale. More often than not however, most sellers will utilize the services of a business broker to help find a suitable buyer, and will compensate the broker on a commission basis upon closing. Unlike real estate closings, whereby the main concern is the title of the property being conveyed, medical practice sales require much more detailed representation on all aspects of the business, including but not limited to, real property, existing contracts, existing patients, and medical equipment.
Before signing a business broker listing agreement, ensure that the following points are considered to avoid potential pitfalls: read more
Thinking about selling a medical practice? Here are some steps for preparing your business in advance of a transaction.
Visit your financial planner.
Be sure that you can afford to leave the business, if you are retiring. Most times, buyers will require a comprehensive non-compete and you should be absolutely certain that you are financially prepared to retire or sell before you sign that restrictive covenant.
Visit your accountant.
Get your financial history in order. Review and re-review your tax returns and profit statements for the past three years to ensure that the business is appropriately reflected in those records. Take the time to clean up any “creative” bookkeeping so that the buyer is given a complete and accurate picture of the business they are buying into. You are likely going to have to make a representation that your financial disclosures are true, so take the time to get comfortable with that representation early on. read more
Private money (e.g. private equity) is in full swing purchasing medical practices with large profit margins (e.g. dermatology). This is NOT the same thing as when physician practice management companies (PPMCs) bought practices the 90s. Back then, the stimulus for the seller was (a) uncertainty re practice profits in the future, and (b) the stock price. Selling practices got some or all of the purchase price in stock, with the hopes the purchasing company stock would far exceed the multiplier applied to practice “earnings” (the “multiple”). Buyers promised to stabilize and even enhance revenues with better management and better payer contracting. If the optimism of the acquiring company and selling doctors was on target, everyone won because the large stock price made money for both the buyer and seller. The private equity “play” today is a little different.
Today’s sellers are approaching the private equity opportunity the same way they did with PPMCs, except for the stock focus since most private equity purchases don’t involve selling doctors obtaining stock. Sellers hope their current practice earnings will equate to a large “purchase price.” And they hope the buyer have better front and back office management that will result in more stable and even enhanced earnings. And for this, the private equity buyer takes a “management fee,” which they typically promise (though not in writing) to offset with enhanced practice earnings. read more
Healthcare providers often have more than one relationship with each other. For instance, a physician may be employed by a hospital and also provide that hospital with medical director services. Or a healthcare consultant may also be a healthcare provider’s landlord. Oftentimes, these types of relationships are each memorialized in one or several contracts between the parties. And while, on their face, these contracts may seem to be compliant with applicable healthcare laws, when examined together, compliance and other contract issues may arise. read more
Like many entrepreneurial endeavors, owning a pharmacy requires careful planning and an astute risk versus reward analysis. However, unlike other industries, venturing into a healthcare business brings with it an entire new world of regulations, and rightly so. Pharmacies don’t sell widgets they sell prescription drugs, and to people whose well-being depends on it being done correctly. As such, there’s a host of state and federal laws a pharmacy must abide by, intended to safeguard patients and the healthcare system as a whole. Don’t let regulatory hurdles alone serve as an insurmountable deterrent from entering into what can be a profitable and fulfilling profession; proactive compliance is the key to success! Here’s an overview of the general steps necessary to become a pharmacy owner, be it from scratch or by acquiring an existing practice. For the purposes of this article, let’s assume it’s a community/retail pharmacy that will be located in Florida.
So what’s better – building from scratch or buying something that’s already out there? Typical lawyer answer – it depends! But I won’t stop there; here are some considerations that must be taken into account to make a proper decision: (1) how quickly does the business need to be up and running? It’s typically a faster process to commence business by acquiring an existing pharmacy rather than buying one, but that depends on (2) what is out there in the current marketplace? If a stock acquisition, all of the known and unknown liabilities will be inherited by the new owner; proper due diligence on the pharmacy’s past is essential. read more
Private money (e.g. private equity) is back chasing those selling medical practices and medical business acquisitions. This time around it is very different from similar activity in the 90s. Back then, the movement was public companies aggregating gross income dollars, which for a time drove stock prices. Today’s private money buyers are looking to maximize profitability through achieving efficiency and aggregating large groups for leverage and the development of new income streams. Though stock (in the form of warrants and options or stock itself) if often on the table, it doesn’t have to be. Buyers are doing all cash deals, albeit to some degree on an earnings basis. If you want the full price, you have to remain involved and do what you can to maintain revenues and perhaps even drive them up.
Physicians especially have to know what they’re dealing with and then have at least a basic understanding of the issues that will drive these deals. To begin with, “private equity” simply means private investors (typically a group that pools their capital) that buy a portion or all of a company. Their investments are usually much larger than venture capital firm deals. They are not publicly traded entities. What do they want? To invest money in mature businesses, grow a company’s profitability and then “flip” their ownership to another buyer, typically in three to five years form their launch date. In contrast, venture capital firms usually invest in start-ups, buy 100% of the company and require control. read more
When considering optimization of healthcare business operations it is important to remember Limited Liability Companies are fundamentally just partnerships with added liability protection. The LLC structure offers liability protection called charging order protection, which prevents your (or your partners’) personal creditors from seizing your business or its assets to settle personal debts. Since LLCs were designed to be partnerships, you are expected to adhere to some basic partnership rules – most importantly, you should have partners. Running an LLC with no partners opens you up to liability. read more
Building a medical practice trademark brand image is extremely important in today’s technology-driven economy. Because of social media, online advertising, and the availability of online reviews, local healthcare providers need to engage at a higher degree than ever before to attract new patients, retain current patients, and establish themselves as experts in their respective fields.
Patients choose providers based on specializations, reputation, and quality of care, so the first step in branding is selecting and registering the trademarks for your practice. Trademarks are the names, slogans, tag lines, and/or logos that identify and represent your practice, its services, and mission to the public, and are the foundation for the facility’s overall branding and marketing strategy. In addition to the trademarks associated with your main practice, you may also use trademarks to protect your stake in a specific area or a specific area of expertise. For example, the trademark and logos used for a hospital’s senior services might be different than one used for its cardiac care services. If you do not protect your trademark, a competitor could use it or something similar, which could confuse your patients and potentially draw business away from your practice..
Do you really need to register your trademarks? Consider the following: read more
For many years, medical providers and regulators have wrestled with whether Advance Registered Nurse Practitioners (“ARNPs”) and Physician Assistants (“PAs”) should be able to prescribe controlled substances. This past legislative session, several bills were signed into law allowing ARNPs and PAs to prescribe controlled substances subject to several limitations and restrictions. This article will set forth a broad overview of the bills. However, if your practice intends to use ARNPs or PAs to prescribe controlled substances, we strongly recommend that each practitioner is educated about the boundaries set forth in the new law. For instance, there are restrictions on prescribing certain controlled substances in certain circumstances, prescribing controlled substances within a pain management clinic, and prescribing controlled substances for persons under age 18. It is important that all practitioners are properly educated prior to engaging in prescribing or dispensing any controlled substances.
Advance Registered Nurse Practitioners
ARNPs may prescribe or dispense Schedule II, III or IV controlled substances if they have graduated from a program leading to a master’s or doctoral degree in a clinical nursing specialty area with training in specialized skills and have completed 3 hours of continuing education on the safe and effective prescription of controlled substances. ARNPs must limit their prescriptions of Schedule II controlled substances to a 7-day supply. However, this restriction does not apply to psychiatric ARNPs who are prescribing psychiatric medications. read more
The amount of regulation imposed upon those entering into the healthcare business arena can be staggering even for a highly experienced businessman. In the business world, buying and selling businesses is often accompanied by lawyers, documents and consultants. In the healthcare business world, buying into and selling healthcare businesses, or any portion of health care businesses, requires all of that support and much more.
Diving into a healthcare business requires many considerations that are unique to other areas of business. First, appropriate licensing bodies must be notified and/or approve any such purchase or sale. For instance, in the State of Florida:
the Department of Children and Families must be notified every time a new owner becomes a part of a licensed substance abuse treatment center and prior to taking ownership, must either submit to a level 2 background screen or provide proof of compliance with the level 2 background screening requirements.
the Agency for Health Care Administration must be notified sixty days prior to any change in ownership and will run a background check on new owners.
the Agency for Health Care Administration must be notified every time a new owner is added to an entity holding a Health Care Clinic License. Additionally, AHCA must approve any owner of more than 5% of the Health Care Clinic prior to such person becoming an owner.