Mega Practices – How Big is Too Big?

mega practicesBy: Jeff Cohen

A January 24, 2014 court ruling in Idaho that will require the unwind of a hospital system’s purchase of a large primary care medical practice will cause mega practices to think twice about their size.  The Idaho court ruled that St. Luke’s Health System’s purchase of the 40 physician Saltzer Medical Practice violated pertinent state and federal antitrust laws because the group had 80% of the primary care physicians in Nampa, Idaho, a city of roughly 85,000.  The suit was brought by two competing hospitals and succeeded, despite St. Luke’s claims that integrating the practice would improve the quality of care. 

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Super Groups: The Most Important Factors When Considering a Merge

supergroup doctorsBy: Brian Foster, Guest Contributor

We shouldn’t be surprised that physicians still talk about banding together into “supergroups.”  This has been a hot topic in South Florida for about 20 years.  There are notable examples of large single-specialty groups that have succeeded – but unfortunately, there are many more groups that have crashed and burned, with many docs left considering how to get out. It’s an old joke, but getting doctors together really can feel like herding cats. The politics are tiring, expensive and time consuming.  And there is no guarantee of success.Continue reading

Healthcare Reform Doesn't Have to be All or Nothing

By: Jeff Cohen

pulling hairHealthcare professionals today are constantly faced with views of what’s changing in healthcare, and all of them seem equally convincing.  “One day, everyone will be employed by a hospital” is one of the favorites.  Not surprisingly, the proponents of that perspective tend to be….hospitals.  “Everyone has to merge their practices” is another favorite.  The proponents?  Large super practices, of course.

How does one sort through this?  Who’s right?  The truth is that everyone is seeing part of the whole and is “right.”  But being “right” doesn’t mean right for you.  My opinion?Continue reading

OIG Shoots Down Physician Owned Distributorships (PODS)

Physician owned distributorships (PODs) have been the source of considerable controversy for years.  A couple years ago, they caught the attention of Congress.  Now, the Office of Inspector General of the Department of Health and Human Services (“OIG”) has issued a Fraud Alert making clear their dislike of PODs and sending a clear shot across the bow of those who are in that industry.

PODs distribute various things, most commonly surgical implants and devices, that are reimbursed by insurers.  A patient needs a spinal rod, a surgical implant/device company makes it and a distributor rep distributes it.  Device/implant companies usually contract with distributorships to sell their products.  Distributorships contract with reps who are paid commissions for sales.  Surgeons who actually order the devices sometimes think “Since I’m the one doing the surgery and ordering all this stuff, why can’t I earn something from that?  I’m not ordering anything I don’t need or that I don’t think is good for the patient.”  PODs are one way for physicians to financially benefit from the sales of devices and items their patients need, but they have never been more controversial than now.Continue reading

Hospital Physician Recruitment on the Rise Again

In an effort to stay competitive, hospital physician recruitment deals are on the rise.  These arrangements are permitted under applicable federal law (the Stark Law) and are a core tool in hospitals’ tool chest.  These arrangements generally involve the hospital “loaning” to the physician or to a practice employing the doctor the costs associated with that doctor joining.  Since the ramp up costs associated with hiring or a physician just relocating to a new community can be steep (especially as payer contracts can take many months to set in place), hospital financial assistance can be critical.  How do they work?  Simple—

1.The hospital guarantees, based in part on MGMA salary surveys and other cost data sources, that the physician will collect at least $X each month for a period of normally up to 12 months;

2.The doctor agrees to remain in the hospital’s service area for 2-3 years, during which time, the amount loaned by the hospital is forgiven.

Though it may sound too good to be true, there are drawbacks, including:

1.There are pretty severe limitations placed on noncompetes for hospital recruited physicians which can be daunting to practices hiring them;

2.Unless carefully worded and negotiated, recruited physicians may find themselves with high expectations and little delivered in terms of the marketing and other support required to create a successful practice.  Not being financially successful is no defense to the requirement of staying in the hospital community for several years to write off the loan;

3. Some hospitals offset their business risk by taking any excess earnings (the collections exceeding the guaranteed amount) for months after the 12 month guarantee period, a period when collections should be substantially higher than during the early phases of the recruitment.

Practices entering into a hospital recruitment arrangement need to be careful in their physician contracts to pass as much financial risk as possible to the recruited doctor.  A recruited doctor that decides he or she no longer likes the new community can leave the practice holding the bag for a huge amount of money which has not yet been forgiven.

Recruited physicians need to be careful about the risk passed off to them in their employment contracts if they are joining an existing practice, since the practices typically benefit by receiving enough money to cover all of the new physician’s salary, benefits and overhead.

From Intervention to Prevention

“Healthcare Reform,” “PPACA” and “ACOs” all have one certain thing in common:  cost-saving change.  Though debate swirls about politics, timing and the particulars of change, it seems clear that the changing demographics of our country (aging baby boomers) in our economic climate is not sustainable as is.  And it’s no surprise that a compensation system based on how much is done and how much it costs leads to greater expense.  An economic reward system that drives costs up as more and more people are set to join the ranks of the insured (through mandated health insurance and expanded Medicaid) simply underscores the timing of the change.  What does that mean for physicians?

Physicians are asking three key questions:

  1. Is there a future for small or solo practices?
  2. Is fee for service really gonna change?
  3. What can I do right now to adapt?

The Future of the Small Practice

The only solid answer is “less.”  It really depends on complex things like the demographics of where the doctor practices and the number of competitors close by.  That said, as change happens, the hardest hit will likely be the smaller practices, since they lack the personnel and financial resources to weather the change and to invest in adaptation.  Many small practices will likely experience change in such a way that the best they can hope for is to survive, rather than thrive.  Even worse, solo practitioners already know what it’s like to handle all the duties as a physician, keep track of business operations and keep the patients flowing into the practice.  Exhausting.  Without substantial support and resources, it’s just not realistic for most solos to expect to keep up.

Even larger practices are not often run like a business.  The professionals that generate the revenue often manage as well.  Moreover, most medical practices do not market or do any serious “back office” magic (revenue cycle management).  As such, change hits small practices especially hard.  Implementing even new EHR requirements can be consuming for a small practice.  How will it be as changes are made to reduce cost and improve quality?  How will it be when practices begin to see there is opportunity in change, that they may actually make more money in a risk based compensation environment?  Rougher.  Like a herd of buffalo when attacked, circling together is a good strategy.

That said, the vision has to be clear.  Why circle together?  Most medical practices are combining and growing to guard market share, not to manage costs or measure and demonstrate quality.  This is probably the biggest reason why we see larger practices in single specialties, not multi-specialty or primary/specialty based practices.  Most physicians that are adapting by joining larger practices are doing so for the same reason why buffalos circle together—the threat of change.  Though size alone is no panacea, larger practices are definitely in a better position to adapt.

Let’s face it:  few are running after change in healthcare right now.  Few see the opportunity and are leading the charge.  Most are waiting or are just setting the stage.  And most large practices are, at best, a good platform where change can be implemented and costs can be shared and spread among a larger pool.

Will There be a Change to Fee for Service Payment?

Yep.  Simple as that.  It’s already happening.  Bundled payments are in place, even in Florida.  Capitation is old hat for many now.

When?  Over time…  Not right away.  Even ACOs aspirants are selecting just one sided risk, testing the water as they see how well they do to reduce costs, improve quality and “earn” their right to bonus money.  Physicians that think fee for service will thrive for decades are kidding themselves, at least in the insured market.  Is there a basis for it in a “second tier” or concierge sort of environment?  Probably.

What Can I Do Right Now?

First, accept that we are approaching a new paradigm of healthcare delivery.  The current model of disease/injury crisis management has prepared no one for the move from intervention to prevention.  And yet, systems that are solidly based in wellness and prevention stand to profit most from the change we all face.

Second, look to shore up you business model.  That means:

  1. Look to join a larger practice that is committed to thriving in the future risk-based compensation scenario.  If the practice is there just to thrive in a fee for service environment and has no commitment to thriving in a risk based compensation model, keep looking;
  2. Market.  Most practices do not market at all, and yet consumers are selecting medical care in the most unlikely environment—the internet;
  3. Look at anything concierge-like.  Most of the public conversation centers around the insured market, mostly the Medicare Shared Savings Program (which has spawned the ACO concept).  What about the rest of the consumers?  As the insured market gets squeezed (remember that consumers are feeling the pressure too with heightened copays, deductibles and benefit limits), you can expect growth of the “second tier,” those who want more and are willing to pay for it;
  4. Build in wellness and prevention.  Not all practices lend themselves to wellness related services that can reduce healthcare costs, but those that do must look at ways to offer cost-saving, wellness and prevention-oriented services;
  5. Enlist the patients.  The concept of “partnering” with patients is strange, but consider the amount of savings and the enhancement of outcomes if physicians could incentivize healthy patient behavior.  Though absent from the public policy conversation, health care businesses that build in patient accountability stand to win big in a payment system that rewards clinical outcomes and cost savings.

Change is frightening.  Even “good” change is frightening.  Just look at all the upset stomach meds sold at airport kiosk counters.  Physicians have a terrific burden at this time.  They not only hold our health in their hands.  They are expected to have skills and time to help create a new environment in which care will be delivered.  Denying change in the healthcare sector is a waste of time and energy.  Looking for ways to thrive in it and even drive it is wise.

The Florida Healthcare Law Firm Goes National

Followers & Friends – BIG Announcement coming out today! If you haven’t seen our new NATIONAL platform, check it out here at www.nationalhealthcarelawfirm.com and stay tuned for our #healthcare #legal news at 2pm EST !!!

Supreme Court upholds Obama health care law

Via @USAToday

The Supreme Court upheld President Obama’s health care law today in a splintered, complex opinion that gives Obama a major election-year victory.

Basically. the justices said that the individual mandate — the requirement that most Americans buy health insurance or pay a fine — is constitutional as a tax.

Chief Justice John Roberts — a conservative appointed by President George W. Bush — provided the key vote to preserve the landmark health care law, which figures to be a major issue in Obama’s re-election bid against Republican opponent Mitt Romney.

The government had argued that Congress had the authority to pass the individual mandate as part of its power to regulate interstate commerce; the court disagreed with that analysis, but preserved the mandate because the fine amounts to a tax that is within Congress’ constitutional taxing powers.

The announcement will have a major impact on the nation’s health care system, the actions of both federal and state governments, and the course of the November presidential and congressional elections.

A key question for the high court: The law’s individual mandate, the requirement that nearly all Americans buy health insurance, or pay a penalty.

Critics call the requirement an unconstitutional overreach by Congress and the Obama administration; supporters say it is necessary to finance the health care plan, and well within the government’s powers under the Commerce Clause of the U.S. Constitution.

While the individual mandate remained 18 months away from implementation, many other provisions already have gone into effect, such as free wellness exams for seniors and allowing children up to age 26 to remain on their parents’ health insurance policies. Some of those provisions are likely to be retained by some insurance companies.

Other impacts will sort themselves out, once the court rules:

— Health care millions of Americans will be affected – coverage for some, premiums for others. Doctors, hospitals, drug makers, insurers, and employers large and small all will feel the impact.

— States — some of which have moved ahead with the health care overhaul while others have held back — now have decisions to make. A deeply divided Congress could decide to re-enter the debate with legislation.

— The presidential race between Obama and Republican challenger Mitt Romney is sure to feel the repercussions. Obama’s health care law has proven to be slightly more unpopular than popular among Americans.

Full Story Here: http://content.usatoday.com/communities/theoval/post/2012/06/Supreme-Court-rules-on-Obama-health-care-plan-718037/1#.T-xqPhd5F9E

The Florida Healthcare Law Firm Announces National Expansion

(Delray Beach, FL) June 21st, 2012 – The Florida Healthcare Law Firm, one of Florida’s leading healthcare law firms, today announced a major increase in their legal practice capabilities with the official launch of the National Healthcare Law Firm, a d/b/a and new portal of the firm. The expansion to a national platform providing healthcare legal services to physicians and healthcare businesses is one that significantly increases resources for clients who lack qualified local healthcare counsel. While the Florida Healthcare Law Firm has for years assisted clients outside the state of Florida*, this new development further cements the firm’s commitment to providing ethical legal counsel in the healthcare industry.

“We are very excited about it. The fact that we serve clients all over the country has been a small secret for a while but we realized there’s a huge demand and decided to just go for it,” said Jeffrey L. Cohen, Esq. Founder and President of Florida Healthcare Law Firm.

According to Cohen, “It’s just a strange area of the law.  Nearly everything in healthcare business is regulated; leases, employment agreements, compensation.  Things you wouldn’t think are regulated are strongly regulated.  And there are large fines and criminal penalties for getting it wrong!  Our clients understand that healthcare business of any kind has serious legal risks and that they need uniquely qualified help.”

To request a service list or for any other firm information, call Autumn Piccolo at 888-455-7702 or visit the firm’s website at www.nationalhealthcarelawfirm.com or www.floridahealthcarelawfirm.com

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Acknowledged throughout the country for its service and excellence, Florida Healthcare Law Firm is one of the nation’s leading providers of healthcare legal services. Founded by Jeffrey L. Cohen, Esq and headquartered in South Florida, FHLF provides legal services to physicians and healthcare businesses with the right pricing responsiveness and ethics. From healthcare clinic regulation, home health agency representation and physician contracting to medical practice formation/representation and federal and state compliance matters, the Florida Healthcare Law Firm is committed to bringing knowledge and experience to a diverse group of clients.

Super Group Doctors Beware of Departure Provisions

 Super groups are in vogue as physicians do their best to reduce costs and enhance revenues.  A “super group” is essentially a collection of previously separate competitors who have joined a single legal entity in order to achieve certain advantages.  Those advantages tend to be (1) reducing overhead expense associated with economies of scale.  Buying insurance for a group of 100 doctors should be far less expensive per doctor than a group of three doctors; (2) gaining leverage in managed care contracting.  20 groups of five physicians each cannot contract with a payer with “one voice” due to the antitrust restrictions, but a single group of 100 doctors can; and (3) finding new revenue sources.  Small groups and solo practices cannot afford revenue producing services like surgery centers, imaging services and such.   When practices combine, they have a greater patient base, which makes the development of new revenue sources feasible.

Physicians join super groups with terrific promise and hope.  They are clearly a good idea, especially if they have solid operations.  That said, physicians who rush to form them rarely consider the risks associated with a physician departing the group.  They need to!

When a doctor joins a super group, she stops billing through her old practice (the “P.A.”) and starts billing through a new group (the “LLC”).  The LLC has a tax ID number and a Medicare group number.  And the LLC enters into lots of managed care payer agreements.  Simply put, the doctor puts all of her eggs in the LLC basket.  So what’s the risk?

When physicians depart super groups, they have to confront difficult facts, like:

  1. It will take months to get a new Medicare provider number.  If they haven’t billed through their “old entity” for a while, that number is gone.  And getting a new number for the departing physician takes time, during which revenues associated with Medicare patients are lost (until the number is obtained);
  1. It takes even longer to get on insurance plans.  If the LLC is contracted (they usually are), how long will it take to get the P.A. fired back up?  It can take as long as six months (and sometimes even more)?  That means the departed doctor is out of network with all the plans!  This exposes her patients to higher costs and may affect referral patterns.  This alone can be crippling to a physician who has left the super group.
  1. Leaving can also mean ending access to patient scheduling and electronic medical records.  Many super groups do not ensure access to patient scheduling or billing to enable a departing physician to get back on their feet; and this can be devastating.
  1. Noncompetes can play a big role in how a departing physician gets back on her feet.  Ideally she will know that being solo is not as good as being part of a larger practice.  But what if the super group imposes a restriction on the departing physician that prevents her from being part of another group?  This is common and often very harmful, since some physicians who depart super groups have no effective options but to join other groups.

Super groups exist to benefit physicians.  It makes no sense that they would be used to harm them, which is precisely what can happen (and sometimes does happen) if physicians do not pay good attention to the “back end” as well as they do to the “front.”  That means things like—

  1. Making sure that, wherever possible, the departing physician is afforded enough time to get back on her feet professionally.  She will need time to get a new practice formed, to get a new Medicare provider number and to get back on insurance plans;
  1. Ensuring the departing physician has adequate access to medical and scheduling records;
  1. Carefully considering whether or not noncompetes make any sense.  Some may say that it is important to protect the new practice (like the old one), but these are different sorts of practices.  They are not built from the ground up.  They are built because successful competitors who have been in business for years decided essentially to “loan” their practices to the super group in order to obtain certain unique advantages.

Super group arrangements continue to grow.  Some of them even develop into fully integrated and sophisticated businesses.  Physicians who join them have to consider all “angles,” not just how good it will be or can be when they join.