Adding an interesting wrinkle to an already complex environment, the Federal Trade Commission filed a suit this month to block an Idaho hospital from acquiring a physician practice. According to an article on thomsonreuters.com, the FTC and the IDAHO Attorney General have filed an antitrust complaint seeking to block St. Luke's Health System's acquisition of Saltzer Medical Group, a large multi-specialty practice. The FTC's alleges that the acquisition would result in St. Luke's having a 60% share of the local primary care market. This most recent foray into the physician/hospital acquisition arena suggests that a truly integrated delivery model may simply not be possible in some markets.
According to a recent study published in the Journal of the Association of American Medical Colleges, a primary care physician who graduates with education debt of $160,000 should be able to raise a family, live in an expensive urban area, and repay their debt in 10 years without incurring additional debt, as long as their household income and spending are consistent with median statistics. However, the ability to meet education debt repayment obligations as a primary care physician becomes significantly more difficult when the education debt is $200,000 or more. According to the study, of 2011 medical school graduates, 59% had education debt of $150,000 or more at graduation, 33% had more than $200,000, 15% had more than $250,000, and 5% had more than $300,000.
By national standards, physicians – even primary care physicians -- have a pretty good earning capability. However, the financial, emotional and physician investment required to earn a medical degree and complete training is daunting – particularly when coupled with the fact that most physicians cannot begin saving for retirement in a meaningful way until their early to mid-thirties. With the emphasis placed on primary care under the federal Affordable Care Act, what will the federal government need to do to entice the best and the brightest to go into primary care?
As administrative burdens and costs associated with the practice of medicine continue to grow, many physicians are wondering out loud whether now is the time to make the leap to cash-only concierge medicine. In its purest form, concierge medicine is a model where patients pay a recurring cash fee (e.g., monthly or annual) for expedited/enhanced access to medical and wellness care. There are many possible variations on this concept ranging from a cash fee-for-service model to a hybrid model where the physician accepts cash for some services (non-covered) and bills insurance for others.
While the concept may sound incredibly tempting, physicians are advised to proceed with caution. To be sure, there are a host of legal considerations - most of which have to do with Medicare and commercial insurance contractual issues. These are particularly tricky in a hybrid model where the distinction between covered and non-covered services is critical.
There are, however, many business considerations that should be carefully evaluated before making this leap. Among other things, the practice needs to be in a market that will support a cash-only practice. Patients who get decent coverage through their employer's plan and only have to pay minimal copays/deductibles may be reluctant to pay more. Some patients may be willing to pay for concierge level care but how many of those patients will you need to sustain a practice? How will the practice operations and cost structure change under a concierge model? How will the physician's lifestyle need to change?
While concierge medicine may be a great fit for a handfull of doctors, it's likely not a feasible model for many. If you are considering making this change, be sure to do your homework first.
Health care fraud and abuse enforcement activity is at an all-time high yet many physicians and other providers lack a basic understanding of the key healthcare fraud and abuse statutes that apply to them. Although each state may have its own fraud and abuse laws, any healthcare provider that receives federal funds should be familiar with three significant federal fraud and abuse statutes: the anti-antikickback statute, the federal false claims act and the physician self-referral law (also known as the Stark law).
Each of the statutes imposes a different set of prohibitions on healthcare providers and each carries separate but significant penalties for violation. For an introductory overview to each of these statutes, consider listening to the brief podcasts produced by physicianspractice.com at the following links:
There's an interesting piece in the Miami Herald today regarding hospitals once again acquiring physician practices. The article raises some good questions regarding the motivations underlying this growing (recurring) trend and suggests that it might be more about control than preparing for a "reformed" health care system. The article also questions whether hospitals will be any more successful this go-round in managing the acquired practices than they were in previous attempts.
I frequently represent both hospitals and physicians in practice acquisition transactions. In my experience, only a handful of hospitals and health systems have a true plan for how they will integrate the practices they are acquiring in a manner that will improve the delivery of healthcare. To be sure, how best to integrate providers to improve care is not an easy question to answer. I find, however, that the "smart" hospitals and health systems are willing to acknowledge that physicians should be involved in the development process and that they (the hospitals) do not necessarily have all the answers for how best to accomplish that goal.
If you are considering selling your practice to a hospital, or you are a hospital looking to integrate the physicians in a thoughtful way, consider whether it makes sense to begin the process with a dialogue about where each party envisions the relationship to be several years in the future. If you can reach consensus on where you want to end up, you can then structure a transaction which is specifically designed to get you there.
According to an article in the Arizona Republic posted on AZcentral.com, Health Net of Arizona has begun offering a new "narrow network" HMO product to employers in conjunction with Banner Health, a health system offering healthcare services in seven western states. Under the new plan, employers will receive premium discounts for limiting their network of providers to the newly formed "Banner Health Network". Presumably based on an ability to better manage care within an integrated network, Health Net believes the should offer a 20% savings over its traditional PPO products.
The emergence of narrow network HMO products is a trend worth watching for several reasons: first, it demonstrates that third party payers are aggressively seeking to better manage health care costs and are looking for innovative ways to do so; and, second, it is apparent that as new products are developed, those providers who are integrated (both horizontally and vertically) are most likely to be the players of choice, as they will presumably have a greater ability to control costs across the delivery continuum. Physicians and other providers should take these developments to heart when developing their strategic plans for the coming year(s).
Have you or your practice been the subject of a negative online review? If not, there's a pretty good chance that you might be in the future. Online physician rating websites are proliferating and it is becoming increasingly common for disgruntled patients to vent their frustrations on the World Wide Web. Even worse is the fact that many of these websites permit anonymous posting, so you may not even know who your detractor is. It's finally, case law generally exempts rating websites from liability provided they are only facilitating publication of the personal opinions of posters. None of this however means that you must take a negative online review lying down. In fact, given that a physician's reputation is one of his or her most valuable professional assets, I would encourage you to proactively protect your online reputation. Here are a few things you can do:
• Regularly (at least monthly) do an online search of your name and your practice's name to see if comments have been posted. Some search engines allow you to set up an "alert" to notify you by e-mail if your name appears in a search.
• If you know who the poster is, consider calling them and trying to work through their concerns to see if they would be willing to retract their online comment.
• If you have patients with positive things to say about you or your practice, encourage them to post positive comments on one or more of the available rating websites. Not only does this counter any negative comments but it can also push negative comments further down in the list so that they are less prominent.
• Consider involving legal counsel to advise you on your options. Sometimes a well drafted letter from an attorney to either the website or the poster is enough to encourage them to take down the posting.
Physicians are feeling the economic burn of the down economy perhaps more than the average American. Not surprisingly, creative physician joint ventures are proliferating in the healthcare industry as a means of stabilizing revenue streams and referral patterns. Unfortunately, many of these arrangements may raise questions under applicable fraud and abuse laws. One such proposed arrangement was the subject of the most recent (and negative) Advisory Opinion issued by the Office of Inspector General (OIG) of the Department of Health and Human Services.
The arrangement involved a proposed management services agreement for pathology services pursuant to which a physician-owned management company would provide pathology laboratory management services to a pathology lab. Under the management services agreement, the management company would provide all pathology services, utilities, furniture, fixtures, space and laboratory equipment. In addition, the management company would provide both marketing and billing services. For all of these services, the pathology lab would pay the management company a "usage" fee based on a percentage of the lab's revenue. Moreover, the management company would offer ownership interests to physicians in a position to refer to the pathology lab.
Noting that the arrangement could not meet any of the available safe harbors under the federal anti-kickback statute and citing the fact that the management fee would fluctuate with the volume or value of services performed by the pathology lab, the OIG found that the arrangement would pose a substantial risk of fraud and abuse and, therefore, refused to bless it.
When revenue is flat and costs are increasing, it is hard to blame physicians for at least considering potentially lucrative joint venture proposals. Of course, many such arrangements may be perfectly legal and may even be eligible for safe harbor protection under the various healthcare laws. That being said, physicians must always be mindful that penalties for violating federal and state laws can be catastrophic. For example, violation of the federal anti-kickback statute is a felony a felony, punishable by a fine of up to $25,000, up to five years in jail, or both as well as potential false claims liability. Therefore, when it comes to joint venture arrangements, the best course is to proceed with caution.
One of the major trends in health care today is to allow greater patient access to health information. In keeping with that, the Department of Health and Human Services has proposed amendments to the CLIA regulations which would require labs covered by the health Insurance Portability and Accountability Act (HIPAA) to provide test results directly to patients. According to HHS Secretary Kathleen Sebelius, the amendments are designed to cut down on the administrative delays currently experienced by many patients in getting their results from their doctors. I wonder however whether patients will be able to effectively interpret their own lab results or, perhaps more importantly, whether they might be inclined skip a critical follow up visit because they think everything looks fine. For more information, take a look at the following article from Reuters.
In July, the Centers for Medicare and Medicaid Services (CMS) released the much-anticipated final regulations that providers are required to meet in order to receive the Medicare incentives for adoption of a certified electronic health record system. In those regulations, In the final rule, CMS set forth 15 core elements which must be met in order to qualify for “meaningful use” of the EHR system.
Notwithstanding the regulations, the requirements are complex and many physicians and other providers have a host of questions regarding both the regulations and the incentive program. To address some of these questions, CMS has issued a number of Frequently Asked Questions (FAQs) on its website. To review the new EHR FAQs, physicians can click here and type the term “EHR” into the search window.
Massachusetts has joined the small but growing list of states regulating gifts and payments by pharmaceutical and device manufacturers to physicians. According to a Boston Globe article, Massachusetts regulators have adopted regulations banning gifts to physician and mandating disclosure of consulting/speaking payments to doctors in excess of $50. The regulations apply to any pharmaceutical and device company doing business in Massachusetts and take effect July 1, 2009.
This is yet another indication that the landscape surrounding physician-industry relationships is undergoing major changes. As regulators push for greater transparency, physicians must be careful to avoid arrangements with pharma and device companies which might not only violate state or federal laws (including the federal anti-kickback statute) but which could attract unwanted public attention and scrutiny.