Hiring a new physician into a practice can be an expensive and risky proposition but for most practices it is a necessary endeavor.  Aside from the actual costs of recruiting and negotiating a contract with the new physician, there are associated increases in overhead, and perhaps most importantly, the risk of damaging valuable practice goodwill in the community if you happen to make the wrong choice.  Here are a few important legal and business considerations to think about before hiring a new physician:

1.         Are you sure you need a new physician?  Physician extenders – nurse practitioners and physician assistants – often cost less than hiring a physician and can, depending on their state licensure rules, handle much of what a physician can do in the office.  Moreover, extenders don’t typically expect to become owners and may be willing to work on an hourly as-needed basis.  Consider first whether an extender might be enough.

2.         How much can you afford to pay a new physician?  Fundamentally the decision to hire is a mathematical equation:  how much in salary, benefits and overhead will it cost you and do you have the patient volume to support the new physician.

3.         What type of physician is the right fit for your practice? Is there a potential niche for a physician with a particular subspecialty or skills set?

4.         Do you expect to offer the opportunity for the new physician to become an owner in the practice?  While it’s never a good idea to guarantee co-ownership in your physician employment agreement, be prepared for candidates to ask about the opportunity and what it might entail. You don’t necessarily have to know or give all of the details, but it’s a good idea to have a sense of when co-ownership might be offered, what criteria will go into the decision to offer it and what kind of buy-in might be required.

5.         Will you impose a non-competition covenant on the new physician?  Restrictive covenants are very common in physician employment agreements but overly-aggressive restrictions can send the wrong message and scare good candidates away.   Ideally restrictive covenants should be narrowly tailored to protect the practice.

The article Pediatricians v Retail Clinics: Is It Time to Think Beyond the Office Visit? published today at time.com, highlights an important shift occurring in the delivery of physician services.  Patients are foregoing their regular physician office visits in favor of  “as-needed” treatment from retail clinics, urgent care centers and walk-in clinics springing up around the Country.  These outlets may certainly offer a convenient and sometimes cost-effective alternative to traditional appointment based medical office visits.  However, continuity of care may be jeopardized where a retail clinic provider does not have access to a patient’s medical history. Even a written medical record may not give a provider as clear of an understanding of a patient’s history as a patient’s regular treating physician may have after years of monitoring and treating that patient.

With so much focus on the cost and efficiency of healthcare, it is no wonder that physician services are becoming commoditized.  Where cost and convenience are a patient’s primary focus, popping in to the local big-box store makes sense.  Of course, many retail and walk-in clinics and urgent care centers offer excellent healthcare services.  However, the value of an on-going physician/patient relationship should not be overlooked.

Here are some steps physicians can take to enhance the value of the physician/patient relationship:

  • Spend a few extra minutes with your patients to be sure that their questions are answered.  The last thing a physician should ask the patient:  “Do you have any other questions or concerns I can help you with?”.
  • Create a mechanism for patients to get their questions answered when they are not in the office.  Patients may have questions and concerns before or after their office visits.  Giving patients access to you through email (subject to HIPAA), during scheduled telephone time, or by cell phone is a great way to maintain a close professional relationship with them.
  • Be prepared to discuss alternative treatments and treatment trends.  In the age of the internet, you have to expect that patients will research their sypmtoms, diagnoses and treatment options.  Consider doing some general internet research on the common problems you see in your office (e.g., common cold treatments, headaches, arthritis) so you have an idea what your patients may be reading and can anticipate some of their questions.
  • More and more patients are interested in holistic and alternative treatments.  Whether you believe in the benefits of dietary supplements, for example, your patients may elect to use them; so, you should have a basic understanding of the risks and benefits of common supplements (e.g.,  Chondroitin for joint pain) and be prepared to counsel your patients on the use of them.
  • Finally, have helpful literature on hand in the office on various common conditions that you can give patients during their visits.  Let’s face it, not all of the medical information a patient finds onlne is going to be safe or necessarily effective.  Handpicking articles enables you to select the literature that you believe sends a safe and effective message.

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. 

Continue Reading Is Concierge Medicine Right for You?

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.
• Review the website’s “terms of use” to see if the posting is in compliance them. Some websites prohibit posters from personally naming or attacking an individual physician or claiming malpractice on the part of a physician. If you believe a posting does not conform to the terms of use, there is typically a mechanism to report the posting and often the website will remove a noncompliant posting.
• 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.