Presentation is loading. Please wait.

Presentation is loading. Please wait.

GEORGIA HOSPITAL ASSOCIATION CENTER FOR RURAL HEALTH AND LONG TERM CARE FACILITIES ANNUAL SUMMER MEETING HOSPITAL-PHYSICIAN INTEGRATION STRATEGIES DANIEL.

Similar presentations


Presentation on theme: "GEORGIA HOSPITAL ASSOCIATION CENTER FOR RURAL HEALTH AND LONG TERM CARE FACILITIES ANNUAL SUMMER MEETING HOSPITAL-PHYSICIAN INTEGRATION STRATEGIES DANIEL."— Presentation transcript:

1 GEORGIA HOSPITAL ASSOCIATION CENTER FOR RURAL HEALTH AND LONG TERM CARE FACILITIES ANNUAL SUMMER MEETING HOSPITAL-PHYSICIAN INTEGRATION STRATEGIES DANIEL J. MOHAN MORRIS, MANNING & MARTIN, LLP August 8, 2013

2 Trend is towards rapid horizontal and vertical consolidation Horizontal Hospitals and hospital systems are merging, stronger systems acquiring weaker systems, affiliations Vertical Hospitals acquiring physician practices Hospitals acquiring/developing post-acute care lines of business Healthcare institutions are branching out into insurance market TRENDS 1

3 I.FULL INTEGRATION II.PARTIAL INTEGRATION III.MINIMAL (CONTRACTUAL) INTEGRATION HOSPITAL/PHYSICIAN INTEGRATION MODELS 2

4 I.FULL INTEGRATION A.Physician Practice Acquisition B.Full-Time Employment 1.Direct Employment 2.Employment through “captive” physician group practice C.Part-Time Employment II.PARTIAL INTEGRATION A.Physician-Hospital Organization (“PHO”) B.Hospital-Physician Joint Ventures C.Hospital Acquisition of Physician Group Ancillary Service Line D.Practice Asset Acquisition/Lease, Professional Services Agreement (“PSA”) HOSPITAL/PHYSICIAN INTEGRATION MODELS 3

5 III.MINIMAL (CONTRACTUAL) INTEGRATION A.Physician Recruitment B.Personal Services Arrangements Medical Director Department Staffing Call Coverage Administrative/Management Services C.Service Line Management or “Co-Management” Arrangements D.Space/Equipment Leasing Arrangements HOSPITAL/PHYSICIAN INTEGRATION MODELS 4

6 WHY IS IT IMPORTANT TO DO IT RIGHT? Each of these arrangements implicate a variety of federal and state laws and regulations, including: Federal Anti-Kickback Statute Federal Ethics in Patient Self-Referral Law (commonly known as the “Stark Law”) State Fraud and Abuse and Self-Referral Statutes State and Federal Anti-Trust Laws Failure to comply with these laws and regulations could trigger significant repayment obligations, civil penalties and fines, including liability under False Claims Act and Civil Monetary Penalties statute. 5

7 SIGNIFICANT DOJ/OIG ENFORCEMENT ACTIONS ARISING OUT OF ALLEGED IMPROPER HOSPITAL CONTRACTUAL ARRANGEMENTS WITH PHYSICIANS Covenant Medical Center, Waterloo, Iowa (2009) −366 bed acute care hospital in Waterloo, Iowa −Entered into full-time employment agreements with five specialists (2 orthopedic surgeons, 2 neurosurgeons, 1 gastroenterologist) −Government alleged that arrangements violated Stark Law because did not meet applicable exceptions: compensation paid exceeded FMV, and arrangements were not “commercially reasonable” −Evidence indicated that compensation at very top percentile of compensation paid to physicians in comparable specialty nationally, and more than 3x compensation paid to physicians in Waterloo −Evidence further indicated that some of the physicians not working at full capacity, filling time engaged in less specialized practice, performing administrative functions −Hospitals settled FLA and CMP claims for $4.5 million 6

8 SIGNIFICANT DOJ/OIG ENFORCEMENT ACTIONS ARISING OUT OF ALLEGED IMPROPER HOSPITAL CONTRACTUAL ARRANGEMENTS WITH PHYSICIANS Singh v. Bradford Regional Medical Center (2010) −Bradford Regional Medical Center, 107 bed community nonprofit hospital in Bradford, PA −Two local cardiologists considering acquisition of nuclear camera and performing imaging through practice −Negotiations over possible arrangements to avert action unsuccessful −Physicians bought camera, hospital took actions adversely affected physicians −Hospital ultimately agreed to sublease camera from physicians −Sublease Agreement provided for rental rate of ten percent (10%) of hospital collections from tests performed using camera −Court determined arrangement did not meet applicable Stark exception because fee paid to physicians under Sublease Agreement took into account, at least partially, “volume or value” of referrals from doctors 7

9 SIGNIFICANT DOJ/OIG ENFORCEMENT ACTIONS ARISING OUT OF ALLEGED IMPROPER HOSPITAL CONTRACTUAL ARRANGEMENTS WITH PHYSICIANS Drakeford v. Tuomey Healthcare System (2013) −Tuomey Healthcare System entered into part-time employment arrangements with 19 area physicians −“Exclusive” part-time arrangements, effect of which was to preserve referrals of all outpatient services from employed physicians to Tuomey −Compensation paid under each employment agreement consisted of the following: (i)Guaranteed base salary, plus (ii)Productivity bonus equal to eighty percent (80%) of amounts collected by hospital for personally performed services, plus (iii)Additional incentive bonus of up to seven percent (7%) of productivity bonus amount if physician meets specified performance targets −Government alleged arrangements violated Stark: compensation greatly exceeded FMV and arrangements not “commercially reasonable” −Case went to trial, jury agreed with government −Subject to up to $357 million in civil fines and penalties 8

10 STARK SELF-DISCLOSURES UNDER CMS SELF-DISCLOSURE PROTOCOL −CMS instituted “Self-Disclosure Protocol” in 2011 −Total of twenty-nine (29) self-disclosures through 06/20/2013 −Twenty-four (24) self-disclosures involved disclosure of contractual arrangements with physicians that violated Stark because did not meet applicable exception −Settlements between $22,000 and $585,000 9

11 HOSPITAL-PHYSICIAN INTEGRATION STRATEGY Decision to embark on physician integration strategy, and specific integration arrangements to pursue, influenced by a variety of factors, including: 1.Hospital long-term strategic plan 2.Competition in market 3.Size and make-up of physician community 4.Availability of capital 5.Availability of other resources necessary to consummate and manage integration arrangements 10

12 PHYSICIAN INTEGRATION STRATEGIES Various surveys and studies list the following as common drivers of physician integration activities: 1.Build/maintain competitive advantage 2.Physician recruitment strategy 3.Product/service diversification 4.Increase and diversify revenue sources 5.Improve quality and efficiency of services 6.Position facility to respond to changing reimbursement environment 11

13 12 FULL INTEGRATION MODELS

14 HOSPITAL ACQUISITION OF PHYSICIAN PRACTICES According to a recent study Fifty-two percent (52%) of U.S. hospitals plan to acquire physician practices in 2013 (compared to forty-four percent (44%) in 2012) “Opportunity” rather than “strategy” is the primary reason hospitals consider acquiring physician practices (i.e., physician groups initiate process) Moody’s report dated January 22, 2013 indicated that nonprofit hospitals are buying physician practices to stabilize market share and improve bottom line Valuation company VMG Health recently determined that approximately twenty percent (20%) of U.S. physicians are employed by hospitals or health care systems 13

15 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS DIRECT EMPLOYMENT MODEL PHYSICIAN PRACTICE HOSPITAL OR HOSPSUB Doctor $ Assets Employment Agreements 14

16 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS “CAPTIVE” PHYSICIAN GROUP EMPLOYMENT MODEL PHYSICIAN PRACTICE HOSPITAL Doctor $ Assets Employment Agreements HOSPITAL PHYSICIAN GROUP 15

17 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS ACQUISITION TRANSACTION Typically asset acquisition Must meet all criteria of Stark “isolated transactions” exception, including: 1.Purchase price is consistent with FMV 2.Purchase price does not take into account volume or value of referrals by selling physicians 3.Transaction is “commercially reasonable” to the hospital even if physician makes no referrals to the hospital 16

18 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS DIRECT EMPLOYMENT MODEL Employment arrangement directly between the hospital and physician, must meet all criteria of Stark “bona fide employment relationships” exception 1.Compensation paid to physician must be –Consistent with FMV, and –Not determined in a manner that takes into account volume or value of referrals from physician 2.The employment arrangement is “commercially reasonable” even if no referrals were made to the hospital May pay bonuses based only on “personally performed” services 17

19 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS DIRECT EMPLOYMENT MODEL Compensation typically mix of base or “guaranteed” salary, and productivity bonus If base compensation consistent with previous compensation, set minimum productivity level which physician must meet in order to earn base compensation Productivity bonuses if physician exceeds bonus threshold (wRVUs, minimum collections, other measures of productivity) Note, cannot compensate physician based on profitability of his/her “practice,” allow physician to share in ancillary services revenues produced in “practice,” etc. 18

20 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS EMPLOYMENT UNDER “CAPTIVE” GROUP PRACTICE Many hospital systems employing physicians choose to do so through a “captive” physician organization that meets definition of a “group practice” under Stark. Advantages: 1.Greater flexibility in compensation model –Can create group compensation model, encourages group productivity and cohesiveness –Allow group to share in positive net income of practice –If ancillaries stay in practice, physicians can share in positive net revenue for ancillary services 2.Physician participation/input into “governance” of group 3.Seamless transition to hospital umbrella 19

21 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS EMPLOYMENT UNDER “CAPTIVE” GROUP PRACTICE “Group practice” definition under Stark: 1.Single Legal Entity. 2.Physicians. Must have at least two doctors who are members of the group. 3.Range of Care. Each physician member of the group must furnish substantially the full range of care through the group. 4.Services Furnished Through Group. Each member of the group must furnish at least seventy-five (75%) of patient care services through the group. 5.Distribution of Expenses and Income. Must be calculated and distributed in accordance with formulas determined prior to receipt of income. 6.Unified Business. Must be a “unified business” which has a “centralized decision-making body,” and consolidated billing, accounting and financial reporting. 7.Volume or Value of Referrals. Compensation paid to physician members of the group may not be based on volume or value of referrals. 8.Physician-Patient Encounters. Members of the group must conduct not less than seventy- five percent (75%) of physician-patient encounters in the group. 20

22 PHYSICIAN PRACTICE ACQUISITION AND EMPLOYMENT MODELS PART-TIME EMPLOYMENT ARRANGEMENT Part-time employment arrangements are rare, and potential risky Potential part-time employment arrangements: 1.Departmental staffing arrangements 2.Physician clinic staffing arrangement 3.Call coverage arrangement 21

23 DIRECT EMPLOYMENT MODEL PART-TIME EMPLOYMENT ARRANGEMENTS Reasons for structuring arrangements as part-time employment arrangements: 1.Greater control over work performed as employee 2.Eliminate tax risks associated with reclassification 3.Allow hospital to provide benefits to physicians consistent with part-time employee status 22

24 DIRECT EMPLOYMENT MODEL PART-TIME EMPLOYMENT ARRANGEMENTS Must meet all of criteria of Stark “bona fide employment relationships” exception, including: 1.The employment is for identifiable services 2.Compensation paid to physician is –Consistent with FMV, and –Not determined in a way that takes into account the volume or value of referrals 3.The overall arrangement is “commercially reasonable” even if the physician made no referrals to the hospital 23

25 24 PARTIAL INTEGRATION MODELS

26 PARTIAL INTEGRATION PHYSICIAN-HOSPITAL ORGANIZATION (“PHO”) What is it? Single legal entity having a hospital (or hospitals) and physicians, individually or via an Independent Physician Association (“IPA”), as co-owners. 25

27 PARTIAL INTEGRATION PHYSICIAN-HOSPITAL ORGANIZATION (“PHO”) Local Hospital, Inc. Local Physician IPA, LLC Mega Physician-Hospital Organization, LLC LLC Ownership Interest $ $ -Managed care contracting -Vehicle to participate in “bundled” reimbursement programs, similar reimbursement programs -Develop and administer QI programs, clinical protocols, measure outcomes (improve quality, etc.) 26

28 PARTIAL INTEGRATION PHYSICIAN-HOSPITAL ORGANIZATION (“PHO”) Legal Issues: −Will not implicate Stark unless PHO itself is “provider” of DHS −Anti-Kickback Statute: Hospital(s) and physicians capitalize the PHO commensurate with ownership interests Hospital may not loan funds to physicians to purchase ownership interests Additional capital requirements of the PHO must be funded pro-rata by owners Distributions of net capital (if any) made pro rata Separate arrangements between PHO and hospital (space lease, etc.) and PHO and doctors should meet applicable safe harbor −Anti-Trust: Minimum level of financial integration (capitalization of PHO; pool reimbursement and/or withholds, bonuses based on formula; not pure “pass through”) Minimum level of clinical integration 27

29 PARTIAL INTEGRATION HOSPITAL-PHYSICIAN JOINT VENTURES Clinical Services Joint Ventures Non-DHS services −Outpatient surgery centers −Sleep labs −Urgent care centers DHS services under Stark “rural provider” exception Non-Clinical Services Joint Ventures Medical office buildings or other real estate Equipment leasing companies Facility leasing company 28

30 PARTIAL INTEGRATION HOSPITAL-PHYSICIAN JOINT VENTURES Stark “rural provider” exception: an entity that furnishes at least seventy-five percent (75%) of DHS to residents of a “rural” (i.e., non-urban) area Anti-Kickback Statute Safe Harbor: Terms of offer of investment interest are same for all investors Terms of offer to potential investors who are referral sources are not related to previous or future referrals No requirement that investors make referrals to joint venture Joint venture may not market or provide items or services to investors differently than to non-investors May not loan funds to potential investor in position to make referrals to, furnish items or services to, or otherwise generate business for joint venture if investor uses funds to purchase ownership interest Payments in return for investment interest directly proportional to amount of capital invested Additional safe harbor requirements for surgery centers 29

31 PARTIAL INTEGRATION HOSPITAL ACQUISITION OF PHYSICIAN GROUP ANCILLARY SERVICE LINE Physician group operates very profitable ancillary services line within group (chemo; imaging; physical therapy; sleep lab). Group not ready for sale of practice (wish to remain independent), but may be interested in monetizing ancillary service line through sale. 30

32 PARTIAL INTEGRATION HOSPITAL ACQUISITION OF PHYSICIAN GROUP ANCILLARY SERVICE LINE Physician Group −Professional services −Diagnostic imaging −Lab Imaging Center Hospital Space lease or sublease? $ - purchase imaging service 31

33 PARTIAL INTEGRATION HOSPITAL ACQUISITION OF PHYSICIAN GROUP ANCILLARY SERVICE LINE Why would hospital buy? Offensive - establish new or enhance existing outpatient service Revenue enhancement -- hospital based service Defensive - eliminate competitor and/or prevent competing hospital from picking up service Why would physicians sell? Time is right – declining reimbursement for practice-based ancillary services Provide partial liquidation event (generate cash) while continuing independent practice 32

34 PARTIAL INTEGRATION HOSPITAL ACQUISITION OF PHYSICIAN GROUP ANCILLARY SERVICE LINE Stark “Isolated Transactions” exception: Purchase Price Must be consistent with FMV, and May not take into account, in any manner, volume or value of referrals from selling physician FMV opinion from experienced, reputable valuation company is essential. Do not rely on “in-house” valuation. Income approach vs. asset valuation. 33

35 PARTIAL INTEGRATION HOSPITAL ACQUISITION OF PHYSICIAN GROUP ANCILLARY SERVICE LINE Stark “Isolated Transactions” exception: The overall transaction must be “commercially reasonable” even if the selling physicians made no referrals to the purchaser. Minimum, conduct internal “commercial reasonableness” analysis. Controversial deals, consider outside “commercial reasonableness” opinion or report. 34

36 PARTIAL INTEGRATION HOSPITAL ACQUISITION OF PHYSICIAN GROUP ANCILLARY SERVICE LINE Other legal issues: 1.Operate as “provider-based” outpatient department of hospital, must meet Medicare “provider-based rules” 2.Must be in separate and distinct space from physician group −Lease or sublease space from group, meet Stark exception and Anti-Kickback Statute safe harbor for space leases 3.Employees providing service must be hospital employees 35

37 PARTIAL INTEGRATION PRACTICE ACQUISITION, PROFESSIONAL SERVICES AGREEMENT Hospital leases or acquires all or substantially all practice assets (exclude cash, A/R, certain other assets), employs practice non-clinical employees, assumes leases, etc., and operates practice as hospital- owned medical practice. Rather than employ physicians, hospital enters into professional services agreement with P.C., under which P.C. makes all doctors and para-professionals available to hospital to provide professional services in practice. Hospital bills for physician services, pays P.C. fee for clinical services provided by P.C. employees. 36

38 PARTIAL INTEGRATION PRACTICE ACQUISITION, PROFESSIONAL SERVICES AGREEMENT Physician Group, P.C. Practice Assets Professional Services Agreement Hospital Sale or Lease Contract for professional services 37 Clinical Services $ - Fees $ - Purchase Price or Lease Payments

39 PARTIAL INTEGRATION PSA MODEL Practice Acquisition/Lease: −If acquisition, “isolated transactions” exception −If lease, meet all requirements of applicable Stark exception(s) and AKS safe harbor Professional Services Agreement: −Practice agrees to provide specifically identified physicians and para-professionals to hospital to provide services in acquired practice −New physicians added only with hospital approval −Hospital bills for services −Hospital pays fee sufficient to cover P.C. fixed expenses, bonus if group hits pre- established criteria Productivity/Incentive compensation Quality, efficiency, patient satisfaction −Administrative/medical director services separately compensated, at FMV hourly rate −Must meet all criteria of Stark “personal services arrangements” exception 38

40 PARTIAL INTEGRATION PSA MODEL Why physicians like it: 1.Nice option for coverage of remote office 2.Allows doctors to retain some autonomy −Internal compensation −Internal governance 3.Income certainty, remove collection risk and declining reimbursement rates 4.“Date before you marry” 5.Allows for “unwind” and return to private practice if relationship not working Why hospitals like it: Because physicians do 39

41 MINIMAL (CONTRACTUAL) INTEGRATION 40

42 CONTRACTUAL INTEGRATION PHYSICIAN RECRUITMENT Hospitals are permitted to offer physicians a variety of incentives to induce physician to relocate his/her practice to hospital service area. Common recruitment incentives include: (i)Headhunter fees (ii)Relocation expense reimbursement (iii)Income support payments (iv)School loan repayments (v)“Signing bonus” (vi)Short-term housing assistance (vii)Line of credit loans Recruit physician to establish own practice, or to join established practice in hospital’s service area. 41

43 CONTRACTUAL INTEGRATION PHYSICIAN RECRUITMENT Stark “physician recruitment” exception: 1.Physician must “relocate” his or her practice (with some exceptions) to the “geographic area served by the hospital” −Relocate means physician’s practice is outside of hospital GSA, and either moves practice more than twenty-five (25) miles into hospital GSA, or moves practice to hospital GSA and at least seventy-five percent (75%) of revenue in new practice from patients not seen in old practice −Hospital Geographic Service Area lowest number of contiguous zip codes from which hospital draws at least seventy-five percent (75%) of inpatients 2.Recruitment agreement must be in writing and signed by parties 3.Remuneration paid to doctor under agreement not determined based on volume or value of referrals 4.Physician may establish privileges at other hospitals and refer patients to other hospitals 42

44 CONTRACTUAL INTEGRATION PHYSICIAN RECRUITMENT Additional requirements affecting recruitment to an existing group practice: 1. Hospital, physician and group practice must sign the agreement 2.Except for actual costs incurred by group in recruiting doctor, payments are “passed directly through” to doctor or “remain with” recruited doctor 3.If income guarantee, costs allocated by group to new doctor are limited to “actual additional incremental costs attributable to the recruited physician” 4.Must maintain records for five (5) years 5.Remuneration paid under the agreement does not take into account volume or value of referrals 6.Practice may not impose on new doctor “practice restrictions that unreasonably restrict the recruited physician’s ability to practice medicine” in the hospital’s GSA 43

45 CONTRACTUAL INTEGRATION PERSONAL SERVICES ARRANGEMENTS 1.Medical Director Arrangements 2.Department Staffing Arrangements 3.Call Coverage Arrangements 4.Physician Clinic Staffing Arrangements 5.Administrative/Management Services 44

46 CONTRACTUAL INTEGRATION PERSONAL SERVICES ARRANGEMENTS Stark “personal services arrangements” exception: 1.Arrangement is in writing, signed by parties, and specifies services covered by arrangement 2.The agreement covers all of the services furnished by the physician to the entity 3.The aggregate services contracted for do not exceed what is reasonable and necessary for legitimate business purposes of arrangement 4.The term of arrangement is at least one (1) year 5.Compensation paid under arrangement is set in advance, does not exceed FMV, and is not determined in way takes into account volume or value of referrals 45

47 CONTRACTUAL INTEGRATION SERVICE LINE MANAGEMENT AND CO-MANAGEMENT ARRANGEMENTS A “service line” management or co-management arrangement is one where hospital contracts with a group of physicians to provide management services to a hospital department or service line. Under a management arrangement, hospital contracts with a single physician group practice, or with group of unaffiliated physicians of same specialty organized under new legal entity Under “co-management” arrangement, hospital and group of physicians form a new joint venture management company to provide services 46

48 CONTRACTUAL INTEGRATION SERVICE LINE MANAGEMENT AND CO-MANAGEMENT ARRANGEMENTS Management Arrangement Co-Management Arrangement Hospital Management Agreement Physician ManageCo Hospital Co-Management Company Physicians Management and Incentive Fees Variety of Services Management Agreement Invest Fees Services 47

49 CONTRACTUAL INTEGRATION SERVICE LINE MANAGEMENT AND CO-MANAGEMENT ARRANGEMENTS Management Agreement Describe services provided by physicians −Department policies and procedures; medical director; staffing; budgeting; supply chain; clinical protocols; scheduling Create “governance” structure consisting of committee or several committees, hospital and physician representation Establish “reporting” structure Management fees paid under agreement typically consist of “fixed” fee and incentive fee components Fixed fee covers all administrative and management services provided under agreement Incentive fee is triggered by department meeting or exceeding specified “benchmarks” relating to improvements in quality or efficiency, and/or cost reductions Incentive fee may not be tied to percentage of departmental revenue, net income or profit, or increases in departmental revenue or net income 48

50 CONTRACTUAL INTEGRATION SERVICE LINE MANAGEMENT AND CO-MANAGEMENT ARRANGEMENTS Examples of clinical “benchmarks” or “metrics” that may generate incentive fees under the management agreement: 1.Reduction in post-surgical infection rates 2.Reduced re-admissions 3.On-time surgical starts 4.Reduced turn-around time between cases 5.Pre- and post-surgical use of antibiotics 6.Supply cost reductions 7.Patent satisfaction scores 49

51 CONTRACTUAL INTEGRATION SERVICE LINE MANAGEMENT AND CO-MANAGEMENT ARRANGEMENTS Legal Issues: −Depending on how fee is structured and precise party acting as manager, Stark may or may not be implicated −In any event, fee should not exceed FMV, and should not take into account volume or value of referrals −FMV nature of fee should be confirmed by FMV appraisal by experienced H/C appraisal firm −If Stark is implicated, meet all criteria of “personal services arrangements” exception −If “co-management” arrangement, MANAGECO joint venture should be organized and operated consistent with requirements of other hospital-physician joint ventures 50

52 CONTRACTUAL INTEGRATION SERVICE LINE MANAGEMENT AND CO-MANAGEMENT ARRANGEMENTS Business Issues: 1.Doctors must provide legitimate services to earn fee –Commitment of time and energy; not appealing to doctors with busy practice 2.Caveat, may be attractive if arrangement is a vehicle to provide doctors with compensation for services already provided 3.Doctors may be disappointed by what valuation company will approve as FMV “base” fee 4.Ditto for FMV incentive fee 5.Depending on make-up of MANAGECO, achieving some of benchmarks to earn incentive comp will depend on altering behavior of people who have no economic incentive to do so 6.May also depend on circumstances outside of control of physician managers All that being said, a thoughtfully structured arrangement with significant physician “buy-in” can drive significant positive change in service line performance and provide appropriate financial reward for doctors in connection with their efforts to effect change 51

53 CONTRACTUAL INTEGRATION SPACE/EQUIPMENT LEASES Physician group, or lessor entity in which physicians hold investment interests, leases space or equipment to hospital. Must meet all criteria of “rental of office space” or “rental of equipment” Stark exception, if lessor is physician group. If lessor entity includes physician investors, Stark may or may not be implicated, but AKS definitely is. Critical issue, lease payments should be FMV, and not based on percentage of revenues, percentage of profits, or any other percentage-based formula; and, if equipment lease, no “per click” or “per use” fee structure if physician investor is in position to make referrals to machine. 52

54 WRAP-UP −Accelerating pace of hospital/physician integration – trend that is here to stay “Train has left the station,” “horse is out of the barn” −Various models “tools in the tool box” Not every tool is right for every hospital Not every hospital will use every tool, but probably use more than one Exact tools depend on unique facts apply to your institution and market in which operate 53


Download ppt "GEORGIA HOSPITAL ASSOCIATION CENTER FOR RURAL HEALTH AND LONG TERM CARE FACILITIES ANNUAL SUMMER MEETING HOSPITAL-PHYSICIAN INTEGRATION STRATEGIES DANIEL."

Similar presentations


Ads by Google