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| Dear Friend,
Hospitals, lots of hospitals, for sale.
Physicians must understand the potential impact of a growing trend.
Increasing financial pressure is causing both for-profit and nonprofit hospital chains to sell off their hospitals. How might this affect your practice, ranging from a minor inconvenience to the mooting of its, and even your, existence?
According to a report in Becker’s Healthcare News, for-profit health systems shed 81 hospitals over the past 12 months. A significant number were sold to nonprofit systems.
And, according to the same source, nonprofit hospital systems are also shedding facilities.
Buyers include both smaller, regional systems, both for-profit and nonprofit, the latter category including academic medical centers, notably those owned by state governments, such those operated by the University of California: UCLA Health purchased a 260-bed HCA facility. UC Irvine Health is buying four Tenet hospitals, And UC San Francisco Health is in the process of taking on two facilities from Dignity.
For physicians dependent upon a contractual relationship with the hospital at which they practice, this means all hospital-based physicians and many office-based physicians, the sale of the hospital often triggers an immediate termination of the contractual arrangement. And even if it doesn’t, it will certainly affect the terms of the next agreement, if it is awarded to you, once your current contract expires.
Employed physicians, who thought that employment was safer than private practice, might be surprised to find out that their employer no longer needs them. Welcome back to private practice, with no patients, no front or back office support, no nothing other than perhaps a couple of framed diplomas
And, last, for all physicians, referral patterns will be impacted, especially in connection with acquisitions of community hospitals by academic medical centers. The community facilities will be part of the funnel into the academic ecosystem of which you might not play a part.
At least hospital-based groups have more opportunity to gain control over their future. On the one hand, this includes focusing carefully on the terms of the agreements they negotiate with facilities, and it also includes spreading business risk over multiple facilities, meaning over multiple facilities not controlled by the same system owner.
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| | Wednesday - She Said, He Heard – A Lesson From Insider Trading to Prevent Your HIPAA Violation - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Working from home doesn’t work for most, well, nearly all, physicians, but taking work home does, or even taking a work call in a car.
The issue is, who’s within earshot?
From BP and a Couple of Texans to Potential Trouble For You
On February 22, 2024, the U.S. Securities Exchange Commission announced civil charges against Tyler Loudon of Houston, Texas, the husband of a BP p.l.c. mergers and acquisitions manager. The same day, the U.S. Attorney’s Office for the Southern District of Texas announced that Louden pleaded guilty to securities fraud.
As background, during the relevant time in 2023, both Loudon and his wife were working from home. His wife was an executive in mergers and acquisitions at BP p.l.c. (often commonly referred to under its former name, The British Petroleum Company).
The criminal and civil cases center around the allegations that Loudon overheard several of his wife’s work-related conversations in the course of which she discussed BP’s then pending acquisition of TravelCenters of America Inc., a large chain of truck stop and travel centers.
According to the allegations, Loudon then, without his wife’s knowledge, purchased 46,450 shares of TravelCenters stock before the acquisition deal was publicly announced. Upon the subsequent announcement of the deal, the value of TravelCenters stock shot up 71% and, as alleged, he immediately sold all of his shares for a profit of $1.76 million.
As a part of his criminal case plea agreement, Loudon agreed to forfeit the $1.7 million in illegal proceeds. Additionally, he faces up to five years in federal prison as well as up to $250,000 in fines.
From Insider Trading to Inside Voices
As interesting as the Loudon case is, insider trading isn’t the point of this post. Rather, it’s the fact that an almost identical situation applies to HIPAA violations in the context of disclosures of PHI made by physicians, both orally and in the form of unsecured records, while working from home or even while taking a phone call in the car with, as in the Loudon case, a family member present.
What policies does your group have? How are they enforced . . . or even, how can they be enforced? What does difficulty in enforcing them mean? (Answer: nothing.)
As the WWII era poster says, loose lips sink ships.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Picture a revolving door. Even though many physicians and facility administrators don’t realize it, a revolving door can be a useful analogy for anti-kickback analysis. Or, I suppose, just for kickbacks. You see, although most understand the implications of the federal anti-kickback statute (“AKS”) to a physician’s obtaining an interest in a healthcare facility or other entity to which he or she refers, payments to the physician in connection with his or her departure might also implicate the AKS. As a quick refresher, the AKS prohibits the offer of, demand for, payment of, or acceptance of any remuneration for referrals of federally funded healthcare program patients, such as Medicare or Medicaid patients. There are exceptions, most notably regulatory “safe harbors,” that describe certain arrangements not subject to the AKS because they are unlikely to result in fraud or abuse. In early January 2024, the Department of Health and Human Services Office of Inspector General (“OIG”), the agency charged with regulating and enforcing AKS, released a December 2023 advisory opinion (Adv. Op. 23-12) addressing an instance in which retiring physician partners in a multi-hospital venture could elect into an arrangement by which their ownership interest would be redeemed in a series of three annual payments, set at fair market value at the time of each payment, which value would likely increase between the election and each subsequent years’ valuation. The potential kickback twist: The electing physician partner would continue to practice and refer to the hospitals for 6 months following the first payment of redemption money. An increase in the value or number of the physician’s referrals could impact the amount of the subsequent valuation/payment he or she will receive over the remaining buyout term. Based on two factors, the OIG determined that although the proposed arrangement would generate prohibited remuneration under the AKS if the requisite intent were present, it would not impose sanctions. The two factors are as follows: - The offer is being extended to all physicians upon attaining a certain age, in this case, 67. It is not conditioned on, or a reward for, the physician making referrals to or generating business for the hospitals or related entities and individuals. That reduces the risk of overutilization and of steering of patients.
- In order to qualify for the offer, the physician must agree not to refer patients to the hospitals or to its owners (a medical center entity and other physician partners) upon: (i) the physician partner’s retirement date (which would occur within 6 months of the first payment); or (ii) the date the physician partner no longer meets the requirements of the partnership agreement, whichever comes first. The OIG stated, “[i]t is true that the [p]hysician [p]artners who accept the [offer] may continue to refer patients to the [hospitals and other physician partners] for the 6-month period between the first payment under the [agreement] and retirement. However, because the period between the first payment under the [agreement] and retirement is time-limited and, as Requestor certified, is necessary to allow the [p]hysician [p]artners who accept the Redemption Offer to wind down their medical practices consistent with state law requirements, it is unlikely that the Arrangement would cause the retiring [p]hysician [p]artners to alter their referral patterns to benefit the [hospitals and other physician partners] during this 6-month period.”
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| | Help Us Help You With Helpful Content
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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