Here’s a rundown of the top risks in health care relationships, according to Shannon Sumner and Carol Carden, principals in PYA.[1] Contact Sumner at ssumner@pyapc.com and Carden at ccarden@pyapc.com.
10 Common Healthcare Compliance Concerns Related to Hospital/Physician Transactions
1 Healthcare Real Estate |
Office space, ambulatory surgery centers (ASCs), timeshares, etc. Common concerns and challenges include:
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2 Collections-Based Compensation Formula |
Any compensation formula that pays physicians under a methodology based all, or in part, on collections (e.g., physicians under employment or professional services arrangements [PSAs]) can be prone to error. Formulas based upon work relative value units (wRVUs) are commonplace but should be based on “personally performed wRVUs.” In other words, formulas generally should not include wRVUs from nurse practitioners, physician assistants, or other non-MDs, particularly if the physicians are not financially responsible for the mid-level providers’ costs. Applicable regulatory guidance includes Stark Law, Anti-Kickback Statute, IRS requirements. Common concerns and challenges include:
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3 Administrative Compensation for Physicians/Physician Practices |
Medical directorships, consulting agreements, advisory committees, etc. Common concerns and challenges include:
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4 Purchase Price of Entities Acquired From Physicians |
Physician practices, ASCs, imaging centers, buildings. Common concerns and challenges include:
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5 Call Coverage |
Restricted versus unrestricted call coverage, medical staff by-law requirements, call pay for employed physicians, etc. Common concerns and challenges include:
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6 Compensation “Stacking” |
Individual compensation elements, as well as the totality of the compensation package, should be consistent with FMV. Common concerns and challenges include:
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7 Disproportionate Share (DSH) Strategies |
Extra hospital reimbursement from federal and some state programs if providing a disproportionate share of medical services to indigent patients. Hospitals, including Medicaid hospitals with nearly the required ratio, may pursue acquisition strategies for obtaining clinics or other healthcare access points with a high Medicaid indigent population in order to ensure continued qualification for DSH payments. Common concerns and challenges include:
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8 Physician Recruitment Agreements/ Income Guarantees |
Hospital recruitment of a physician to a private practice in a community, with the hospital “subsidizing” their practice until the physician is self-sustaining. This arrangement often occurs because the community needs the specific type of physician. Regulations stipulate that if the physician is recruited to an existing private practice, only the “incremental expenses” can be covered in the subsidy. Common concerns and challenges include:
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9 Hospital-Based Physician Subsidies |
Hospital-based physicians (e.g., anesthesiologist, emergency room physician, radiologist, pathologist) often subsidized by hospitals under the notion that they are required to see all patients regardless of ability to pay. Hospitals are required to staff for availability regardless of the number of patients (e.g., each open operating room needs a certified registered nurse anesthetist or anesthesiologist, even if there are no cases). Common concerns and challenges include:
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10 Ambulatory Surgery Center (ASC) Distribution Methodology |
Distributions to owners in a joint venture that are preferential to physician-owners versus hospital. Common concerns and challenges include:
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Other Issues |
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