Florida is still flirting with becoming the next hotspot for physician-owned specialty hospitals, much like Texas experienced. While Texas had its share of successes and failures with such hospitals, if executed correctly, these facilities could offer a better fit for many patients, particularly those with specific co-morbidity issues. And they should be far more attractive to payers with lower price points. Ideally, they would serve as an effective bridge between surgery centers and traditional acute care hospitals. The specialized nature of these hospitals suggests a more efficient staffing model and targeted overhead costs, as opposed to the broad, generalized overhead typical of acute care hospitals. So, what challenges will physicians encounter when organizing and launching these new facilities?
Corporate Structure: Physicians will need assistance in creating the appropriate corporate structure and documenting relationships to balance clinical and business control effectively.
Legal Considerations: Understanding the Stark Law and state self-referral laws, such as the Florida Patient Self-Referral Act of 1992, is crucial. Physicians must navigate what they can legally order and refer, as well as handle state licensure requirements. As certificate of need laws become more relaxed in Florida, these facilities are likely to proliferate. The issue of the need for an emergency department has to be approached affectively. And the conflict of such hospitals with Medicare regs is another point of complexity.
Business Operations: Distinguishing between the cash-based nature of their medical practices and the earnings-based model required for the hospital is essential. This includes maintaining adequate cash reserves and understanding that these hospitals cannot be run like typical medical practices. Success will depend on a solid foundation in operations and financial management.
Payer Relations: Many of these facilities operate out-of-network, meaning they do not have contracts with managed care payers. They bill and collect based on what’s “usual, customary, and reasonable.” Setting up the business to anticipate payer challenges is critical, especially given past costly disputes. A core issue often involves payers questioning the medical necessity of procedures, alleging that actions were driven by investor physician interests rather than patient care. This is an exciting and promising time for physician-owned hospitals in Florida. However, physicians and their advisors must proceed cautiously, thoroughly planning each step to ensure success.
Physician-owned hospitals are gaining momentum in Florida, presenting unique opportunities and challenges for healthcare providers. Clients who work with the Florida Healthcare Law Firm benefit from our deep industry experience and dedicated legal support. Our team doesn’t merely dabble in healthcare law; we specialize in comprehensive representation of healthcare providers and almost every type of healthcare business. We are aligned with your success to protect your interests and ensure a smooth and successful operation.
By: Jeff Cohen
Founder, Florida Healthcare Law Firm
