5 Important Provisions Your Real Estate Lease Needs to Contain

Amanda Howard, Esq.

One of the first steps to take when setting up shop for your healthcare business is to sign a lease agreement. Lease agreements are legal contracts between landlords and tenants and they lay out the rules landlords and tenants agree to follow during tenancies.

  1. Correct names for landlord and tenant: Whoever signs a lease as landlord and tenant is legally responsible for complying with all terms of the lease. That means both parties will want to ensure the other is a legally existing person or entity that can be held accountable.
  2. Description of the premises: The premises may need to be identified by a specific suite number or include certain areas adjacent or attached to the premises itself. Make sure both parties are clear on what is and what is not deemed to be the “premises.””
  3. Term: Both parties need to agree on how long the tenancy will last and on what dates the term begins and ends. For example, if both parties are seeking a long-term relationship, they may want a 10-year tenancy with two options to renew the lease. On the other hand, a new start up may only want to sign a 5-year lease for a space with small square footage so that they can find a bigger space once they’ve grown their business.
  4. Rent: The lease should specify the exact amount of rent due, when it’s due and how it can be paid.
  5. Maintenance, repairs & replacements: Clearly setting out landlord versus tenant responsibilities is critical to avoid disputes and is particularly important when it comes to expensive obligations like replacing an HVAC unit or roof. Oftentimes, a tenant should be responsible for keeping the space in good and clean condition, whereas a landlord should be responsible for maintaining, repairing and replacing components like the roof, HVAC unit, plumbing/electrical systems and structural walls.

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As a boutique law firm dedicated to supporting the healthcare community, our goal is to ensure our clients are protected. If you have questions about lease reviews, contact us at Florida Healthcare Law Firm to set up a consultation today.

 

What questions should I ask before signing an LOI with a DSO?

You’ve reached the point where you’re ready to sell your practice and move into a different role in your professional career. But how do you evaluate offers from various buyers, including a DSO?

Here are a few key questions to ask before you sign a letter of intent to sell your practice:

  1. Is there a financial holdback? If so, what are the terms?
    1. Many buyers will expect to hold back a percentage of the purchase price for various reasons. Most commonly, its to ensure that the seller performs the conditions of the transition or that the seller has been accurate and truth in regards to the representations and warranties made regarding the practice. its important to understand how you fulfill the terms to receive the full purchase price.
  2. Will another doctor be brought in to support the transition?
    1. If you’re ready to retire, you are going to want to know the plan to get you there. As a seller, you’ll be the key person to bridge the gap from your ownership to a new owner and ultimately, you’re the key and sole provider too. Its key to know the plan for bringing in (and choosing) a new dentist to take over the patient care as you transition out.
  3. Can you speak with other dentists that have previously sold to this buyer?
    1. If a buyer has made multiple acquisitions wherein the seller has remained on board for some time, they should provide some contact information for other sellers that you can speak to and ask questions. There is no better way to gauge if this is the right opportunity for you than to speak with others that previously sold.

Planning and asking the right questions is key to ensuring you find the right partner in your transition.

When should I renegotiate my contract?

As an associate dentist, its easy to get lulled into the continuous cycle of contract auto-renewals. You sign a contract, put your head down and start working hard to build a schedule, continue to educate yourself, and produce in order to justify your position. Before you know it, you’re 2 or 3 years in and still getting compensated under the same terms you signed while in school or residency. So when is the right time to renegotiate?

The answer is, it depends. It depends on your goals with the renegotiation. It depends on how well your first few years have gone in terms of production and development. It depends on the employer. More important than timing is preparation. Are you prepared to support your proposals with information that demonstrates good reason for those changes?

While timing is not the key factor, when it comes to the terms in your agreement, timing is key. For example, if the contract specifically requires you to renegotiate during specific time frames, you must abide by those time frames. This means preparation in advance and ensuring you’ve had access to production reports and additional documentation that demonstrates your success thus far. In any case, don’t be afraid to broach the subject. If you don’t ask for it, you won’t get it. 

Can Chiropractors offer Direct Primary Care Agreements to their Patients?

Prepared by: Carlos Arce, Esq.

Florida Healthcare Law Firm

With the uncertainties of personal injury protection benefits (“PIP”) lurking, providers who focus their practice on PIP, are thinking of the next plan to stay in business. It is unclear what will come of HB837 and what parts of the bill will be accepted or denied by Gov. Ron Desantis. What we do know is tort reform is an inevitable thing, and providers, especially Chiropractors must be ready.

So as a Chiropractor how do you stay in business if the PIP law changes? Concierge Medicine. On July 1, 2018, the Florida legislature enacted the “Direct Primary Care Agreement” (“DPC”) statute. Prior to this, providers had to jump multiple hoops to provide plans to patients that had insurance characteristics, which was limited to primary care only. These types of agreements were only limited to primary care services, the new law allows specialist or group practices to enter into DPC’s for specialty type services. The legislature added a list of the providers who would qualify as allowed specialists, Chiropractors are a type of provide allowed.

The statue has a list of items which are required in the DPC. See below:

  1. The DPC must be in writing and signed by the provider and the patient.
  2. Must include termination language allowing termination by either party upon 30 days in writing, immediately if there is a violation of the physician-patient relationship, or a breach of terms in the agreement.
  3. Describe the scope of the primary care services covered by the monthly fee.
  4. Specify the monthly fee and any other fees for primary care services not covered by the monthly fee.
  5. Specify the duration of the agreement and any automatic renewal provisions.
  6. Offer a refund if the provider ceases offering primary care services for any reason.
  7. Must include the following statement, in a contrasting color and 12-point font: “This agreement is not health insurance and the primary care provider will not file any claims against the patient’s health insurance policy or plan for reimbursement of any primary care services covered by the agreement. This agreement does not qualify as minimum essential coverage to satisfy the individual shared responsibility provisions of the Patient Protection and Affordable Care Act, 26 USC §5000A. This agreement is not workers compensation insurance and does not replace an employer’s obligations under chapter 440, Florida statutes.”

This list is a minimum requirement of what is required by a provider allowed under the DPC to engage a contract with their patient for concierge services (cash pay). When creating a DPC, having a legal counselor assist you in this type of arrangement is heavily recommend. The agreements not only contain binding terms, but they implicate various concerns that surround a provider.

A few of those concerns are, compliance with current payor agreements, billing patients who may be Medicare, compliance with the “No Surprise Act”, and proper accounting protocols (specifically relating to Chiropractors). As you can see, the DPC is a blessing but could ultimately be a curse if you fail to engage an attorney to assist you in its creation.

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Attorney Carlos Arce works with the Florida Healthcare Law Firm in Delray Beach, FL. He has deep experience with bodily injury trial work and in health law. Carlos has handled multi-million-dollar healthcare transactions and serves as out-of-house counsel to various small to large types of healthcare entities. He can be reached via email at [email protected] or by calling 561-455-7700.

Has Private Equity Turned Its Sights to IV Hydration Therapy?

Physician, dental, and veterinarian practices have all gone through the run of private equity roll-ups. But are PE-Backed Firms now focusing their funds on cash-pay, elective wellness services? If recent activity has been any indicator, PE-backed firms are not only examining the IV and wellness industry but have already begun picking up and purchasing these clinics.

 

What are they looking for and how can you position yourself for an opportunity?

 

  1. Is your company set up in a way that would easily allow a new owner to buy it, take over assets, employees, and licensure, without having to re-structure in the middle of a roll-up?
  2. Do you have branding and operations streamlined and structured in a way that you can easily replicate it if you were to open future sites?
  3. Are you operating in compliance? Have you had a legal audit conducted on your operations within the last 6 months?
  4. What do you financials look like? Do you keep clean and accurate books and run the company like a truly separate entity?

 

PE-backed Firms want and look for opportunities that are turn-key and cash-flow from day one. They have entered this space and already begun the roll-up of multi-site operations that have address the points above in a way to create an attractive business structure that will success in any economy.

 

If your ultimate goal is to create an opportunity like this, it’s best to start preparing at least 6-12 months in advance so that you’re ready when the right opportunity presents itself. PE is already here in the IV industry, for clinics and ancillary services and products. Be ready or be last.

What role does a lawyer play in a transaction?

A lawyer’s primary role in a dental practice transition is to protect their client’s interest, whether as the buyer or seller. Most importantly, its important for a lawyer to ensure that the language in purchase documents actually match the spirit and intention of the deal. No one ever expects that a transition will lead to litigation, but if one party misrepresents key facts, or fails to fulfill a responsibility, it can create problems post-closing.

A lawyer should also be the leader of the transaction to ensure that it moves efficiently and without interruption. A typical transaction involves at least 5 parties – the buyer, the seller, a practice broker, a lender, a practice consultant. Sometimes, it involves more than that. Each of these parties have multiple things occurring at once and while deadlines are flexible in general, lending puts the most pressure on a deal closing due to interest rate locks.

A lawyer should also be a mediator. At times, hard conversations have to occur. Whether it be about the structure of the deal, the transition period, post-closing obligations, or otherwise. A lawyer can step in to help find middle ground or the lawyer can be the “bad guy” that the client needs to use to explain a position or proposal to the other party.

Biggest Pitfalls in practice transactions

Buying or selling a practice can be one of the highlights of your professional career. At the same time, for some, its their biggest investments while for others it’s the key to their retirement after a lifetime of achievements and success. Its not all roses, however, throughout the transaction and while ideally a transaction runs smoothly from start to finish there are a number of issues that could arise and derail a deal.

Loans and Liens

 

Its hugely important to ask the right questions to uncover any lingering practice or real estate loans well prior to closing of the practice sale. A late discovered loan can create a delay until the parties determine who holds the loan, the pay off amount, and if there are any liens attached to the practice.

Legal Issues

               Does the practice have any outstanding or pending legal claims? This could be malpractice, employment, or even business to business. As an example, a seller might have a business name or logo that potentially infringes on another trademark. If this hasn’t been uncovered, or disclosed, it can seriously impact the deal and the transaction.

 

Corporate matters

Has the seller kept their corporations active? If the seller’s corporation is not in active status, this creates a hurdle to selling assets or the practice real estate. In fact, it becomes a roadblock until that entity becomes active again. As a seller, you want to ensure well in advance that your entity is in good standing and has the ability to transact business, otherwise you will spend additional time and money to bring it to order.

 

Lending

Many buyers seek third party financing to purchase the practice or real estate. What many buyers and sellers don’t realize is the impact and influence a lender might have on the terms of the deal and transition of providers. If there are terms that conflict with the lender requirements, this can create another hurdle for the parties to resolve prior to closing.

While these issues don’t affect every practice transition, they can certainly create a headache if uncovered towards the end of the deal (or after closing!). The key is to prepare early, plan, and do your due diligence whether you’re a buyer or seller in order to optimize you opportunities.

 

Recently, the Louisiana State Board of Nursing (“LSBN”) posted an update on regulatory guidance as it relates to IV hydration therapies.

Recently, the Louisiana State Board of Nursing (“LSBN”) posted an update on regulatory guidance as it relates to IV hydration therapies. LSBN stated that it considers “mixing or otherwise preparing IV solutions in non-emergency circumstances as a prohibited act for all its licensees due to the current state and federal laws and rules relative to compounding.” They further state “Compounding IV therapies or adding a medication, vitamin, or other substance or additives to IV solutions is allowed…when performed by registered practitioners of pharmacy, medicine, dentistry, or veterinary medicine. RNs and APRNs in Louisiana, are prohibited from compounding…in non-emergent circumstances…[even if delegated by an authorized practitioner…].”

This is a huge blow to the IV hydration community in Louisiana as it restricts the scope of practice for RNs and APRNs in Louisiana. As the LSBN states themselves, this is in response to an increased number of inquiries regarding the APRNs authority to compound.

What does this mean for an industry as a whole? It mean the industry is getting regulated, rather than creating the regulation themselves. Nurses in Louisiana just got slapped down by their authority and other states could follow suit. While every state operates independently, many states will follow trends so as not to be the first. With the increase in demand for compounded IV solutions across the Country, more and more state boards will be pressed on this issue, which in many cases is not addressed. That means, the state boards could very well take a conservative approach here and limit scope of practice.

The Trojan Horse of Healthcare Revenue

Prepared by: Carlos Arce, Esq.

Florida Healthcare Law Firm 

Private equity and venture capital firms engaged in health care acquisitions over the last dozen years could be facing monetary penalties in the millions via clawbacks coming from CMS focused all the way back to 2011! CMS representatives have released statements to the Wall Street Journal that the agency will be recovering an estimate of $479 million dollars for over payments in 2018, and approximately $4.7 billion over the next 10 years.[1]

Healthcare business transactions always include financial due diligence on both sides. It’s routine, especially for large firms with dedicated accounting departments. One of the components of due diligence includes the calculation of the EBITDA through profit and loss statements, tax returns, and projected future profits. However, the due diligence that is often lacking is the deeper regulatory compliance due diligence that reveals whether the funds projected and reported are clean. In healthcare, compliance is essentially the foundation of revenue. Ignoring compliance is the foundation of fraud.

Coding and billing practices have for many years been under scrutiny for providers engaged in fee for service billing. In the last ten years, however, the government has focused massive audit efforts on whether upcoding has occurred in the Medicare Advantage space. Enter, “MRA gaming”. MRA stands for Medicare Risk Adjustment codes, which are codes demonstrating to CMS the expected healthcare costs of treating certain enrollees (Medicare beneficiaries) based on the disease factors and demographic characteristics. Providers who use MRA codes are mostly primary care providers because they receive additional funds when they contract with the Medicare Advantage Plans under a “risk” model. The issue arises when those codes do not have corroborating documentation to prove the necessity for use of the codes on behalf of those patients.

MRA codes make the difference between reimbursement to a provider for solely receiving a monthly per member per month (“PMPM”) capitation payments, and the surplus they receive based on the MRA codes and HEDIS measures. Providers are more likely to make higher returns per patient based on the surplus payments linked to MRA codes. Higher returns = higher transaction values. Higher transaction values = more risk in the eyes of CMS.

If the regulatory compliance overlay of due diligence on past transactions covered pre-closing audits as it relates to billing and coding practices, private equity and venture capital firms can rest easy. If it wasn’t handled at the time, there is still time to conduct a post-closing audit to diagnose any previous issues and proceed accordingly. It is better to get in front of this type of issue through self-disclosure, as opposed to having the government find out which could cause for a larger claw back amount. The government’s remedy for false claims is treble damages, and each claim has a penalty associated with it, therefore, it could be very costly once the bell has been rung.

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Attorney Carlos Arce works with the Florida Healthcare Law Firm in Delray Beach, FL. He has deep experience with bodily injury trial work and in health law. Carlos has handled multi-million-dollar

[1] In blow to payers, CMS implements tougher Medicare Advantage audit rule, Rylee Wilson, Becker’s ASC Review: https://www.beckerspayer.com/policy-updates/in-blow-to-payers-cms-implements-tougher-medicare-advantage-audits.html?origin=PayerE&utm_source=PayerE&utm_medium=email&utm_content=newsletter&oly_enc_id=1148G2743801I3V

The Biden Administration has announce it will not renew the COVID-19 public health emergency declarations, with the declarations ending officially on May 11. This will impact healthcare and telehealth providers, and patients, nationwide.

March 13, 2020. Nearly 3 years ago the Trump Administration declared a state of emergency in response to the COVID-19 pandemic. Since then, both the Trump and Biden Administrations have extended the declaration with seemingly no end in sight. However, after months of speculation, the Biden Administration has declared it will allow the declarations to expire officially on May 11, 2023. The Declarations provided the Federal Government broad authority during the pandemic and largely expanded health care services and funding. So what does it mean that these declarations are ending? Well, we just don’t know exactly at this time. Our expectation is that nearly everything that was affected by the declarations at the time will revert back. However, there is speculation that a number of beneficial health care service related rules will remain in place more permanently or at least long time. For example, Medicare patients can receive telehealth services for behavioral/mental health in their home, still, and there are no geographic restrictions for originating site for behavioral/mental telehealth services.

 

What does the end of the public health emergency mean for non-medicare treatments that involve prescribing of controlled substances? Again, we just don’t know enough at this point. We have to expect that we’ll revert back to the restrictions imposed by the Ryan Haight Act, however, dozens of organizations have pressed the DEA and Congress to make permanent the telehealth controlled substance waiver, exempting patients from receiving an in-person evaluation prior to receiving controlled substances. The Ryan Haight Act specifically stated that a practitioner could not issue a “valid prescription” for a controlled substance without an in-person medical exam first, except in certain limited circumstances.

 

At this point, we are all awaiting clarity on what happens on May 11th. Many lawmakers are eager to keep the good of the declarations in place, like access to healthcare. Either way, we expect things to change.