Resurgence of Medical Practice Acquisitions in Private Equity

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medical practice saleBy: Jeff Cohen

Private money (e.g. private equity) is back chasing those selling medical practices and medical business acquisitions.  This time around it is very different from similar activity in the 90s.  Back then, the movement was public companies aggregating gross income dollars, which for a time drove stock prices.  Today’s private money buyers are looking to maximize profitability through achieving efficiency and aggregating large groups for leverage and the development of new income streams.  Though stock (in the form of warrants and options or stock itself) if often on the table, it doesn’t have to be.  Buyers are doing all cash deals, albeit to some degree on an earnings basis.  If you want the full price, you have to remain involved and do what you can to maintain revenues and perhaps even drive them up.

Physicians especially have to know what they’re dealing with and then have at least a basic understanding of the issues that will drive these deals.  To begin with, “private equity” simply means private investors (typically a group that pools their capital) that buy a portion or all of a company.  Their investments are usually much larger than venture capital firm deals.  They are not publicly traded entities.  What do they want?  To invest money in mature businesses, grow a company’s profitability and then “flip” their ownership to another buyer, typically in three to five years form their launch date.  In contrast, venture capital firms usually invest in start-ups, buy 100% of the company and require control.Continue reading

Healthcare Business Operations: LLCs Get Back to Basics

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By: Shobha Lizaso

When considering optimization of healthcare business operations it is important to remember Limited Liability Companies are fundamentally just partnerships with added liability protection. The LLC structure offers liability protection called charging order protection, which prevents your (or your partners’) personal creditors from seizing your business or its assets to settle personal debts. Since LLCs were designed to be partnerships, you are expected to adhere to some basic partnership rules – most importantly, you should have partners. Running an LLC with no partners opens you up to liability.Continue reading

Protecting Your Medical Practice’s Brand: Trademark Basics

brand

By: Shobha Lizaso

Building a medical practice trademark brand image is extremely important in today’s technology-driven economy.  Because of social media, online advertising, and the availability of online reviews, local healthcare providers need to engage at a higher degree than ever before to attract new patients, retain current patients, and establish themselves as experts in their respective fields.

Patients choose providers based on specializations, reputation, and quality of care, so the first step in branding is selecting and registering the trademarks for your practice.  Trademarks are the names, slogans, tag lines, and/or logos that identify and represent your practice, its services, and mission to the public, and are the foundation for the facility’s overall branding and marketing strategy. In addition to the trademarks associated with your main practice, you may also use trademarks to protect your stake in a specific area or a specific area of expertise. For example, the trademark and logos used for a hospital’s senior services might be different than one used for its cardiac care services.  If you do not protect your trademark, a competitor could use it or something similar, which could confuse your patients and potentially draw business away from your practice..

Do you really need to register your trademarks?  Consider the following:Continue reading

PAs and ARNPs and Prescribing Controlled Substances

ARNP controlled substancesBy: Jacqueline Bain

For many years, medical providers and regulators have wrestled with whether Advance Registered Nurse Practitioners (“ARNPs”) and Physician Assistants (“PAs”) should be able to prescribe controlled substances.  This past legislative session, several bills were signed into law allowing ARNPs and PAs to prescribe controlled substances subject to several limitations and restrictions. This article will set forth a broad overview of the bills. However, if your practice intends to use ARNPs or PAs to prescribe controlled substances, we strongly recommend that each practitioner is educated about the boundaries set forth in the new law. For instance, there are restrictions on prescribing certain controlled substances in certain circumstances, prescribing controlled substances within a pain management clinic, and prescribing controlled substances for persons under age 18. It is important that all practitioners are properly educated prior to engaging in prescribing or dispensing any controlled substances.

Advance Registered Nurse Practitioners

ARNPs may prescribe or dispense Schedule II, III or IV controlled substances if they have graduated from a program leading to a master’s or doctoral degree in a clinical nursing specialty area with training in specialized skills and have completed 3 hours of continuing education on the safe and effective prescription of controlled substances. ARNPs must limit their prescriptions of Schedule II controlled substances to a 7-day supply. However, this restriction does not apply to psychiatric ARNPs who are prescribing psychiatric medications.Continue reading

Healthcare Change of Ownership in Business

healthcare change in ownershipBy: Jacqueline Bain

The amount of regulation imposed upon those entering into the healthcare business arena can be staggering even for a highly experienced businessman. In the business world, buying and selling businesses is often accompanied by lawyers, documents and consultants.  In the healthcare business world, buying into and selling healthcare businesses, or any portion of health care businesses, requires all of that support and much more.

Diving into a healthcare business requires many considerations that are unique to other areas of business. First, appropriate licensing bodies must be notified and/or approve any such purchase or sale. For instance, in the State of Florida:

  • the Department of Children and Families must be notified every time a new owner becomes a part of a licensed substance abuse treatment center and prior to taking ownership, must either submit to a level 2 background screen or provide proof of compliance with the level 2 background screening requirements.
  • the Agency for Health Care Administration must be notified sixty days prior to any change in ownership and will run a background check on new owners.
  • the Agency for Health Care Administration must be notified every time a new owner is added to an entity holding a Health Care Clinic License. Additionally, AHCA must approve any owner of more than 5% of the Health Care Clinic prior to such person becoming an owner.

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Medicare Liability (and more) Buyer Beware

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By: Jeff Cohen

Healthcare businesses are bought and sold every day!  Though sophisticated people are fully aware of the risk difference between an entity sale and an asset sale, some do not understand the lingering nature of Medicare related liability.

When a legal entity (company, limited liability company, whatever) is bought, the liabilities of that entity are often assumed by the buyer.  This is because buyers that purchase selling healthcare entities like the idea of keeping both term managed care agreements and the Medicare provider number intact.  Keeping them intact can help ensure continual cash flow of the seller, but will also create Medicare liability to the buyer. Continue reading

Physicians: Start Preparing for 2016 Changes in Healthcare

By: Jeff Cohen

Stepping into 2016, physicians and medical practices must continue to be vigilant about the changing landscape in healthcare.  Those who adapt quickly and smartly will thrive, while those who don’t will lose.  What can they do?

Stabilize

Stability for medical practices requires two things:  clear analytics and fixes.  Smart medical practices will examine threats outside the practice and within it.  As far as external threats go, the key area to focus on is competition.  Do you know what competitors are doing and how they’re different than you?

Internal threats are general revealed in the form of (a) employees that need better training and communication, (b) employees that just need to go, and (c) creating a succession plan for the practice.  If the practice is top heavy with older physicians, what plan is in place to ensure that “new blood” is brought in?  What recruitment strategies are in place?  Can the practice go it alone or does it need a recruitment arrangement with a hospital that can demonstrate a community need?  How will the older physicians phase out?  Is there a plan in the corporate documents to make sure phase out is slow and planned?  What do departing physicians get?  What about billing and collection?  When was the last time that was analyzed?  And finally, coding analysis.  Is money being left on the table?  Far too many practices actually undercode visits and services out of fear of payer audit.  Apart from constituting a False Claims Act violation (though regulators are not fast to indict providers who are underpaid), the differential can mean the difference between a good year and a bad one.

Finally, in light of the fact that regulatory and recoupment activity has never been higher, practices would do well to ensure compliance via a self-audit and compliance plan.  This is a different animal than a coding audit.  This one looks at all contractual relationships to ensure compliance and augments coding compliance.  Continue reading

T’was the night before the First Tuesday after the First Monday in March, and all through the House (and the Senate…)

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FLBy: Dave Davidson

It’s that time of year.  People are scrambling around, deciding what they want to give and what they want to get.  Brand new packages are being wrapped up and filed away.  Excitement and tension fill the air. Everyone can’t wait for the big day; but in this season that big day doesn’t happen until the first Tuesday after the first Monday in March.  But it’s never too early to start getting ready, right?  In fact, the Florida Legislature is currently in session, drafting and filing bills that the sponsors hope will be considered in March and will become law in 2016.  And as usual, health care is on a lot of legislative wish lists.  Although all of these bills are subject to significant revision, and some may never make it out of a subcommittee, here’s a sneak peek of some of the proposed health care legislation (without editorial – for now).

Scope of Practice Expansion

Three categories of health care professionals may see significant expansion of the scope of their practice.

Both Advanced Registered Nurse Practitioners and Physician Assistants would gain the right to prescribe controlled substances pursuant to Senate Bill 676.  Most of the details about specific medications and dosages is left to an administrative committee, but the bill seems to anticipate broad authority.  The bill also adds references to ARNPs and PAs throughout the Florida Statutes, indicating a willingness to accept these professionals into a significant role in the delivery of care.  Additionally, SB 572 would add PAs and ARNPs to the list of providers who can certify that an individual meets Baker Act criteria to justify a patient’s involuntarily confinement for mental health reasons.Continue reading

Recovery Business Industry Forced to Grow Up Fast

bcbs lawsuitBy: Jeff Cohen

When Horizon Blue Cross/Blue Shield of New Jersey blasted Avee Laboratories in connection with a variety of business practices, some of which included kickback violations (in connection with the provision of POCT cups), businesses in the drug and alcohol recovery space took notice.  With the recent FBI raid on a Palm Beach County sober house and the amped up attention of managed care payers to clinical lab testing, the industry is reeling!  The good news, however, is that these recent developments, along with increased payor scrutiny (and payment denial!), is a call to compliance that has long seemed inapplicable to an industry that has been able for many years to operate with simplicity not found in other segments of the healthcare business community.  Where facilities once viewed DCF as the only regulatory parent they had to please, they are now learning there is a far greater degree of regulatory complexity to be considered; and they are rushing towards compliance.Continue reading

More Than a Legal Look: The Business Implications of Recruitment Agreements

contractBy: Jackie Bain

Many lawyers have written extensively on the legal issues surrounding recruitment agreements, but there is an information gap out there between the discourse over the legal issues and how those issues make an impact on the actual business, the practice. When a practice decides to employ a new physician with the help of a hospital, the practice is essentially a business making a business decision. With that in mind, the practice must fully inform itself of the implications that a Recruitment Agreement will have on their bottom line.Continue reading