All Posts by Dennis Hursh

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About the Author

I am a healthcare attorney with over 34 years of experience, focusing on physician contracts, regulatory compliance and sales of medical practices.

Jan 29

Selling Your Medical Practice – the Asset Purchase Agreement

By Dennis Hursh | sale of medical practice

Selling your medical practice is a complicated transaction.  The purpose of this post is to give you a sense of some of the issues you will run into.

One of the first things you have to do is make sure that everything that was agreed to in the letter of intent is included in the final agreement.

In addition, because of the nature of many small practices, it is not unusual to find that personal property in the practice is owned by the physician. In many instances, even if the practice holds title to the asset, the physician still views it as his or hers. For example, laptops and artwork are often “not for sale”, even if the practice paid for them. Developing a listing of what is being sold can be a challenge. Often this is done as a room by room inventory.

Negotiation over assigned contracts can become a major issue. Unfortunately, some physicians  sign the document that was presented to them as the “standard contract” by the vendor. Accordingly, practices are often signatories to long-term commitments with no termination provisions.

One common issue is electronic medical record agreements. If the health system is implementing one electronic records system, it is extremely unlikely it will want to accept assignment of a long-term commitment for a different electronic records system. At the same time, the physicians certainly do not want to continue paying for an EMR system out of their own pockets after selling the practice. I have been able to convince EMR companies to terminate the agreement at some point in the future (after the information has been transferred to the hospital’s EMR), and convinced the hospital to pay for the EMR during that time.  It’s rarely an easy negotiation, though.

Developing a list of on-going expenses that the health system is willing to accept can be a challenge.  In addition, the list of excluded assets (what the practice keeps) and excluded liabilities (obligations the hospital will not assume) can become the subject of extensive negotiation.

Although it isn’t something most physicians want to spend their time on,  the physicians must read and consider the representations and warranties in the agreement. Even though you may view these provisions as mindless insignificant legalese, these provisions in the agreement can produce significant liabilities if they are not accurate. In particular, physicians may be unaware of any liens on their assets, including liens on hard assets included in bank documents for lines of credit or other loans. If you represent that there are no liens, the hospital can seek indemnification (see below) when the liens are discovered.

Covenants not to compete are very likely to be included in the asset purchase agreement as well as the employment agreement. These covenants should be the same, so you don’t inadvertently agree to a longer or more geographically expansive covenant in one of the documents.

Indemnification provisions have to be the subject of negotiation. Many health systems want unlimited, “first dollar” perpetual indemnification. Your lawyer will attempt to limit the survival of these indemnifications (i,e, how long you are on the hook), limit the amount of the indemnifications (at a minimum, to assure that the indemnification commitment will not exceed the purchase price) and insert a materiality provision to prevent “nickel and diming” from the health system (e.g., if it develops that a few dollars’ worth of supplies were not present at closing, you don’t have to cut a check for a few bucks). Various compromises are possible in this regard, from limiting the overall amount of the indemnification requirement to developing “baskets” of various potential liabilities so that, for example, an undiscovered tax lien will not require repayment in excess of the value of the underlying fixed assets.

Selling your medical practice is a huge decision on your part.  This is a major transaction, that requires your careful attention, and involvement by an experienced physician’s lawyer.

DPC manual
Sep 12

Thinking About Starting a Direct Primary Care Practice?

By Dennis Hursh | blog , Medical practice

I recently wrote about the benefits to physicians and patients of a direct primary care practice.  If you’re not familiar with that concept, it generally means opting out of all insurance, and charging a fixed monthly fee for “all you need” care from the practice.

The idea of setting up a direct primary care (“DPC”) practice is probably appealing to many physicians. But, as you can imagine, the administrative aspects of setting up a medical practice can be very daunting. For  a physician thinking about taking the plunge, a great deal of angst is natural. Do you hire consultants to set up appropriate policies for HIPAA, OSHA, CLIA, etc. or do you rely solely on a physician’s lawyer to handle these aspects? Where do you even start? How do you know if you’ve covered everything?

Plenty of physicians have done it, so you know it is possible. Still, wouldn’t it be nice if somebody came up with a road map, including samples of policies for employees and all the regulatory issues? As you may have guessed, that was a rhetorical question.

Kim Corba, D.O. has set up her own DPC practice in the Lehigh Valley, and has been an active contributor to many forums about DPC practices.  She has (with a little help from yours truly) developed what she believes is a comprehensive manual containing all the policies and forms used in her DPC practice. She even has marketing materials included. I can’t imagine the time she spent pulling together all these materials!

Luckily for anybody who wants to set up a DPC practice (or is thinking about setting up a DPC practice), Dr. Corba has made this manual available to physicians. I would encourage anybody who thinks they might be interested in setting up a DPC practice to seriously consider purchasing the manual. It’s even possible to purchase individual chapters, if you have started down the road but don’t have everything complete yet (or would like some reassurance that your forms and policies are complete).

Please look at the manual of policies and procedures for direct primary care. It may be all you need to get away from being employed by the (not so friendly) local health conglomerate, and get back to practicing medicine through really connecting with your patients.

Aug 04

Direct Patient Care – Is it really a good idea?

By Dennis Hursh | Medical practice

I have recently been involved with two physicians who have each set up a “direct patient care” practice. I have no idea if this is going to be a trend, but I hope it will be.

I  suspect that if you have seen one DPC practice, you have seen one DPC practice – so I hesitate to talk about the “model”. Nevertheless, I think talking about how these two practices operate might stimulate conversation, and get other physicians thinking about “taking the plunge”.  Both the practices have a few things in common.

First, they do not accept insurance, unlike concierge practices which still accept insurance and charge an additional membership fee on an annual basis. One of the practices I represent does give its patients CPT codes to assist in obtaining reimbursement, but the other does not. The practices charge a fixed monthly fee for “all-you-need” care in the practice, ranging from $10-$100 per month (based on age) in a primary care practice, and $25-$45 per month for a gynecological practice. Foregoing insurance reimbursement allows for a  bare-bones staff, since billing is accomplished automatically through a charge to the patient’s credit card each month. By saving a massive amount of overhead, the physicians are able to limit  the size of their practice and give the attention to each patient that the physician feels is required. (No six patients an hour in these practices!)

Secondly, they provide continuous, 24/7 access to the patients in their panel for acute issues via email, text, and/or phone. Patients are given the physician’s cell phone number for after-hours care.

In addition, they both have access to discounted pricing from a radiology facility, a lab, and several specialists, saving the patients even more money.

The primary care practice has been established longer, and it has developed a host of enhancements for its patients.  The practice has its own dispensary, where patients can get their generic medications at wholesale with a very modest mark-up of 10%.  The physician has saved patients hundreds of dollars a year (for some patients, thousands of dollars) over the cost of medicine through pharmacies.

Even without the discounts, patients can potentially save a great deal of money with these practices.  Instead of paying a hefty co-pay every time they see the physician, patients in these practices just pay one fixed monthly fee, which is often very close to the cost of a single co-pay.

Most importantly, the patients get a physician that has the time to get to know them, and spend however much time is needed to treat him or her. Office visits typically range from 30-60 minutes per patient.

The physicians get to spend most of their time healing patients, rather than supervising a massive staff and fighting with insurance companies.

The physicians can’t escape every woe, of course.  HIPAA, CLIA, OSHA, etc. are still applicable.  If they are treating Medicare patients, they need special waivers, and a patient contract must be developed.

Still, DPC seems like a great thing for patients and physicians alike.

Time will tell if this model fulfills its promise – but early indications are that it will!

 

Jun 07

Shifting Alliances

By Dennis Hursh | Medical practice

I was recently at a meeting where a respected physician leader made a fascinating observation. It is his belief that the new emphasis on value-based contracting and risk-based contracting is changing the historic alliances between physicians and hospitals on one side of the table, and payers on the other side of the table.

He believes that the new contracting paradigms are creating alliances between physicians and payers on one side, squared off against hospitals on the other side. If you think about many of the new initiatives coming out of CMS (care coordination management codes, for example) a common thread seems to be that paying physicians a little more can generate huge savings on what would otherwise be spent on hospital services.

At the risk of sounding like a broken record, I think this is great news for physicians. Hospital consolidation continues at a dizzying pace, creating massive enterprises with seemingly unlimited resources. And yet, the entities holding the money (payers) finally seem to realize that the folks in the white coats, if properly compensated and incentivized, can effectively bend the healthcare cost curve.

In Pennsylvania, the market I am most familiar with, physicians are organizing clinically integrated networks designed to work with the payers to move money from the “hospital bucket” to the “physician bucket”. It is not going to happen overnight, but physicians are going to take back control of healthcare.

Who (other than hospitals) would not be encouraged by that?

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