Jan 22 2018

Hospital Becomes Hole In Ground. ASC Takes Up The Slack.

In what might seem to some like ancient history and to others as a clarion call, in June 2010, New York City’s approximately 400 bed, 160 year old St. Vincent hospital, the last Roman Catholic general hospital in the city, closed its doors for the last time.

In late 2017, a competing non-profit opened the modern variant of a replacement “hospital” right across the street: a 6 O.R. ambulatory surgery center located in a facility with an emergency department, an imaging facility, physician offices, and other healthcare services.

Other than in respect of the freestanding emergency room, which, depending on state law may or may not be possible to license (or even wanted), there’s nothing in the concept of the replacement facility that couldn’t be created by you as a physician-led, physician-owned, for profit venture. In fact, it’s exactly along the lines of what I’ve termed a Massive Outpatient Center™:  A combination of an ASC, a medical office building, and one or more of a menu of complementary offerings.

For some, thinking becomes ossified along historic lines: “Hospitals build hospitals.” “Physicians just practice medicine.” “Physicians can’t own hospitals.” But none of these is necessarily true.  But, even if they were, opportunity is more malleable. What’s functionally like a hospital need not be a hospital.

If I were wrong about this, St. Vincent’s would be celebrating its 168th anniversary. It’s not. A 200-unit condo complex stands in its place.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss



Jan 18 2018

Drugs, Sentencing and Lock (and Roll on to Another Kickback Prosecution) – Podcast

The federal Anti-Kickback statute makes it illegal to receive anything of value for the referral of federal health care program patients. How are you managing this potential pitfall?

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Mark F. Weiss


Jan 17 2018

Transparency Within Medical Groups – Medical Group Minute

How much transparency should exist within your group?

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Mark F. Weiss

Jan 16 2018

An Emoji Can Send You To Prison – Success In Motion Series

Ride along with Mark as he discusses the dangers inherent in texts and emails in connection with business transactions.

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Mark F. Weiss

Jan 15 2018

7 Steps to Gainsharing Heaven – OIG Advisory Opinion 17-09

In eerie (or perhaps prescient) follow up to my article about gainsharing in the December 31, 2017, issue of The Advisory E-Alert, From Steelworkers to Surgeons: Gainsharing and Physician Groups, on January 5, 2018, the OIG released an important new advisory opinion (Adv. Op. 17-09 – let me know if you’d like a copy) on a gainsharing arrangement between a hospital and neurosurgeons.

A Quick Recap of the Concept

At its heart, in healthcare, gainsharing is a split, a sharing, of the savings or other gains to a hospital as a result of physicians’ (or others’) efforts. It’s what I describe in encapsulated form as, “If I make you a dollar, I get to keep 50 cents.”

The New Advisory Opinion

In Adv. Op. 17-09, the gainsharing deal centers around a hospital that will share the savings over a three-year period resulting from cost-reduction measures implemented by neurosurgeons in connection with spinal fusion surgeries. Although the specific measures aren’t necessarily important for your gainsharing deals, they concerned both the use on an as-needed basis only of Bone Morphogenic Protein and the standardization of certain devices and supplies.

In its grant of a favorable opinion, the OIG cited seven important elements that I call the 7 Steps to Gainsharing Heaven:

First Step to Gainsharing Heaven: The arrangement contains safeguards to mitigate (note that it’s not “eliminate”) the risk that the neurosurgeons will increase their referrals to the hospital.

Second Step to Gainsharing Heaven: With an exception for funds retained by the neurosurgeon’s multi-speciality group for administrative expenses, only the participating surgeons, and no other physicians in the group, receive gainsharing incentives. The OIG saw this, including the fact that the administrative percentage to the group was a longstanding element of the group’s compensation structure, as an important element because of its concern that any share retained by the group in general would be a kickback from the hospital to the other physicians in the group to induce their referrals.

Third Step to Gainsharing Heaven: The base year used to measure savings is reset annually.

Fourth Step to Gainsharing Heaven: The arrangement is based on clinically appropriate measures and will require additional training, and a change in their clinical practices, on the part of the participating neurosurgeons.

Firth Step to Gainsharing Heaven: The rewards are tied to actual, verifiable cost savings attributable to the neurosurgeons’ recommendations during spinal fusion surgeries. This prevents the parties from gaming the system.

Sixth Step to Gainsharing Heaven: In connection with the device and supply standardization element of the arrangement, the hospital will continue to have the same, full range of items available to the surgeons as it did prior to the arrangement in order to permit the surgeons to make clinically appropriate product decisions.

Seventh Step to Gainsharing Heaven: No neurosurgeons outside of the subject group will participate in the gainsharing plan. The OIG saw that that as an important element to prevent the hospital from using the lure of the arrangement to attract neurosurgeons from competing hospitals.

Gainsharing involves a complicated dance in and out, around and between, inducements to refer (i.e., violations of the criminal federal Anti-Kickback Statute) and inducements to reduce or limit services (i.e., violations of the Civil Monetary Penalty Statute). And, just as not everyone thinks there’s a heaven, the 7 Steps are instructive but not necessarily applicable, or sufficient, to every gainsharing deal.

The essential takeaway lesson for you is that gainsharing continues to make a significant regulatory comeback.

Gainsharing is an important tool, together with more traditional elements such as coverage stipends, in structuring financial arrangements between physicians and hospitals.

Contact me to discuss how you can gain your fair share.

Mark F. Weiss



Jan 11 2018

Honey I Shrunk The Hospital! – Podcast

Behold! We have the incredible shrinking hospital.

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Mark F. Weiss


Jan 10 2018

Healthcare Kickbacks in the Fastlane – Medical Group Minute

Kickback violations are like traffic on the highway. The chances of getting caught speeding are probably only 1% or 2%. Eventually, though, someone will be pulled over.

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Mark F. Weiss

Jan 09 2018

Are Compliance Plans Bad For Compliance? – Success In Motion Series

Ride along while Mark talks about the downside of compliance “plans.” Are they actually hindering compliance?

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Mark F. Weiss

Jan 08 2018

Hospital-Physician Owned ASC Sues Freedom Loving Physician Entrepreneurs for Competing

The Sioux City Journal reported last week (on 12/29/17) that a hospital-physician joint venture ASC, Pierce Street Same Day Surgery, filed suit to enforce covenants not to compete against a number of current and former physician investors.

Pierce Street is also suing the medical group, Tri-State Specialists, owned by some of the individual physician defendants.

The flashpoint is the defendants’ development of a competing ASC, Riverview Surgical Center.

That’s the straightforward news. But, what’s really going on? And why should you, probably not a surgeon in Sioux City, care? Keep reading. It will become clear, really clear.

Pierce Street, a joint venture between physicians and UnityPoint Health – St. Luke’s hospital, is located in Sioux City, Iowa, a Certificate of Need (“CON”) state. Pierce Street alleges that the defendant doctors signed agreements that bar them from being involved in a competing ASC located within 30 miles of Pierce Street, both while they are owners and for a year after.

Tri-State Specialists and the defendant physicians are developing their competing facility in Nebraska, just across the Missouri River, the state boundary, from Sioux City. That site is 4 miles away from the Pierce Street ASC.

Here’s what’s interesting for any physician, for any ASC, and for any hospital administrator, whether you’re in Sioux City, Scranton, or San Francisco, or anyplace else.

1. I haven’t seen the underlying agreements and so I can’t tell you if I think the specific covenants not to compete are enforceable or not, but either way, physicians that sign them and facilities that demand them must understand their limitations and their obligations. They may be BS (I’ve worked with a number of physicians on their escape from unenforceable provisions). They may be enforceable, in which case the damages could be severe. But either way, those that demand them are often serious about attempting to enforce them . . . whether they are ultimately enforceable or not . . . and the transaction costs of that battle can be staggering.

2. Nebraska is a non-CON state. Facilities located in a CON state, like Iowa, may think that they’ve blocked competition, but if they’re located anywhere near a border with a free state, the protection is illusory.

3. More telling of the future, and while I can’t get into the heads of the competing physicians or of the Tri-State Specialists’ medical group CEO, but I’d guess that they realized that they didn’t need a hospital partner to run an ASC. Pierce Street alleges that it will lose 60% of its volume to Riverview, and that’s sure to put a pile of profit into the Riverview physician-owners’ pockets. As a regular reader of the blog, you know that that’s one of my main points: hospitals are dying and, so, too, are hospital-affiliated ASCs. Hospitals are becoming anchors around the feet of entrepreneurial physicians.

4. Riverdale is being built next to an existing Marriott hotel, with the intention that patients and their families can stay right next door. That’s a low-cost twist on my concept of the Massive Outpatient Clinic™ (watch the related Success in Motion video), in essence, a “non-hospital hospital” campus. Just as physicians no longer need a hospital to partner in an ASC, you no longer need a hospital to partner in what is nearly equivalent to a hospital.

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Mark F. Weiss



Jan 04 2018

For Whom The Whistle Blows: Texas County Hospital Settles False Claims Act Suit – Podcast

Once again, this case demonstrates that simple, facial reliance on safe harbors under the Federal Anti-Kickback Statute and Stark do not guaranty safety for either hospitals or their physician employees and subcontractors.

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Mark F. Weiss