Oct 03

Make Sure Your Policy Works For You, Not Against You – Success In Motion Series

Ride along with Mark as he discusses the role of policies in your business and why they must mesh with your medical group’s other governance document. Ignore at your peril!

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

Mark F. Weiss

Oct 02

Complain. Get Fired. Get $17.5 Million.

The next thing you know she was fired.

Unfortunately, it’s an all too uncommon experience.

A physician raises honest criticism or files a heartfelt complaint concerning another member of the medical staff or another member of her group. She’s fired.

The lead surgeon in a hospital-supported cardiac clinic questions the impact on patient care of a decision by hospital administration. He’s replaced.

The group negotiating for the renewal of an exclusive contract questions a hospital demand as violative of the federal Anti-Kickback Statute. They’re terminated.

Suck it up and go home? Or say “$%^& it” and go sue?

Last month, the Seattle Times feature a story concerning David Newell, M.D., a neurosurgeon once employed by Swedish Health of Seattle.

In 2016, Swedish Health fired Dr. Newell, allegedly because he didn’t notify the employer that he had been arrested in a prostitution sting.

Newell didn’t deny his brush with the law. In fact, he pleaded guilty to the charges, paid a fine, and performed community service.

But Newell alleged that that wasn’t the actual cause of his termination.

In a claim filed against Swedish Health, he alleged that the real reason behind his termination was that he was one of several hospital staff who had filed internal complains regarding star Swedish Health surgeon Johnny Delashaw, M.D. who later resigned from Swedish Health and had his Washington medical license suspended. In complaints to Swedish Health, Newell said that Delashaw was trying to marginalize him, steal his cases, and get him fired on flimsy grounds.

Newell alleged in arbitration that Swedish and its parent organization, Providence, engaged in a pattern of targeting and interfering with his and other neurosurgeons’ practices, retaliatory behavior relating to his reporting of Delashaw, and a disregard for patient safety. He alleged that they “stole” his practice by firing him.

The arbitrator agreed, awarding him $16.5 million in compensatory damages and $1 million for emotional distress.

Swedish Hospital and its parent, Providence, are challenging the arbitrator’s award in court.

Although we know what the arbitrator found, neither you nor I know the actual reasons behind Newell’s termination. That said, the situation serves as a flashpoint to discuss the situation of retaliatory termination and of claims of retaliation.

The arbitrator’s award to Newell signals the significant damages that can result from a finding of retaliatory termination. Does this mean that employers or hospitals will simply “dress up” termination to make it appear as if it were for a valid reason? If Swedish Hospital’s prostitution sting rationale were a “pig in a dress”  excuse, it was still a pig, at least up to and including the arbitrator’s award.

Does it mean that employees or even contracting parties will take strategic action to create a history of complaints and reports to block future termination? We’d have to be lying to ourselves if we didn’t admit that hospitals and medical staffs have engaged in that sort of behavior in the reverse for years, even decades.

Retaliation is real. So, too, are false claims of it. No arbitrator or court has a laser beam into “the truth” of the situation, if purity of cause even exists in the absolute sense.

From a practical standpoint, this means that individuals and entities on the receiving end of retaliation must make the tough choice about whether to take a stand against it, knowing that the individuals and entities on the delivering end will themselves claim, rightly or wrongly, a legally valid reason for their action.

From a practical standpoint, it also means that the circumstances can and will be “gamed.” No system is perfect.

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

Mark F. Weiss

www.advisorylawgroup.com

 

Sep 28

Will the Lightbulb Go On For You? – Podcast

Opportunity is a funny thing because it’s always there but isn’t usually seen. That’s because it’s hiding in the camouflage of everyday problems.

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

Mark F. Weiss

www.advisorylawgroup.com

Play

Sep 27

Aetna Obtains $37-plus Million Judgment Against ASC Manager – Medical Group Minute

Earlier this year, a Santa Clara County, California jury awarded the insurer Aetna a $37,452,199.00 judgment in a lawsuit against Bay Area Surgical Management, LLC, a surgery center management company, a number of its managed ASCs, and three of Bay Area’s executives.

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

Mark F. Weiss

www.advisorylawgroup.com

Sep 26

Rightsizing Your Medical Group – Success In Motion Series

Ride along with Mark as he discusses rightsizing your medical group. Do you have the governance structure, policies, employment agreements, and other elements required to shift resources and reduce staff as well as expand it in face of shifting needs?

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

Mark F. Weiss

www.advisorylawgroup.com

Sep 25

Should Non-Taxpaying Hospitals be Able to Gamble With Your Funds?

Should non-taxpaying hospitals, the facilities that prefer to be known by the misnomer “not for profit,” be able to gamble their tax free funds on venture capital investments?

Well, they already are.

An article by Dave Barkholz, “Midsize hospital systems taking the VC plunge,” published earlier this year in Modern Healthcare, featured, among others, the story of Spectrum Health, a not-for-profit health system in Michigan, which created a $100 million venture capital fund to invest in personalized medicine, information technology, population health management and other emerging technologies.

Does anyone else have a problem with this?

These “not for profits,” like other “charitable” non-taxpaying entities, seek your contributions. They escape paying federal and state income taxes. They escape paying property taxes. Yet they seek to profit from speculative investments, investments supported by those who actually pay taxes.

One countervailing factor, though: Spectrum’s CEO made more than $4 million from the health system and related entities during the fiscal year ending in June 2016. I assume he paid his taxes on that.

Just like the “bankers” who caused banks to lose more in the recent recession than banks had make in profit in all of recorded history, there’s a huge asymmetry between non-taxpaying hospital executives pulling out stupid-large compensation and benefits, and now making risky investments, during good times, and expecting donors, both willing and unwilling, to prop them up during bad.

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

Mark F. Weiss

www.advisorylawgroup.com

 

Sep 21

The Rise of the Machines: Dr. Watson, Al and the Future of Your Medical Group – Podcast

Will today’s physicians soon be referred to as “human physicians” or “carbon-based docs” as opposed to the silicon-based kind? Paging Dr. Robot?

Play

Sep 20

House Calls and the Future of Hospitals

Hospitals are on the decline, are you focusing your future to compete in a changing world?

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

Mark F. Weiss

www.advisorylawgroup.com

Sep 19

Who’s Accrediting the Accreditors? – Success In Motion Series

It seems as if nearly everyone working in healthcare has some sort of accreditation or certification. It’s the case for individuals and for facilities. Ride along with Mark as he questions who’s accrediting the accreditors, even the biggest one of all, the Joint Commission.

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

Mark F. Weiss

www.advisorylawgroup.com

Sep 18

Washington State Takes Antitrust Aim at Aggressive Health System Competition

The unfettered growth of hosptial-centric medicine, usually touted as bringing “better care,” “enhanced safety,” and “more efficiency,” often brings less caring care, hospital acquired infections, and . . . control over the market with its “efficient” byproduct, higher prices.

The growth of hospital systems can be seen as a reaction to the fact that procedures are moving out of the hospital at a quickening pace.

But why grow when the future requires that they shrink? In a sense, it’s the same reason that a government bureaucracy grows like a rhizome: self-protection. Stop the progress, stop the future, and stop the competition.

Consider the following: Hospitals attempt to prevent competition by (1) turning to regulators and legislators to ban or severely restrict competition (e.g., prohibitions on physician ownership of hospitals, certificates of need), (2) acquiring physician groups in order to bind the providers to the hospital, taking them “off the table” in a manner of speaking, and (3) acquiring competing freestanding facilities (e.g., ASCs) and either converting them into hospital outpatient department facilities receiving higher reimbursement, or simply closing them down.

On August 31st, Washington State’s Attorney General filed an antitrust suit in federal court against Franciscan Health System d/b/a CHI Franciscan Health, Franciscan Medical Group (which I’ll refer to collectively as “CHI Franciscan”), The Doctors Clinic (“TDC”), and WestSound Orthopedics (“Westsound”).

The lawsuit seeks to unwind the deals in which CHI Franciscan acquired WestSound, a seven physician orthopedic practice, and entered into an affiliation via a professional services agreement, a management services agreement, and other agreements (collectively, the “PSA”) with TDC, a 45-physician multi-specialty group. It also seeks disgorgement of profits plus civil penalties.

The State alleges that the deals violate a number of pro-competitive laws, including the Sherman and Clayton Acts (i.e., federal antitrust law), and counterpart Washington State law. In fact, the State alleges that the deal is so blatantly anti-competitive that it constitutes a per se antitrust violation.

The Deal

Prior to the deal, WestSound was a 7 physician orthopedic group in Silverdale, Washington.

In July 2016, CHI Franciscan acquired WestSound and folded the physicians into its captive group.

Then, in September 2016, CHI Franciscan entered into a set of agreements with TDC, also based in Silverdale. The deal with TDC was not structured as an acquisition of the medical practice itself. TDC remains a separate legal entity.

Instead, via the PSA, TDC and CHI Franciscan agreed that TDC would provide services exclusively for CHI Franciscan in exchange for CHI Franciscan’s negotiated reimbursement rates with payers, and CHI Franciscan acquired TDC’s ASC, imaging, and lab facilities. TDC agreed to provide management services back to CHI Franciscan.

The Allegations

The State argues that the acquisition of WestSound and the arrangement with TDC weren’t simply deals entered into in order to improve care and provide better access for patients, but were instead anticompetitive schemes in connection with healthcare services on the Kitsap Peninsula, the area of the state that lies west from Seattle across the Puget Sound.

As to the deal with TDC, the State alleges that it’s simply a price-fixing conspiracy between competitors via the PSA.

Under the PSA, the CHI Franciscan negotiates reimbursement rates both for itself and for TDC, but CHI Franciscan doesn’t share any financial risk with TDC. As mentioned above, TDC remains an independent entity with its own governance, provides most of its own administrative functions, and has its own EHR system. CHI Franciscan and TDC are neither clinically nor financially integrated.

After the deal was inked, CHI Franciscan closed outpatient facilities that it acquired from TDC, allegedly shifting cases to CHI Franciscan’s HOPDs in order to receive higher reimbursement.

According to the Complaint filed by the Washington State Attorney General, the impact of the arrangement between CHI Franciscan and TDC is higher prices, lower quality, and decreased patient choice.

The Attorney General’s attack on CHI Franciscan’s acquisition of WestSound is based on traditional anticompetitive merger grounds. The AG claims that the relevant market is the Kitsap Peninsula and that following the TDC and WestSound deals, CHI Franciscan controls 55% of orthopedic services and is monopolistic.

None of the defendants have yet filed a response to the Attorney General’s Complaint.

The Takeaways For You

1. Hospitals have had a rather free hand in acquiring physician groups, especially because many deals are too small to attract US Department of Justice or Federal Trade Commission attention. But there are other routes to challenge their metastasis, including, as in this case, action by the state government.

2. Anti-competitive arrangements do not arise solely from true mergers and acquisitions. Ongoing deals between separate legal entities, as in the CHI Franciscan case, between a hospital system and a large medical group, can trigger antitrust investigations and lawsuits.

3. The Complaint (let me know if you’d like a copy) demonstrates the the AG has detailed knowledge of internal CHI Franciscan communications. I’m not suggesting that anyone break the law and hide it, and the allegations in the CHI Franciscan case are of a civil, not criminal, nature. Rather, it’s self-immolating to document unlawful intent. Emails don’t just go away. Loose lips sink ships.

4. As the future gets bleaker for hospitals, expect more to attempt to try to lock up physician referrals through questionable deals. Be ready.

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

Mark F. Weiss

www.advisorylawgroup.com

 

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