Representing Physicians Primer

Transcription

1 Representing Physicians Primer ire Cycle or a Physician-Practice Association A Presentation For: Physicians & Physician Organizations Orlando, Florida February 13,2008. Michael F. Schaff, Esq. 1

2 OVERVIEJJ General Considerations - Health Care Environment - Physician Market - Who is Your Client? - Who Can Employ a Physician? Basic Issues in Employment Contracts The Buy-In: Becoming an Owner in a Medical Practice Retirement Issues/Sale Post Termination Restrictions ~..~ ~/ 'It...~ , ~.. ~...":...l.' ~ ,....:: "... \ ;;:~:::: lllllllilii..:. 2

3 Healthcare En Burdensome regulations Dramatic increase in professional liability. premiums Rapidly evolving healthcare services Decreased reimbursement Aggressive litigation 3

4 Physician Market - 200, Physician Shortage Malpractice Insurance Retirement of Baby Boomer Physicians 250,000 over age ,000 over age Year Training Cycle Stock Market rise of 2000 to 3000 points Source: Healthcare Financial Management Association, October

5 WHO is YOUR CLIH. ljiiicc... The medical practice ("Practice") The physician being admitted to the Practice A younger owner An older owner The President of the Practice 5

6 u.n HRSII A.n YO UR CI~IH.r-r...lili Advise each owner to have his or herown/coiinsel, accountant and other necessary professional( s) Know who you are dealing with "Who are the parties and the professionals? " - Accountant - Attorney - Outside practice management consultants What are your client's goals? 6

7 WHO CA. HMPLOY A Pli~YSICIA.?. Corporate Practice of Medicine Doctrine - Prohibits unlicensed individuals or entities - from practicing medicine or employing healthcare professionals - Regulates who can employ physicians in some, states 7

8 WHO CA. HMPLOY A PlIYSICIA.? Check Current State Laws - Physicians cannot be employed by unlicensed entities, general business corporations, or general business limited liability companies (LLCs) - Many states allow physicians to form a professional corporation or LLC úú... E z.o~ Xl~

9 BASIC ISSUES IN PHYSICIAN EMPLOYMENlìiiiiiiillll~m.....,.,.,.,.,.,.,.,.,.,."""""""""""":':':':':::::::::::::::::::::"ittØ&liIiIiI If:::::'::::::... r IIIIIIIIIIhmmmIIINUH CONIìRAClìs r~iif 9

10 TERM Commencement Date: When does Conditions Precedent vs. Conditions Subsequent Examples: - Receipt of State License - Receiving Hospital or other privileges "The Employee's first day of employment is contingent on the Employee's receipt of his/her (State) medical license and obtaining (provisional or attending) staff status at hospital( s), however, the actual first day of the Employee's employment shall be the "Commencement Date." If the Commencement Date has not occurred by _, 200_, the Employer may terminate this Agreement." 1 0

11 TERMINATION DATE - Renewal Terms - Automatic Renewal (Evergreen Clause) "The Employee's employment under this Agreement shall commence as of,200_ (the "Commencement Date") and shall continue thereafter until _, 200_. Thereafter, this Agreement shall automatically renew itself for successive (_) year terms unless either party gives the other part at least _ days notice of their intent not to renew. This Agreement may be terminated prior to the end of its terms pursuant to the provisions of Paragraph _ below." 11

12 DUTIES Time Commitment - Full time? Define? - Part time? - Work schedule (days/hrs) - Night, weekend and holiday call schedak 12

13 DUTIES Locations (limit?) Time Commitment for Administrative Matters Moonlighting? Ability to work outside Physician Organization - Practice may want to restrict since it may affect Group Practice definition under STARK (75% test) - Does Practice's Malpractice Insurance Cover? 13

14 DUTIES - Compliance with :E~thical Profession Compliance with Other Documents of the Physician Organization, including: - ~"'loyer'~~ Ownership Agreement, Bylaws, Rules and Regulations, Compliance Plans, HIP AA - llospitals or other Facilities where Physician is on staff: Bylaws, Rules and Regulations. 14

15 DUTIES - Compliance with Payer Re and/or standards relating to quality - How does "Pay for Performance" affect physician's employment status? 15

16 DUTIES Required Licenses, Hospital Privileges and Board Certification. Requirement For Continuing Medical Education 16

17 DUTIES Inclusion or exclusion of Income/Revenue Generated from sources "outside" practice Define outside sources, i.e., Expert Testimony, Lectures, Medical Director Fees, other... ' ~~

18 DUTIES: BILLING ISSUil~mm... Fee Schedules Assignment of Fees Completion of Medical Records and Reports Responsibility for Accuracy in billing 18

19 COMPENSATION: OVERVIEW What does the Practice Wish to Reward? Reward should encourage specific behavior. 19

20 COMPENSATION.. OVER VIE 1. Equal Compensation: 2. Productivity Formulas: must understand: - Stark Law - Fraud & Abuse Laws - Applicable State Laws - Medicare Reimbursement Rates - IRS Unreasonable Compensation Issues 20

21 3. Combination of Equal and Prod 4. Point System ( or relative Value Method ("RVUs")) 5. Fixed Base Periodic Salary + Bonus a....l J~ tttttttttttttrr:: li elf) A ~11 21

22 OTHER COMPENSATION ISSUES Severance/Deferred Compensation on termination Disability Compensation - Definition of disability - Offset for disability insurance payments - Accrual of time off during disability? 22

23 BENEFITS Vacation (scheduling issues) Sick days Seminars, Conventions, and Continuing Medical Education 23

24 BENEFITS :Ex(lense Reìlillll~lI.~nt... u omo i e paymen s, gas, 0 sparing......, :.: : J I I I I!I:I:I:I:I:I:::: : : : : : :!!...I...:.F A t b I t t II &...iik.....:.:.:.:::::::::::::::.:.:...::::::::::::::::::::.:.::... Cell phone & beeper Dues & staff fees (hospital,... MCOs, IP As, societies) \'/ Moving expenses Maternity leave Subscriptions and journals Pension plan & 401(k) Entertainment & other fringe benefits 24

25 BENEFITS -- Disability Insurance Medical Insurance J)ental Insurance Vision Insurance 25

26 MALPRACTICE INSURAN~E... _f". Malpractice Insurance Crisis? Occurrence Policy vs Claims Made Policy (Need for Tail) Amount? Cancellation of policy, refund entitlement... :...:::::::.:.:... :.:... &~ljl' --. '.-i.:.:.:.:.:.:.:.:.:.;.;.i.i.i.i.l.r.rv.:m : - :1:.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1::::.1:::::1 81 :::::::::::::::::::::: ":::::::::::::::::::::'. ;:::::::::::::::::::;::::::::::::::::::i' : ~ ~ llllllllllllllli :: ::::::::::! iiiiiiiiiiii~: ~IIIIIIIIIIIIIIIIII ~~IIIIIIIIIIIIIIIIIII ~\::::::... :::::::::;:;;:;: mmmm: :;::;:;;:;:;:;:;;::::;:::' 26

27 TERMINA Mutual Agreement Death Disability Breach

28 TERMINA TION: WithoßtiiiiBf;USe By the Employee or the Employer withol.tilus~ (for any reason or no reason) on at least ( ) days advance written notice to the other party, provided that upon receipt of notice by the Employee, the Employer shall have the right to terminate the employment of the Employee prior to the expiration of the notice period and pay the Employee only through his/her last day of employment. 28

29 TERMINATION: WitliC.I~~...~i... Recurring absence Failure to abide by the terms of employment, after notice and a ten (10) day opportunity to cure The loss of license or suspension or the right to dispense or prescribe narcotic drugs The suspension, revocation, or curtailment of privileges to practice at necessary facilities 29

30 TERMINA TI ON: WithC..~ll Fraud, misappropriation, embezzlement, theft, dishonesty, or similar actions Intoxication while on duty Illegal use or possession of drugs Act or omission constitutes an indictable criminal offense 30

31 TERMINA TION: WithC. ø~il...:... 31

32 TERMINATION.. With Cause If a hospital based practice (i.. radiology, anesthesia, or pathology), the termination or non-renewal of the exclusive agreement with Hospital. 32

33 TERMINATION.. With Cause Catch all provision: "any of Employee which the Employer deems detrimental to its practice or which constitutes cause for termination in the Employer's reasonable discretion, it being impossible to specifically enumerate all events, conduct, occurrences which would be injurious to the loyer and which would constitute cause"", 33

34 RESTRICTIVE COVENANTS.. Prohibited Activitiei Look at State law to determine if enforceãfjlel) Practice Geographic Area - Time Period Solicitation of: - Patients - Employees - Referral sources ~? 34

35 RESTRICTIVE COVENANTS.. Reasonableness/Three- Pron.llfi~~ii 1. Restrictive covenant must protect a legitimate business interest of the employer. -Patient lists. -Ongoing patient relationship 35

36 RESTRICTIVE COVENANTS.. -- Reasonableness/Three- Proii:gIR::iiill."it Restrictive covenant must not impose an undue hardship on the employee Cannot deprive an employee/member from earning a living in his/her profession. - Mere adverse financial consequences or personal hardship imposed as a result of a restrictive covenant do not rise to level of undue hardship. 36

37 RESTRICTIVE COVENANTS.. -- Reason ablen ess/three- ProlJllJi,liiiii (I~t Restrictive covenant must not be InJuriòl.slofhe public at large. - Right of public to consult physician or health care professional of choice. - Cannot prohibit patients from independently seeking out employee's services. - Cannot restrict so as to cause a shortage of medical professionals in either a particular area of specialty or geographic region. 37

38 RESTRICTIVE COVENAN;... v... Liquidated damages vs. injunction 38

39 Ownership of Patient Records by E:m,loyer Right to Copies of Patient Records and Charts - Local Laws - Costs (l?í.~ B 39

40 OWNERSHIP OPPORTUNITY When will Employee be eliidbllllleiãn Owner?,.'...;.0'.-.-..;.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:;:.;-.-,..:;:::::::::::::::::::::::::::::::::::::::::::::::::::::::::;:;.-.-.-uùù;.;.;.;.;.;.;-;.;-;-:-:-:-;.:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::;;'. - Firm Offer - Nonbinding Intent..:::::: ~~~::. - - _ : i :~:~:~::::::::;:;... -: : : : : : : : : : : : : : : : : : ::::::......:::: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : ::......:::: : : : : : : : : : : : : : W ::t r::..t i:..:: r..:::: : : : : :f. -..C.:::...:: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :..:.:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::.:.:.: :: : : ::~~cc" c:.. d~~ :~~ ~ ~ ~ ~ ~I~II:ff~~~:::::::::::~:ttt:..

41 REPRESENTATIONS AND WARRANTIES OF THE EMPBOJiEE Qualifications - Duly licensed - DEA registration No restrictions or limitations on license No physical or mental disability (ADA concerns) 41

42 REPRESENTATIONS & WARRANTIES OF THE EMPBOJLEE... "iii". Malpractice coverage for past acts (evidence, need for tail?) No financial relationship healthcare facility Provider Status - Never removed from provider panel for cause No pending or threatened malpractice or patient-related proceedings or litigation 42

43 REPRESENTATIONS & - WARRANTIES OF THE EMPáOJTEE No pending or threatened inves~ìll~ìl"sior proceedings regarding competence Not convicted of healthcare violation Never excluded from Medicare or Medicaid Board Certification or Eligibility No breach of Federal Loan programs 43

44 REPRESENTATIONS & WARRANTIES OF THE EMPBOJiEE Representations made as of the execution date and Commencement Date Duty to update all, including reporting obligation for exclusions, suspensions or proposed exclusions or. suspensions 44

45 REIMBURSEMENT FOR DISALLOWED EXPENSES & - COMPENSATION 45

46 BUY-IN TO A MEDICAL PRACTIC 46

47 THE BUY-IN: Due Dilill..IMi... Documents, agreements and contracts relating to the Practice should be reviewed Certificate of Incorporation / Formation Bylaws Operating/Stockholder Agreement Organizational minutes Tax Returns Payor agreements Hospital agreements

48 THE BUY-IN: Due Diiig~nce Property leases and subleases.equipment leases Employment, Consulting, management and other service agreements (owners and non-owners) Agreements with respect to shared facilities and functions.purchase and supply contracts Licenses 48

49 THE BUY-IN: Due Dilifl.BIi\IL...F:::.:... Lines of credit Loan and credit agreements, mortgages, promissory notes, security agreements and other evidences of indebtedness Accounts payable Deferred Compensation Agreements Policies and procedures, including employment manuals and compliance plans Employee benefits agreements 401(k) plan and other pension plans Health, accident, life and disability insurance policies 49

50 THE BUY-IN Related Party Tranša lìlliiilrliijiii\...mmmm ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ;;_llllii...ir... Are there any arrangements between an owner and the Practice? Are they at fair market value? - Real estate (the medical office) Equipment - Employment of relatives - Loans from / to related parties 50

51 ANATOMY OF A PURCHASE or SUBSCRIPTION AGREEMENT Ownership Percentage Purchased How will the Practice be valued? Representations and Warranties 51

52 Ownership Agree 1. Control and Management - Minority Protection Rights & Supermajority 2. Transferability of Ownership Interests - Triggering Events - Valuation - Tax Considerations - Funding Buy-outs 52

53 ues t- "ions.? 53

54 Representing Physicians Primer ire Cycle or a Physician-Practice Association A Presentation For: Physicians & Physician Organizations Orlando, Florida February 13,2008. Michael F. Schaff, Esq. 54