Business Law and Governance Practice Group Mid-Year Luncheon 

Description:  

An increasing number of healthcare systems are embarking on a strategy of putting the “integration” back into the healthcare system. The acquisition and employment of physician groups is a key component of this strategy. This time around, however, systems are acquiring large, single, or multispecialty groups, and rolling the physicians into the system under some form of employment model. The most hotly negotiated aspect of many of these transactions is the structure of the compensation arrangement with the physicians.

In structuring a physician compensation model, the system must balance the expectations of the doctors, an uncertain reimbursement environment, state law issues like corporate practice of medicine,
federal tax-exempt organization laws and regulations, and federal and state anti-kickback and self-referral laws. And all of this must be done in an environment of close scrutiny of these transactions and an increasing volume of investigations and enforcement actions.

We will discuss recurring issues that arise out of the process of structuring physician compensation arrangements, including: (1) final fair market value (FMV) compensation opinions; (2) valuation methodologies; (3) getting to a fi nal FMV opinion; (4) retention bonuses and restrictive covenants; (5) the nebulous concept of “commercial reasonableness”; and (6) lessons learned from recent
enforcement actions.