Tag Archives: hospitals

Mile High Non-Compete Law: Colorado Court of Appeals Determines Enforceability of Liquidated Damages Clause in Physician Non-Compete Agreement

The Colorado Court of Appeals, in Crocker v. Greater Colorado Anesthesia, P.C., recently examined several unique enforceability considerations with respect to a physician non-compete agreement.  Of particular interest was the Court’s treatment of a liquidated damages provision in the agreement.  Pursuant to a Colorado statute (8-2-113(3), C.R.S. 2017), the Court held that the provision was unenforceable because the liquidated damages were not reasonably related to the injury actually suffered.

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Hospital Involved in Joint Venture with For-Profit Entity Loses Tax-Exempt Status

There has been a growing trend of strategic joint ventures throughout the healthcare industry with the goal of enhancing expertise, accessing financial resources, gaining efficiencies, and improving performance in the changing environment. This includes, for example, hospital-hospital joint ventures, hospital-payor joint ventures, and hospital joint ventures with various ancillary providers (e.g., ambulatory surgery, imaging, home health, physical therapy, behavioral health, etc.). Extra precautions need to be taken in joint ventures between tax-exempt entities and for-profit companies.

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GOP Tax Legislation Poses Challenges to the Health Care Industry

Perspectives on Health Care and Life Sciences advisory by Bob Atlas, President of EBG Advisors, Inc. 

Following is an excerpt:

The U.S. Senate and House of Representatives have both passed their tax reform bills and will now confer toward creating a unified bill that both chambers can support, and that President Trump will sign. The two bills differ in some key respects, but their implications for health care are already rather clear. Some aspects of the legislation explicitly touch health care, while other effects would be indirect. Overall, it appears that most of the changes would adversely affect many health care industry participants, especially those in the nonprofit sector that would not gain from the reduction in the corporate tax rate that is the central feature of the legislation. …

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FTC Extends NPIA Exemption to Hospital’s For-Profit Affiliate

In an Advisory Opinion dated October 20, 2017, to Crouse Health Hospital (“Crouse Hospital”), the Federal Trade Commission (“FTC”) agreed that the Non-Profit Institutions Act (“NPIA”) would protect the sale of discounted drugs from Crouse Hospital to the employees, retirees, and their dependents of an affiliated medical practice (Crouse Medical Practice, PLLC) (“Medical Practice”) from antitrust liability under the Robinson-Patman Act.  Significantly, the FTC provided this advice despite the fact that the Medical Practice is a for-profit entity, and is not owned by Crouse Hospital.

The Robinson-Patman Act is primarily a consumer protection statute that prohibits, among other things, discrimination in the sale of like kind products, including pharmaceuticals, to different buyers.  As a result, and absent some exemption, the resale of discounted drugs purchased by a not-for-profit hospital to its patients would be subject to challenge.

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CMS Final Rule Will Reduce Medicare Part B Drug Payments by Nearly 30% for 340B Hospitals

On November 1, 2017, the Centers for Medicare & Medicaid Service (“CMS”) released the Medicare Hospital Outpatient Prospective Payment System (“OPPS”) final rule (“Final Rule”), finalizing a Medicare payment reduction from Average Sales Price (“ASP”) + 6% to ASP – 22.5%, for 340B discounted drugs in the hospital outpatient setting, as was proposed in the OPPS proposed rule earlier this year. This payment reduction is effective January 1, 2018, and would primarily impact disproportionate share hospitals, rural referral centers, and non-rural sole community hospitals.

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D.C. Circuit Court Quashes the NLRB’s Extraordinary Expansion of Weingarten Rights

In Midwest Division-MMC, LLC, d/b/a/ Menorah Medical Center v. NLRB, the D.C. Circuit rejected the Board’s unprecedented application of Weingarten rights to voluntary meetings, by reversing the Board’s Decision that would have extended the right of employees to have union representation at meetings at which the employees’ attendance is not compelled.

Kansas state law requires hospitals to establish an internal mechanism to monitor the standard of care provided by nursing professionals.  Pursuant to this law, Menorah Medical Center (“Menorah” or “Hospital”) established a Nursing Peer Review Committee (“Committee”) to investigate alleged violations of the prevailing standard of care.  If substantiated, the Committee reports the violation to the state licensing agency, but the Committee itself does not impose discipline.  If a violation is reported, the state, not the employer, may suspend or revoke a nurse’s license.

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2012 Privacy and Security Year in Review

In 2012, there has been a continuation of the trend toward heightened regulation and enforcement of the privacy and security requirements under the Health Information Portability and Accountability Act (“HIPAA”) and under other state and federal health privacy laws. Although there have not been any significant changes to federal health privacy laws this year, federal enforcement activity continues to be strong.

Recent actions taken by the Department of Health and Human Services (“HHS”) suggest that HHS’s approach to regulating health information privacy and security is continuing to shift in the direction of enforcement as another way to send a message about the importance of voluntary compliance. In 2012, HHS’s Office of Civil Rights (“OCR”) entered into a number of highly publicized settlements with HIPAA covered entities (“Covered Entities”) stemming from alleged violations of HIPAA. Also this past year, OCR launched a new HIPAA audit and compliance program (“Audit Program”), which it initially intends to use for information-gathering and compliance improvement purposes. In addition, HHS continues to promote better privacy and security practices, most recently by incorporating certain privacy standards relating to medical records access into its electronic health records (“EHRs”) incentive program’s eligibility requirements.

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The Road to a Successful Transaction: Paved With Your Priorities

While I may be stating the obvious, hospitals and health systems are complex creatures that frequently drive local economies, culture and population health status (among other things).  Accordingly, when considering a potential change of control transaction, it is critical that you examine what drives your organization and what [in the community] your organization drives.  In particular, the latter is frequently overlooked in these circumstances.

What Drives Your Organization (Your Mission)

So, how do you begin to identify your organization’s priorities?  I recommend starting with the low hanging fruit—the hospital’s mission.  It is critical in the early stages of a potential transaction to consider your organization’s mission, how that mission relates to your current operations and if that mission is capable of evolving.  For instance, if your hospital’s focus for the last 50 years has related to teaching and research, then partnering with an organization that will continue to enhance and invest in these pursuits may be a key priority.  Likewise, if charity care and serving the indigent population has been the hospital’s mission historically, you will want to ensure charity care is high on your list and considered when your board evaluates a potential transaction partner.  These are the points on which you will be less likely to compromise as the deal progresses.

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Addressing Challenges and Implementing Turnaround Strategies in Financially Distressed Hospitals – Rick Cooper

Richard S. Cooper, Esq
McDonald Hopkins LLC

Frederick (Ted) Woodrell
QHR Intensive Resources

Webinar Summary (Actions for Providers):
This webinar addresses the key challenges facing financially distressed hospitals today and provides solutions for implementing successful turnaround strategies. The program will address the following:

  • Industry distress trends and projections
  • Causes and stages of distress
  • Operational, financial and legal “red flags” of distress
  • Key challenges faced by distressed facilities
  • Strategies and tactics that distressed facilities can deploy
  • Chapter 11—when should it be used, advantages and disadvantages, factors contributing to a successful emergence

After This Webinar You Will Be Able To:

  • Describe the financial environment for similarly sized hospitals
  • Identify contributing factors to financial distress
  • Determine your organization’s status
  • Describe the elements needed to create an effective plan for implementing corrective turnaround actions

Tools and Takeaways:
Actions and strategies financially distressed hospitals can utilize to effectively identify their distress risk factors and status.

Recommended For:
CEOs, COOs, CFOs, accounting directors, and finance executives at small to mid-sized hospitals in financial distress

HFMA Members: Free
Non-Members: $99

Click here for more information.

Click here to register.


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