Health Care Lawyer Blog

FHW law clerk Scott Malott authored today's post.

Months of "Will they? Won't they?" speculation ended Monday morning when the United States Supreme Court officially declined early intervention into Virginia’s health care law challenge. Following a decision from a U.S. District Court in Virginia that held the Patient Protection and Affordable Care Act’s (PPACA) individual mandate is unconstitutional and severed it from the rest of the Act, Virgina filed a “petition for certiorari before judgment” in February that asked the Supreme Court to review the lower court’s decision - BEFORE the case could be heard by the United States Court of Appeals for the Fourth Circuit.

The Supreme Court rarely grants these petitions, and it did not make an exception here. There were no comments issued with the denial, and no dissents noted.

However, it still appears that an eventual hearing before the Supreme Court is inevitable. Challengers of the law have been pushing for an expedited review because some parts of the Act, including some small-business tax credits, federal grants, and consumer protection measures, are already in effect and are being enforced. However, while the challengers were hopeful that this would be a prime instance for the nation’s highest court to hear a case before court of appeals review, the Supreme Court traditionally prefers that the major issues in the cases it hears be fully fleshed out in the lower courts.

Virginia has a law on its books that specifically states that residents cannot be forced to buy health insurance. As an extension, and in support of its own law, Virginia’s argument against PPACA is that the Commerce Clause of the United States Constitution does not grant the government the power to require that private citizens purchase a commercial product. While Virginia officials have indicated disappointment with the Supreme Court’s decision, advocates of the Act opine that constitutional challenges to the Act have no merit and should be rejected unanimously. At least until one of the cases works its way to the Supreme Court through the proper channels (estimates range from late 2011 to sometime in 2012), implementation of the Act will be allowed to press on.

FHW attorneys David Haron, Sue Nolan, and Mercedes Varasteh Dordeski were recently published in the April 2011 ABA Health eSource. The eSource is a monthly electronic bulletin that is distributed nationwide to all members of the American Bar Association's Health Law Section.

The article, entitled "Stark Law Update: Determining Whether Compensation is Fair Market Value or Takes Into Account the Volume or Value of Referrals", examines three recent cases which have a significant impact on how physician compensation is determined under the federal Stark law (also known as the physician self-referral law).

As the article illustrates, structuring a Stark-compliant arrangement can involve careful analysis of many different factors. For questions about complying with Stark or other federal health care laws, contact Haron, Nolan or Dordeski at (248) 952-0400.

Today's post was authored by FHW member Sue Nolan.

To sell or not to sell is a question many practices and their physician owners will face in the coming year. Uncertainty over the effects of health care reform, coupled with concerns about declining Medicare reimbursement rates, is leading many physicians to reconsider being in private practice. At the same time, hospitals are purchasing practices in preparation for creating Accountable Care Organizations (ACOs).

In light of the uncertainty, it is difficult to know what decision is right for a practice. However, if an eventual sale is being considered, there are steps practices can take now to be prepared for the due diligence process, a lengthy and important process during which the purchaser tries to understand exactly what is being sold and the financial condition of the practice.

In order to help be prepared for a sale, physicians should consider the following:

Productivity of the practice. A practice should take steps to maintain or even increase its productivity during the period it is preparing for a sale. Productivity is frequently evaluated by looking at the work relative value units of each physician. Thus, a practice should be prepared to have this information available to a purchaser.

Profitability of the practice. A practice should maintain or improve upon its profitability. This can be done by paying attention to reducing expenses where it seems practical, delaying major non-essential purchases, promptly billing for professional services, and collecting accounts receivable.

Books and records to confirm financial condition of the practice. Purchasers generally request the financial statements and tax returns of the practice for the past year, and often for the prior two years as well. Financial statements for the past year should contain both a balance sheet (also known as a statement of assets and liabilities) and a statement of revenues and expenses.

After the jump - additional considerations for physicians

Continue reading " Thinking of Selling A Medical Practice? What Physicians Need to Know " »