In my January 2011 column (“A Seller’s Market: How to prepare your practice for sale to a hospital”), I described the growing trend of physicians selling their practices to hospitals and large health systems and then working for the hospital or health system. This trend is expected to continue in full force through 2012. As I noted in my January article, the physician’s post-sale arrangement is the driver for the growth of the physician’s practice within the hospital or health system.
Physicians who join a medical practice often have the opportunity to purchase an equity interest in the practice after some period of employment with the group, an issue that is usually addressed in the physician’s employment agreement. If you think you may be interested in such a partnership, you should carefully review your employment agreement before signing it. The amount of detail in the employment agreement regarding potential ownership will vary depending on the practice and the negotiating power of the individual physician. Clearly, the more specificity found in the contract, the better you will be served.
It’s 2011 and the pendulum is once again moving toward private practices selling to hospitals or affiliated foundations. Several years ago, the same phenomenon drove the medical market. Management companies and hospitals went on an acquisition frenzy, purchasing practices at breakneck speed. Soon, hospitals were dissatisfied, management companies went broke and physician practices went private again. Physicians simply proved to be less motivated and productive when employed by hospitals or affiliated with management companies.
In this economy, investing in advertising as a way to increase profits is an attractive idea. But, before you reach out to a marketing firm, let me tell you about a recent scenario that happened to one of my physician clients.
When describing to the curious the benefits of opting out of both Medicare and private insurance, Gerard J. Gianoli, MD, president of The Ear and Balance Institute in Baton Rouge, La., often recalls one particular example: During one 90-day global period about five years ago, after an eight-hour resection of a skull-based glomus tumor, post-operative ICU care and several days of inpatient care and the usual post-operative office visits, he received a total reimbursement of $500.
A physician who was recently offered a lucrative position with an otolaryngology practice in his community asked me to review his current employment agreement to determine if it contained any prohibitions against accepting the job. His previous employment contract contained a noncompetition clause that, justifiably, caused him and his prospective employer some concern. As it turned out, in his case, and in many others, the noncompetition clause was not as restrictive as it appeared at first glance. The provision was penetrable and my client joined the new practice with a clear conscience that he was not in violation of his previous contract.
Hayes Wanamaker, MD, an otolaryngologist in Syracuse, N.Y., refers to the recovery audit process of insurance carriers as the proverbial camel’s nose under the tent.
When Rahul Shah, MD, then a pediatric otolaryngologist at Children’s Hospital in Boston, and several colleagues first undertook a survey of otolaryngologists’ reactions to adverse events in 2004, they provided a blank form for respondents to write about what had happened. In the more than 200 responses they received, Dr. Shah and his colleagues read an outpouring of emotion.
By now, you’re probably well versed in the clinical aspects of the health reform bill signed by President Obama in March. But what you may not know is that the bill includes a section that could benefit otolaryngologists and other physicians in their role as employers.