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Risks of Being Acquired by Non-Hospital Entities

Posted  February 1, 2016

By Tim McCormack and Molly Knobler (published in Physicians Practice)

Hospitals aren’t the only ones looking to buy up physician practices anymore.  Health insurers, private equity firms, and practice management companies are increasingly offering big upfront payments, long-term contracts, lucrative “joint ventures,” and other financial incentives to physician practices.

The compliance risks associated with hospital partnership are relatively straightforward and well-known.  The compliance risks of partnering with or working for non-hospital entities can be substantially more complicated, in part because the financial arrangements and “customers” of these entities vary widely.  A managed-care company participating in the Medicare Advantage program has different objectives and incentives than a practice management company operating hospital emergency departments or a venture capital fund that recently purchased a hospice company.  With different incentives come different compliance risks.  Physicians contemplating these kinds of sales must ask themselves: How does the acquiring company propose to increase practice revenue and more importantly, will they have to change their clinical approaches to accommodate those goals?  Click here for the full article.