August 2012

Electronic Health Records will change the practice of medicine.  Physicians, hospitals, medical groups are all in the process of converting to the electronic health record.  Currently, nearly $4.5 billion in federal incentives have helped move this conversion forward.  Over the final three months of 2011, EHR incentive payments from the federal government doubled.  In a recent study by the National Center for Health Statistics nearly 57% of physician practices currently utilize EHR for matters other than billing.  In a recent study, it was found that many physicians found the conversion to EHR to be difficult or very difficult.  Primarily, the taxing issues were financial and in the realm of training or lack thereof.  Education in the area of EHR is very important.  On December 8, 2011, I spoke at a seminar for LawReview CLE entitled:  Introduction to Electronic Health Records.  This CLE provided a background into the EHR world and many of the issues, including legal issues and implementation issues that physicians, physician clinics and hospitals will face.

Many rural physicians and smaller physician groups are still behind in the implementation of EHR in their practices.  The Modern Healthcare article entitled “Small Providers Still Lag on EHRs,” sets forth the findings of two studies to support this claim.  (I was surprised it took studies to verify this fact.)  Finances and the daunting thought of implementation are key factors for this lag.  In order to help these rural physicians and physician groups make strides in the EHR conversion, not only must financial incentives continue, but also continued efforts to educate and to aid in the training of the EHR process.

Based on the current playing field and environment, the trend is clear that hospitals and physicians are entering into employment relationships.  According to the 2012 edition of AHA Hospital Statistics, hospitals’ employment of physicians jumped 32% from 2000 to 2010.  It is difficult to know whether this trend will continue.  History has shown that it may switch back as it did the last time such a trend started.  I recently attended a very good conference, “Hospital- Physician Contracts: Survival Strategies,” which was put on by Horty Springer, a Pittsburgh law firm, and three of its attorneys, Dan Mulholland, Henry Casale, and  Phil Zarone.  Similar to information identified in their presentation, the issues that physicians and hospitals must deal with are enormous.  At the top of my list, I feel the key issues include:  * the economics (salary, benefits, nonmonetary compensation, vacation, call coverage) of the arrangement, * the medical staffing/control issues, and * the numerous regulatory restrictions, such as Stark, etc., that impact such relationship.  Physicians thinking of becoming employed by hospitals or selling their medical practice to a hospital need to carefully consider these issues and their impacts.

I recently attended a CLE entitled “Accountable Care Organizations: Physician Perspective,” presented by the American Bar Association, Health Law Section, which was presented by David W. Hilgers and Amy K. Fehn.  As a result of the Affordable Care Act mandating that the Medicare Share Savings Program be implemented, many have moved to Accountable Care Organizations (ACOs) as the implementing tool.  Some of the key features of the ACO is that each must have 5,000 beneficiaries (patients) that are assigned to it.  Thus, primary care physicians have a special role in the ACO environment.  ACOs do not need to include hospitals, but many do.  Physician groups, individual physicians and hospitals across Iowa are scrambling to define their roles in this new ACO world.  Iowa Health Clinic attempted to position itself for an early place in the ACO venture world.  Recently the Tri-Health Systems in Fort Dodge Iowa, was identified as one of the pioneer ACOs.  The two large hospital systems in Des Moines, Iowa, Iowa Health Systems and Mercy Hospital, also recently announced their plans for ACOs.  Individual physicians and physician groups will need to carefully analyze the ACO structure and whether they want to be part of it.  There is a fear that without an ACO affiliation, then the physicians or physician groups will not be able to survive.  Thus recently, I helped form an Independent Physician Association (IPA) of primarily family practitioners, which joined a virtual ACO (a very new concept) to share in the shared savings program.  A great deal of information will be learned as this plays out.  In a decision as to whether to join an ACO,  several legal issues need to be considered, including, but not limited to:

1) organizational structure of the entity (both in type and governance);

2) the tax treatment of the organization (will it be tax exempt);

3) antitrust laws;

4) regulatory restrictions (anti-kickback statutes, Stark, Civil and Monetary Penalty Law); and

5) state laws (insurance regulations within each state).