Health Care Industry Trend Hospital Systems Merging and Acquiring Private Practices All Across the U.S.

Wednesday, November 21, 2012

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

There’s a structural shift that is sweeping the health care system - hospitals are acquiring private physician practices. It is happening all over the U.S., including right here in Central Florida. On December 31, 2012, Orlando Health - a nonprofit, multi-hospital system that owns Orlando Regional Medical Center and eight other hospitals - will allegedly merge with Physician Associates - Central Florida’s largest medical practice, according to the Orlando Sentinel. The alleged price tag on this sale is $50 million, with each of the group’s 95 physicians receiving about $500,000 a piece.


Critics Say This Merger will Cost the Patients.

Orlando Health maintains the goal of the merger is to move toward a new payment model and reduce health care costs, but critics interviewed in the Orlando Sentinel article disagree.

The trend around the country is that after a merger patients will see a facility fee tacked onto a doctor’s fee, even if patients go to the same doctor’s office. Critics also believe providers will feel obligated, or will be required, to only refer patients to the hospital that employs them. Another fear is job loss, as hospitals take over office management.

To read the article from the Orlando Sentinel, click here.


A Closer Look Into an Acquisition.

In August 2012, the Wall Street Journal took a closer look at what happens after an acquisition of a private practice by a hospital system.

The article stated as physicians are absorbed into hospital systems, they can get paid for services at the hospital systems’ rates, which are typically higher than what insurers pay to independent doctors. Some services that physicians previously performed at their facilities may start to be billed as hospital outpatient procedures, this can double or triple the cost.

Medicare pays more for certain services if they are performed at hospital facilities. According to the Wall Street Journal, if a hospital system transforms a private clinic to become an outpatient facility or moves services onto a hospital site, the hospital’s Medicare reimbursement rates will increase.

To read the entire Wall Street Journal article, click here.


Physician Associates Says Nothing Will Change.

On November 15, 2012, the Physician Associates Chairman of the Board of Directors posted a letter to patients on the practice’s website. The letter assures patients nothing about the service they receive will change. The letter says the sale is about patients receiving the best possible care in a new, fast-paced health care environment. In response to the sale price, the chairman said a large component of the purchase price reflects the sale of all of the Physician Associates’ assets to Orlando Health, along with an agreement to provide future employment.

Click here to read the entire letter.


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Comments?

What do you think of the merger between Physician Associates and Orlando Health? Who do you think it will benefit more, the patients or the doctors? Please leave any thoughtful comments below.


Sources:

Jameson, Marni. “$50M sale of Physician Associates Signals Major Shift in Orlando Health Care.” Orlando Sentinel. (November 13, 2012). From: http://articles.orlandosentinel.com/2012-11-13/news/os-physician-associates-orlando-health-20121109_1_orlando-health-health-care-physicians

Wilde Matthews, Anna. “Same Doctor Visit, Double the Cost.” Wall Street Journal. (August 27, 2012). From: http://online.wsj.com/article/SB10000872396390443713704577601113671007448.html

Walker, M.D., Erik. “Letter to Our Patients Regarding Potential Orlando Health Merger.” Physician Associates. (November 15, 2012). From: http://www.paof.com/news/2012/11/letter-our-patients-regarding-potential-orlando-health-merger


About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  www.TheHealthLawFirm.com  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.


Tag Words: hospital acquisitions, private practice mergers, medical groups, Orlando Health, Physician Associates, reviewing and negotiating contracts, business transactions, Florida health care lawyer, Florida health care attorney, contract attorney, contract lawyer, physician contract lawyer, physician contract attorney, sale of practice, closing attorney, merger legal counsel
 
"The Health Law Firm" is a registered fictitious business name of George F. Indest III, P.A. - The Health Law Firm, a Florida professional service corporation, since 1999.
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11/21/2012

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