October 2014 | Physician Magazine

READY TO MAKE A MOVE? STARTING • BUYING • SELLING • LEASING • FINANCING YOUR PRACTICE

REPORTING ON THE ECONOMICS OF HEALTHCARE DELIVERY

A PUBLICATION OF PNN www.PhysiciansNewsNetwork.com

JOIN LACMA, CMA & MANY OTHERS

VOTE NO ON PROPOSITIONS 45 & 46

OCTOBER 2014

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NORCAL Mutual is owned and directed by its physician-policyholders, therefore we promise to treat your individual needs as our own. You can expect caring and personal service, as you are our first priority. Visit norcalmutual.com, call 877-453-4486, or contact your broker.

A N o r c A l G r o u p c o m pA N y

OCTOB ER 2014 | TA B LE OF CONT ENT S

Volume 145 Issue 10

BUYING, SELLING, RELOCATING OR STARTING A NEW PRACTICE

10 DEPARTMENTS

16

FRONT OFFICE | PRACTICE MANAGEMENT 14 Risk Tip: Conflicting Guidelines on

COVER STORY

6

HAVE YOU JOINED THE FIGHT?

There is more than one proposition

on the California ballot this November that threatens healthcare pro-

viders and patients. Find out how you can get involved in the fight and

Mammograms Can Pose Risks

15 Confused About “Group Practices”

and Physician Ancillary Services?

FROM YOUR ASSOCIATION 4 PRESIDENT’S LETTER | PEDRAM SALIMPOUR, MD 17 CEO’S LETTER | ROCKY DELGADILLO

educate your patients, neighbors, friends and families as we unite to defeat Propositions 45 and 46.

Physician Magazine (ISSN 1533-9254) is published monthly by LACMA Services Inc. (a subsidiary of the Los Angeles County Medical Association) at 707 Wilshire Boulevard, Suite 3800, Los Angeles, CA 90017. Periodicals Postage Paid at Los Angeles, California, and at additional mailing offices. Volume 143, No. 04 Copyright ©2012 by LACMA Services Inc. All rights reserved. Reproduction in whole or in part without written permission is prohibited. POSTMASTER: Send address changes to Physician Magazine, 707 Wilshire Boulevard, Suite 3800, Los Angeles, CA 9001 7. Advertising rates and information sent upon request.

O C TO B ER 2014 | W W W. P H Y S I C I A N S N E W S N E T W O R K .C O M 1

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as well as medical students, interns and residents. For more

PRESIDENT

PRESIDENT-ELECT

TREASURER SECRETARY

IMMEDIATE PAST PRESIDENT

Pedram Salimpour, MD Peter Richman, MD Vito Imbasciani, MD William Averill, MD Marshall Morgan, MD

than 100 years, LACMA has been at the forefront of current medicine, ensuring that its members are represented in the areas of public policy, govern-

LACMA BOARD OF DIRECTORS CMA TRUSTEE

COUNCILOR - DISTRICT 9 COUNCILOR - DISTRICT 2

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ment relations and community

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relations. Through its advocacy

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efforts in both Los Angeles County and with the statewide California Medical Association, your physician leaders and staff strive toward a common goal– that you might spend more time treating your patients and less time worrying about the chal-

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CMA TRUSTEE (RESIDENT)

David Aizuss, MD William Averill, MD Boris Bagdasarian, DO Erik Berg Stephanie Booth, MD Steven Chen, MD Jack Chou, MD Troy Elander, MD Hector Flores, MD C. Freeman, MD Sidney Gold, MD William Hale, MD David Hopp, MD Fred Ziel, MD Lawrence Kneisley Kambiz Kosari, MD Howard Krauss, MD Maria Lymberis, MD Carlos E. Martinez, MD Nassim Moradi, MD Ashish Parekh, MD Jennifer Phan Heidi Reich, MD Peter Richman, MD Sion Roy, MD Michael Sanchez, MD Nhat Tran, MD Sion Roy, MD

lenges of managing a practice.

LACMA’s Board of Directors consists of a group of 30 dedicated physicians who are working hard to uphold your rights and the rights of your patients. They always welcome hearing your comments and concerns. You can contact them by emailing or calling Lisa Le, Director of Governance, at lisa@lacmanet.org or 213-226-0304.

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Acceptance of advertising in Physician Magazine in no way constitutes approval or endorsement by LACMA Services Inc. The Los Angeles County Medical Association reserves the right to reject any advertising. Opinions expressed by authors are their own and not necessarily those of Physician Magazine, LACMA Services Inc. or the Los Angeles County Medical Association. Physician Magazine reserves the right to edit all contributions for clarity and length, as well as to reject any material submitted. PM is not responsible for unsolicited manuscripts.

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Mercer Health & Benefits Insurance Services LLC • CA Ins. Lic. #0G39709 777 South Figueroa Street, Los Angeles, CA 90017 • 800-842-3761 • CMACounty.Insurance.service@mercer.com • www.CountyCMAMemberInsurance.com * The initial premium will not change for the first 10 or 20 years unless the insurance company exercises its right to change premium rates for all insureds covered under the group policy with 60 days’ advance written notice.

The County Medical Associations and Societies/NORCAP/CMA receive sponsorship fees for insurance programs that offset the cost of program oversight and support member benefits and services.

P RES IDEN T ’S LET T ER | P EDRAM S ALIM P OU R, M D

Dear Colleagues, Like most doctors, I am not much of a politician. But when called on, we all know how to put up a fight. And that is exactly what the Los Angeles County Medical Association and the California Medical Association are engaged in now. As such, we are devoting vast effort and resources on behalf of our patients and our doctors to defeat a ridiculously packaged set of initiatives that will go on the November ballot as Proposition 46.

It is imperative that you, your staff and your patients be educated on this issue because, by design, if passed it will have an impact. Proposition 46 is in reality three measures haphazardly thrown together by trial attorneys with the hope that adding “sweetener” provisions will confuse voters. And that confusion is designed to accomplish one task: increase the cap on medical malpractice payouts.

The outcome of such a dramatic increase in malpractice payouts is quite simple to imagine, and to calculate. This proposition will increase healthcare costs for everyone and decrease access for those who need it the most. As a direct result, we will see valuable resources pulled directly out of the healthcare delivery system and put into the pockets of trial attorneys at the expense of voter —patients—everywhere.

As physicians, we’re always looking for ways to improve patient safety—and so are the groups that are our partners in this fight. The list is vast and ought to make all of us proud to have been able to form such a broad and far-reaching coalition. So, we must encourage our patients, family and friends to vote NO ON PROPOSITION 46 because of the terrible impact and consequences it will have on the already burdened healthcare delivery system. We must share our story and encourage everyone to vote on Election Day. Let’s lead the way for our future and the future of our patients. It is in our hands. And it is within reach.

Pedram Salimpour, MD President, Los Angeles County Medical Association

4 P H Y S I C I A N M A G A Z I N E | O C TO B ER 2014

Join the Los Angeles County Medical Association, CMA and other medical providers and

VOTE NO on PROPOSITION 45.

dr. Carlos Martinez, board Member, laCMa

dr. richard baker, CMa board of Trustees

“Proposition 45 threatens physicians’ ability to provide the care that patients need by giving a single elected politician vast new power over our health care, including what treatment options our health insurance covers. The last thing we need is a state politician meddling with decisions about the care and benefits patients receive.”

-Dr. Pedram Salimpour, President, Los Angeles County Medical Association

Nurses, doctors, community health clinics, business, labor and taxpayer groups oppose Proposition 45 on California’s November ballot.

•

Too much power to one politician. Prop. 45 gives one politician – the state insurance commissioner -- sweeping new power over our health care, including what treatment options your health insurance covers.

•

Hurts access to care. Prop. 45 establishes new and conflicting rules that will interfere with California’s implementation of the affordable Care act – hurting patient access to care and providing more uncertainty, delays and confusion at a time when California doctors and patients are already dealing with massive changes to our health care system.

•

Costly and unnecessary new bureaucracy. Prop. 45 duplicates multiple existing state agencies that regulate our health care by creating a new bureaucracy which costs tens of millions of dollars per year.

•

Trial lawyer sponsors stand to make millions. Prop 45 is backed by the same trial lawyer groups that are behind Prop. 46, the MiCra measure. The measure’s backers have made more than $14,000,000 off costly legal challenges authorized by the last ballot measure they wrote. a hidden provision in Prop 45 will allow them to make tens of millions off of health care lawsuits.

www.NoOn45.org

Paid for by No oN 45 – CaliforNiaNs agaiNsT HigHer HealTH Care CosTs. Major fuNdiNg by Kaiser fouNdaTioN HealTH PlaN, iNC., WellPoiNT, iNC. aNd blue sHield of CaliforNia WiTH a CoaliTioN of doCTors, Nurses, HosPiTals, HealTH PlaNs, aNd CaliforNia eMPloyers.

HAVE YOU JOINED THE FIGHT?

OVER THE LAST several months, you may have read information about the Medical Injury Com-

pensation Reform Act (MICRA) lawsuit initiative, Proposition 46, in the pages of this magazine, on your local medical society’s website, in information from the California Medical Association (CMA) and likely from the hundreds of coalition partners that have all pledged to oppose the measure this November. On November 4, 2014, voters will be asked to cast their ballots. In the final months, weeks and days leading up to Election Day, it will be our task as physicians to educate our patients, neighbors, friends and families about the real intentions behind Prop. 46.

AN OVERVIEW OF PROP. 46 The measure is complex and contains three separate and distinct pieces that trial lawyer proponents have thrown together in an effort to mask their real intent – quadrupling non-economic damages in MICRA, pulling money directly out of the health care delivery system and putting it into their own pockets. The pieces voters will be asked to weigh in on are as follows: • A quadrupling of the non-economic damages limit on medical malpractice awards in California, which will cost consumers and taxpayers hundreds of millions of dollars every year in higher health care costs, and cause many doctors and other medical care professionals to quit their practices or move to places with lower medical malpractice insurance premiums – reducing access to care in California.

• An unfunded mandate that will require physicians, pharmacists and veterinarians to check a government run database before prescribing schedule II or III drugs. This piece in particular threatens patient privacy by requiring a massive expansion of the use of a personal prescription drug database.

• Both a random and mandatory requirement to perform alcohol and drug testing on doctors, which was only added to this initiative to distract from the main purpose.

Let’s not be fooled – Prop. 46 uses alcohol and drug

6 P H Y S I C I A N M A G A Z I N E | O C TO B ER 2014

testing of doctors to disguise the real intent – to increase the limit on the amount of medical malpractice lawsuit awards.

RAISING HEALTH CARE COSTS I’ve been speaking about Prop. 46 for months now, and explaining to people how it was carelessly thrown together without concern for taxpayers’ pocketbooks, health care or privacy, but one question that comes up repeatedly is, “how will this increase health costs?”

We know that trial lawyers out to profit from medical lawsuits sloppily drafted Prop. 46 and it will result in higher health care costs for everyone. We’ll see money come directly out of the health care delivery system and straight into the pockets of the lawyers that stand to gain most.

These higher costs will be passed to every purchaser and provider of health care: state and local governments, employers, employees, consumers and taxpayers. That’s why such a broad coalition of group stands in solid opposition to Prop. 46.

According to California’s independent, non-partisan Legislative Analyst’s Office (LAO) Prop. 46 could increase costs for state and local governments by “several hundred million dollars annually.”

The LAO goes on to warn that “even a small percentage change in health care costs could have a sig-

No on Prop 46

Get Engaged!

By now, many of you are familiar with the MICRA lawsuit initiative that will appear on the November 4, 2014, ballot. Proposition 46 is being opposed by a coalition of doctors, community health clinics, Planned Parenthood Affiliates of California, local governments, working men and women, business groups, taxpayer groups, hospitals and educators, all of whom know that the measure will lead to more lawsuits and higher health care costs. What’s more, it will threaten personal privacy and jeopardize people’s access to their trusted doctors or clinics.

This information is intended to be useful for coalition members who are on the ground working to defeat Prop.

46. To that end, please also visit www.NoOn46.com for updated campaign information and to find out what you can do to join the efforts as an individual or organization.

WHAT YOU CAN DO SIGN UP FORMALLY (AS AN ORGANIZATION, PRACTICE OR INDIVIDUAL) IN OPPOSITION TO THE CAMPAIGN Visit the campaign website at www.NoOn46.com to add your name to the growing list of groups and organizations opposing Prop. 46.

REQUEST A CMA STAFF MEMBER TO SPEAK TO YOUR GROUP, HOSPITAL OR SPECIALTY SOCIETY Let your local county medical society or CMA know and we can ensure you’re hearing from the right people about the most recent campaign updates.

ORDER CAMPAIGN COLLATERAL Download the Order Form to receive office posters, Englishand Spanish-language patient brochures, campaign buttons, message cards and more. You can also order directly online by visiting NoOn46.com SPREAD THE MESSAGE ON SOCIAL MEDIA If you’re active on social media, start by following the California Medical Association and No on Prop 46. Retweet and repost the information that is being put out to help spread the word about how dangerous and costly Prop.

46 will be for everyone. For questions about how to start a Twitter or Facebook account or how to engage with CMA, please contact Brooke Byrd at bbyrd@cmanet.org.

PARTICIPATE IN MESSAGE/MEDIA TRAINING The campaign is looking for physicians interested in taking on a more public role speaking to community groups about why this ballot measure should be defeated. Contact Molly Weedn at mweedn@cmanet.org for more information.

Twitter

SPEAK TO YOUR COLLEAGUES, PATIENTS AND COMMUNITY Use the resources at NoOn46.com to talk to your colleagues, patients, friends and family. Don’t forget to speak to community members as well – groups such as Rotary, Kiwanis, Soroptimist and more provide great venues for presentations.

Facebook

CMA: No on 46:

CMA: No on 46:

@cmaphysicians @NoOn46

facebook.com/cmaphysicians facebook.com/NoOn46

nificant effect on government health care spending.”

But, how exactly?

State and local governments are hit with higher costs in two ways: o They provide health care benefits for current and retired government employees; o They also provide health care services for low-income residents through Medi-Cal and other locally-run health care programs like community clinics and public hospitals.

Higher health care costs for state and local governments would reduce funding available for vital local services like police, fire, social parks and The measure is complex and con- services, libraries, to name a If Prop. 46 passtains three separate and distinct few. es, everyone will carthe burden of these pieces that trial lawyer proponents ry increased costs.

While the LAO eshave thrown together in an effort timates costs to state and local governto mask their real intent – quadru- ments, they aren’t the ones who will pling non-economic damages in only pay for more lawsuits higher payouts.

MICRA, pulling money directly out of andAccording to a study by California’s the health care delivery system and former Legislative Prop. 46 will putting it into their own pockets. Analyst, increase health care costs across all sectors by $9.9 billion annually, which translates to around $1,000/year in higher health costs for a family of four.

For many families across the state, that is a tough choice between groceries and health care – and one that we can’t afford to let happen.

THREATENING PRIVACY Proposition 46 includes a provision that could significantly jeopardize the privacy of patients’ personal prescription medical information. The initiative forces doctors and pharmacists to use a massive statewide database, called CURES, which is filled with patient’s personal prescription drug information. Though the database already exists, it is underfunded, understaffed and technologically incapable of handling the massively increased demands this ballot measure will place on it.

In fact, in evaluating Prop. 46 the LAO noted, “Currently CURES does not have sufficient capacity to handle the higher level of use that is expected to occur when providers are required to register beginning in 2016.”

Many of us as physicians want the CURES database to work to help keep patients safe. Unfortunately, the provision in this ballot measure isn’t that simple.

Prop. 46 will force the CURES database to respond to tens of millions of inquiries each year– something the database simply cannot do in its current form or functionality. A non-functioning database system will put physicians and pharmacists in the untenable posi-

8 P H Y S I C I A N M A G A Z I N E | O C TO B ER 2014

tion of having to break the law to treat their patients, or break their oath by refusing needed medications to patients.

Another concerning piece of this provision is that the massive ramp up of this database will significantly put at risk patients’ private medical information. Prop.

46 doesn’t contain any provisions or funding to upgrade the database with increased security standards to protect personal prescription information from government intrusion, hacking, theft or improper access by non-medical professionals.

The CURES database contains a record of every dispensed prescription of a Schedule II, III or IV substance and contains highly sensitive, personal and potentially stigmatizing details about a person’s health. It includes prescription information including medicines used to treat anxiety, insomnia, obesity, narcolepsy, drug detoxification, pain, epilepsy, conditions related to cancer and AIDS, asthma, chronic infection, and other sensitive medical conditions.

What’s more - the law gives the Department of Justice unfettered discretion to disclose confidential patient prescription information to any state, local, or federal public agencies for disciplinary, civil or criminal purposes.

There are literally hundreds of entities and thousands of individuals who work for those agencies that meet this definition - providing access to highly-personal and sensitive patient health information for nonmedical reasons.

WHAT NOW? We’ve got a lot of work to do between now and Election Day. The proponents of Prop. 46 continue to mislead the public about the real intentions behind the measure – quadrupling the cap on non-economic damages in MICRA, which will result in higher health care costs for everyone.

For the future of medicine in California – and the nation – and for the safety of our patients, I ask you to get engaged in these last weeks and months. You can: - Donate to the campaign. It’s as simple as visiting NoOn46.com and clicking on “contribute.” Every dollar counts as we need to produce material to ensure voters understand the risks associated with Prop. 46 - Order campaign material. We’ve got buttons, office posters, informational brochures, lab coat cards and more, all available at NoOn46.com. Simply click “Take Action” and “Get Campaign Material” and it will be sent directly to you.

- Sign up to be a part of the campaign. As physicians, we see dozens of patients daily. Take the time to let them know about the dangers and real intent behind Prop. 46.

With the changing times in the health care delivery system, I know it can be tough to make the time for something else. The future of our profession depends on us here, and I urge you to commit to being involved through November 4 and beyond.

For all of your efforts until now and moving forward – thank you.

PROPOSITION 45

The “Other” Trial Lawyer Proposition Puts a State Politician in Charge of Your Patients’ Health Care There is more than one proposition on the California ballot this November that threatens health care providers and patients. The same groups pushing to change the Medical Injury Compensation Reform Act (MICRA) – “Consumer Watchdog” and their trial lawyer allies – are also pushing Proposition 45 that would give the state Insurance Commissioner sweeping new power over health care benefits, rates and co-payments for individuals and small groups.

LACMA is part of a broad coalition opposed to Proposition 45, including the California Medical Association, California Hospital Association, county medical societies, specialty societies, hospitals, health plans, labor and small businesses.

CMA President Dr. Richard Thorp explained why so many provider groups are opposing Prop 45: “Proposition 45 threatens physicians’ ability to provide the care that patients need by giving a single elected politician – the Insurance Commissioner – vast new power over health care benefits and rates. With recent cuts to the MediCal program, we are already seeing the devastating impact it can have on patient access to care when politicians cut reimbursement rates below the cost of providing care. Additional cuts would result in an even more difficult time for patients that need care the most.”

Even worse, Prop 45 gives a politician new power over benefits too. The last thing doctors and patients need is a politician having more power to interfere with what treatments are or aren’t covered – those decisions are best left to the exam room.

Beyond these flaws, Prop 45 has a hidden agenda – allowing trial lawyers and the sponsors to file costly new health care lawsuits. They buried a provision in the fine print that allows them to “intervene” in the regulatory process created under the Initiative and file lawsuits if they don’t like the results. In doing so, they can pocket millions of dollars in so-called “intervenor fees” – as much as $675/hour. In fact, the proponents have already received more than $11.5 million from a similar provision used in auto and home insurance regulation.

Many business groups and taxpayer organizations also oppose Prop 45 because it sets up a costly, duplicative new bureau-

cracy, when California already has multiple regulators overseeing health care.

Lastly, Prop 45 establishes new and conflicting rules that could interfere with California’s implementation of the Affordable Care Act – providing more uncertainty, delays and confusion at a time when California providers and patients are already dealing with massive changes to our health care system.

For more information or to sign up to oppose Prop 45, visit www.stophighercosts.org.

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F EAT U RE | READY T O M AKE A M OVE

Checklist for Starting a New Practice

BY MARION WEBB

Every successful practice starts off with a detailed plan that describes the strategic goal of your organization, its financial and other resources and a sound business plan, according to MGMA Health Care Consulting Group.

While every state and market is different, here are some general guidelines that every physician should consider before starting up his or her own practice.

BUYING, SELLING, RELOCATING OR STARTING A NEW PRACTICE

In this article, the experts offer valuable tips for starting a new practice, such as creating a strategic plan that involves budgeting, smart hiring and consulting with outside experts.

While the nearest bank may be the most convenient place to borrow capital for a new venture, it’s not always the best option. Find out from the experts what to look for when borrowing money. We’ll identify several local, state and federal incentives that can help physicians generate significant savings.

Thinking about selling your practice? The ins and outs of navigating the sale of a practice can vary significantly depending on the buyer and the deal structure. Learn how to optimize a deal and how to avoid common legal mistakes that can be costly down the road.

1. Develop a Strategic Plan When it comes to starting your own practice, you want to begin with a strategic plan to identify goals and how to get there and also create a solid market analysis.

2. Budget A budget allows physicians to get an understanding for measuring performance, sources of revenue, practice expenses and capital needs. Generally, physicians start off with two types of budgets: The start-up budget relating to consulting, legal fees, accounting and other costs, and the operating budget to project revenues and expenses once the practice is operational.

3. Hire Specialists While some practices prefer to organize and manage their resources internally, others may find it easier to outsource tasks such as billing and benefits administration. Every practice, however, is well advised to gain access to a qualified healthcare attorney, a tax specialist and general counsel to go over liability issues and insurance needs.

4. Get Credentials Every physician needs to be credentialed with hospitals, health plans and other health organizations to run a successful practice. It is also a prerequisite for physicians to be paid for their services by third-party payers.

5. Find Facilities Physicians starting a new practice can commonly access space from a retiring physician or rent space in a medical office building to save costs and gain access to patients. To learn more, consider hospital administrators and commercial realtor estate agents as some of the best resources.

6. Find the Right Staff Hiring the right staff will be critical to any practice’s success.

Some physicians may be inclined to skimp on staffing to save costs but usually regret that move, according to the experts.

1 0 P H Y S I C I A N M A G A Z I N E | O C TO B ER 2014

When physicians need to borrow money for new equipment or real estate, they tend to qualify easily for loans but make the mistake of not shopping around, according to some experts.

Borrowing is quite common for medical practices. According to the SBA, in 2011 the Small Business Administration backed $649.8 million in 1,516 approved loans to physicians, more than four times the amount of borrowed money it guaranteed for the 625 SBA loans approved in 2001.

To ensure that you’re getting the best deal, follow these tips from the experts.

1. Find a Personal Banker Too many doctors go to the nearest bank when they should be shopping for a banker who will truly look out for your best interests. The first meeting should be like a first date, David Shuffler, a longtime banker and consultant based in Asheville, N.C., told American Medical News.

“If the doctor can walk out with the feeling that this banker can be a partner, then they can do business and go to the next step.”

2. Pick the Right Borrowing Tool Each situation calls for a different borrowing tool.

As a general rule, a line of credit or credit card should be paid off once a year and may not be the best option to buy equipment. Sometimes it makes more sense to lease equipment or pay on an installment loan rather than using a line of credit. Longer-term debt should be used to buy a practice or property.

3. Avoid Borrowing to Cover Operating Expenses Physicians who borrow money to make payroll or rent will have a tough time persuading a bank that their practice is sound financially and should avoid borrowing to cover operating expenses, according to the experts.

4. Generate Income When it comes to buying new technology, such as a new electronic health record system, efficiency is important, but the new equipment also needs to help the practice save money or

create income. Any new equipment needs to offset the cost of buying it.

5. Do the Financial Paperwork If a doctor leaves a practice, that doctor needs to ensure that he or she isn’t liable if the practice defaults on a loan. Most lenders require a personal guarantee for a small practice loan, so physicians should be prepared for that and protect themselves in situations where the practice is being restructured or a partner leaves. Most loan terms include a “joint and several” clause, which makes each practice partner liable for the loan in the case of a default.

Getting Tax Breaks for Your Medical Practice

Many doctors are unaware that federal, state and local governments offer doctors incentives.

Governments often see practices as fueling the economy.

The trick for physicians is to identify these tax breaks. Here are some ideas that may apply to your practice: In some cases, medical practices can get state and federal incentives for locating in certain areas or for hiring certain individuals.

California, for instance, has several financing options available for businesses that hire people in an enterprise zone (a low-income area that is recovering from a disaster such as fire or flood) or locate in a brownfield (a former industrial or commercial area) or in an environmentally challenged area.

Many states provide incentives for hiring unemployed or disadvantaged people or for just hiring more people.

Hiring a veteran, for instance, can produce federal incentives through the Department of Veterans Affairs’ Special Employer Incentive Program.

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READY T O M AKE A M OVE | F EAT U RE

Borrowing Money

When physicians need to borrow money for new equipment or real estate, they tend to qualify easily for loans but make the mistake of not shopping around

F EAT U RE | READY T O M AKE A M OVE

The department can reimburse an employer up to 50% of the veteran’s salary for up to six months.

The employer is also eligible for a federal credit for hiring a veteran who participated in a vocational rehabilitation program.

There are also many programs for doctors who practice in rural areas.

Medical practices are highly desired in rural communities, and the Department of Agriculture has a loan program and grants for developmenting a practice in these areas.

Several states and the federal government have loan forgiveness programs for physicians who practice in designated rural and underserved areas for a specified time.

To learn about these incentives in your state, visit your state’s economic development department website.

Many sellers get too fixated on the price alone when they should be focusing on the totality of a deal and the broader implications of the transaction

Navigating the Sale of a Practice

Many people believe that health reform has contributed to declining practice values across the board when in reality it has actually served to rebalance values based on the perceived risk and reward for different specialties, according to the experts.

Specialties that are historically prone to overuse and may be susceptible to future reimbursement risks have declined in value, while specialties that focus on primary and preventive care have experienced increases in value.

That is because the latter areas are key to future healthcare delivery models, according to Healthcare Finance News.

Payment for Goodwill and Intangibles The debate over goodwill and intangibles continues in this marketplace, and their monetization in a deal will depend on the buying entity and the structured deal.

In general, hospital deals don’t involve payments for intangibles to avoid regulatory scrutiny, among other issues, while deals involving physicians, medical groups and equity groups typically consider intangibles in the price.

Intangible value is generally present when there is an economic earnings stream that constitutes a return on equity.

1 2 P H Y S I C I A N M A G A Z I N E | O C TO B ER 2014

Optimizing a Deal

There are a myriad of potential deal-related complexities that require a practice seller to be cautious.

Many sellers get too fixated on the price alone when they should be focusing on the totality of a deal and the broader implications of the transaction, the experts say.

For instance, a $5 million selling price with 100% cash down has different implications than 50% cash and 50% taken in a seller carryback.

Doctors need to find out what the terms and risk are of the carryback and assess the financial risks of every deal structure.

Avoiding Common Legal Mistakes 1. Get Independent Representation When it comes to selling your practice or working on a succession plan, it’s key to have independent representation. Even if a broker is an attorney, the experts recommend that physicians hire their own attorney to ensure that the physician’s best interest is represented.

2. Evaluate Your Practice Many physicians rely on a team to help them understand proper valuation methods and the proof to support the true worth of their practice.

Not being in the know could create liability issues as a seller, according to an article in Physicians Practice. A good buyer will ask many questions, including how the business works, where the referrals come from and who the key employees are, which is all information that could potentially be held against the seller down the road.

3. Protect Your Assets One of the critical pieces after selling or retiring is to obtain “tail” insurance at or above the same level of coverage a physician carried before as malpractice insurance. This is important not only for liability in case of a claim, but also because the claim can do a lot of damage even after someone is no longer in practice. The other key component is to protect the proceeds from the buyers themselves, because if a buyer is not successful in running a business for any reason, the buyer may come back to the seller and claim an omission or another act to get a refund.

Whether it comes to selling or buying a practice, these valuable tips should give physicians a prescription for success before entering into the critical discussions with their own consultants and other parties involved.

Los Angeles County M e d i c a l As s o c i a t i o n

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Mail your invoice and payment to: 707 Wilshire Blvd, Suite 3800; Los Angeles, CA 90017 For a copy of your renewal invoice please email Carolina Velazquez, carolina@lacmanet.org O C TO B ER 2014 | W W W. P H Y S I C I A N S N E W S N E T W O R K .C O M 1 3

P RAC T IC E M AN AG EM ENT | F RONT OF F IC E

RISK TIP

Conflicting Guidelines on Mammograms Can Pose Risks

Misdiagnosis, delayed diagnosis and failure to diagnose breast cancer are liability risks, particularly for radiologists, gynecologists, general surgeons and family medicine practitioners, according to closed claims data from The Doctors Company from 2007–2013. Several factors contribute to these risks: • Conflicting guideline screening recommendations.

• False negative mammograms, which fail to detect some cancers.

• False positive mammograms, which lead to breast biopsy.

• Radiation exposure.

The 2008 American College of Radiology and 2003 American Cancer Society guidelines recommend annual mammography screening for asymptomatic, average-risk women age 40 and older.1 However, the guidelines set forth by the U.S. Preventive Services Task Force in 2009 recommend starting routine mammograms for women with an average risk of breast cancer at age 50.1 Although the presence of numerous professionally endorsed options arguably gives physicians a broader set of clinically valid choices, inconsistent guidelines may also leave physicians feeling more exposed to malpractice claims.2 Adding to this dilemma is that some states are now requiring physicians to notify women who have dense breast tissue,3 which makes it more difficult to read mammograms. However, there are no guidelines on what physicians should do if a woman has dense breast tissue.

In addition, interpreting mammograms can be difficult because normal breasts vary in their mammographic appearance.4 Physicians should consider a personalized approach that best assesses the individual patient’s need.

1 4 P H Y S I C I A N M A G A Z I N E | O C TO B ER 2014

PHYSICIANS CAN REDUCE RISKS AND PROMOTE PATIENT SAFETY BY: • Communicating with patients about conflicting guideline recommendations.

• Discussing why you believe your recommendation is right for the patient.

• Reviewing the patient’s breast-related medical history and breast cancer risk factors to assess their impact on breast cancer risk.

• Ensuring that an adequate follow-up system for mammogram reports is in place.

• Clearly communicating mammogram test results to the patient in a timely manner and ensuring that the patient understands the significance of the findings and recommendations.

• Documenting all discussions with patients in the medical record.

For medical groups, all member physicians should agree on and follow consistent practice guidelines for breast cancer screening.

Contributed by The Doctors Company. For more patient safety articles and practice tips, visit www.thedoctors.com/patientsafety. ___________________ 1Pace L, Keating N. A systematic assessment of benefits and risks to guide breast cancer screening decisions. JAMA. 2014;311(13):1327-1335. http://jama.jamanetwork.com/article.aspx?articleid=1853165. Accessed May 30, 2014.

2Kachalia A, Mello M. Breast cancer screening: Conflicting guidelines and medicolegal risk. JAMA. 2013;309(24):2555-2556. http://jama.jamanetwork.com/article. aspx?articleid=1691914. Accessed May 30, 2014.

3Rabin, R. Dense breasts may obscure mammogram results. New York Times. June 14, 2014. http://well.blogs.nytimes.com/2014/06/16/dense-breasts-may-obscuremammogram-results/?_php=true&_type=blogs&_r=0. Accessed June 23, 2014.

4Mammography. RadiologyInfo.org. May 7, 2013. http://www.radiologyinfo.org/ en/info.cfm?pg=mammo. Accessed May 30, 2014.

BY LAURA PODOLSKY AND HARRY NELSON

AS PRIVATE PRACTICE physicians have seen insurance reimbursement drop lower and lower, many have

looked to ancillary revenue sources – such as diagnostic imaging and laboratory services – to make up the difference. But while ancillary services can improve the bottom line, they also raise tricky legal issues.

Among the most confusing of these issues are the federal and state self-referral laws. Most physicians have heard of the federal Stark law and California’s Speier Act (Business and Professions Code Section 650.01, also known as PORA), but don’t understand their details. Both laws prohibit a physician from making certain kinds of referrals from which the physician (or his or her immediate family) stand to benefit. Stark, however, applies only to federal health programs, including Medicare and Medi-Cal, while the Speier Act applies to these programs and to private insurance and cash-paying patients. These laws and regulations are also often confused with the related but distinct topic of anti-kickback laws, which prohibit compensation relationships that induce referrals.

To further confound matters, each of these—Stark, Speier, and the anti-kickback laws— has its own distinct and complicated exceptions and “safe harbors.”

In future issues, we will focus on the Speier Act (which has been the subject of legislative consideration for amendment), the anti-kickback laws, and anti-markup laws. For now, we want to address one of the most widely misunderstood exceptions to the Stark law: the “In-Office Ancillary Services” (IOAS) exception and its availability to physicians who utilize ancillary diagnostic testing in general and laboratories in particular.

Although the Stark law generally prohibits physicians from referring to laboratories (among other “designated health services”) that they own or receive compensation from, the IOAS exception enables a physician to profit from the referral when the lab is in the physician’s office, in the same building or in a centralized building (as defined in federal regulations). The analysis is the same for the other categories of designated health services, such as diagnostic imaging, but for the sake of simplicity, we will focus on labs here.

The most common misconception we encounter is the notion that as long as the physician’s office and the lab are in the same building, the arrangement is permissible under the IOAS exception, so that the physician may legally refer to the lab and bill for the lab fees.

Co-location, however, is only one of the requirements.

The IOAS exception also requires that the services be performed or supervised (and billed) by the referring physician him or herself, or another member of the same group practice. And “group practice” has a specific definition: It means that the physician members perform “substantially all”—defined as at least 75%—of their services through the entity.

Unfortunately, many physicians have unwittingly entered into noncompliant arrangements that don’t meet these legal requirements. We regularly encounter physicians who form agreements to share expenses and revenues associated with a lab to which they refer, believing they are protected by the IOAS exception. Sometimes the lab is in the same office, building or complex; other times, the lab is in a different location. Typically, the physician mistakenly believes that his or her co-ownership arrangement means that the lab qualifies as an extension of her office (and so services performed there are “in office”), or that multiple physicians who co-own lab equipment but otherwise practice separately qualify a “group practice.”

These arrangements are problems waiting to happen. Often the problems are discovered in the course of audits by Medicare, Medi-Cal or the private insurance companies. In addition to violating federal and state law self-referral prohibitions, inappropriately structured shared labs raise other legal issues, such as noncompliance with California’s anti-markup provision for labs (Business and Professions Code 655.5) and violations of anti-kickback statutes. Equally seriously, physicians are submitting inaccurate billing forms representing lab services as having been performed in their own offices. Such inaccuracies can spur allegations of healthcare fraud, a criminal offense.

The misunderstanding of the IOAS exception is just one of several problems related to physician lab services. The good news is that the problem can be fixed by ensuring that group practice arrangements meet Medicare requirements or by establishing distinct and separate labs that are under the physician’s direct control. Without attention to the detailed statutory requirements, however, these arrangements raise serious risks for the physicians involved.

Harry Nelson is the managing partner of Nelson Hardiman, LLP, and can be contacted at hnelson@nelsonhardiman.com.

Laura Podolsky is an associate at Nelson Hardiman, LLP, and can be contacted at lpodolsky@nelsonhardiman.com.

O C TO B ER 2014 | W W W. P H Y S I C I A N S N E W S N E T W O R K .C O M 1 5

F RONT OF F IC E | P RAC T IC E M AN AG EM EN T

Confused About “Group Practices” and Physician Ancillary Services?

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LACMA and CMA are distinguished by their successes. Dual membership provides for unparalleled legislative advocacy to end abusive practices. In addition, LACMA has sued health care plans on behalf of members to stop intimidation tactics.

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• Socialize and network with members of the medical community • Find or create opportunities for your practice • Engage with legislators and policymakers

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Tired of fighting with payors? CMA’s Economic Services experts have recovered nearly $8 million for members since 2010!

Information is power. LACMA and CMA produce several publications full of valuable information including the award-winning Physician Magazine, Physicians’ News Network, and CMA Practice Resources, full of tips and tools for your practice.

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Working together, the Los Angeles County Medical Association and the California Medical Association are strong advocates for all physicians and for the profession of medicine.

Of the many reasons for joining LACMA and CMA, 10 stand out.

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When you join LACMA and CMA, you hire a professional staff that serves as an extension of your practice. We are here to help you reach your goals and connect to the resources you need most. Whatever you need—be it help with a problematic payor, or details about your member discounts—just call the member helpline at (800) 786-4262 or visit www.lacmanet.org

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is the best time to join LACMA and CMA For more information on member benefits and resources, visit www.lacmanet.org/Membership LOS ANGELES COUNTY MEDICAL ASSOCIATION 707 WILSHIRE BLVD, SUITE 3800 LOS ANGELES, CA 90017

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CMA develops toolkits, guides, webinars, and resources on all things related to today’s changing healthcare landscape—all FREE with membership. In addition, LACMA provides access to important and local CME-accredited events.

FOR JOINING LACMA AND CMA

PHONE: (213) 683-9900 FAX: (213) 226-0353

DURING THIS FALL season, LACMA encourages physicians everywhere in Los Angeles County to spread the message that Proposition 46, if passed, would be devastating for their patients and the entire community.

Voting “No on Prop. 46” is is foremost in everybody’s mind these days, especially physicians who would be directly impacted by this ill-conceived ballot measure.

To help set the record straight, we encourage all LACMA physicians to not only educate their patients and the community on the perils of Prop. 46, but also help spread the word to “Vote No on Prop. 46” by putting up signs, distributing pamphlets and wearing campaign buttons—all available at LACMA’s headquarters.

While the campaign to fight Prop. 46 with its three components—requiring random drug and alcohol testing for doctors, requiring doctors to check a statewide database for prescribing certain medications in an effort to curb drug abuse, and raising the cap on pain and suffering damages from $250,000 to about $1.1 million— takes center stage this month, we are pleased to announce that another major LACMA initiative has already had a positive impact.

After the Superior Court denied LACMA’s request for a preliminary injunction to stop the ill-founded implementation of the duals demonstration project, Cal MediConnect, we are pleased to inform our members that our voices have been heard after all.

Last month, the California Department of Health Care Services agreed to issue a new form that will allow dual eligibles to clearly mark a box stating that they wish to opt out of the program and stay with their current trusted provider.

This marks a huge victory for LACMA and comes after Los Angeles’ most vulnerable population—the elderly and disadvantaged—have been passively enrolled in Cal Mediconnect, often without their knowledge and at risk for having their medical care disrupted.

As always, during the month of October, we will have many exciting new opportunities for doctors to network, enhance their professional skills and get involved with LACMA. As we approach LACMA’s biggest annual event, the LA Healthcare Awards, this November, I’m excited that the selection of our finalists is in full progress.

I am already looking forward to an evening of celebration, honoring Los Angeles’ most outstanding physician leaders.

Rocky Delgadillo Chief Executive Officer O C TO B ER 2014 | W W W. P H Y S I C I A N S N E W S N E T W O R K .C O M 17

LAC M A NEWS | AS S OC IAT ION H AP P EN EIN G S

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Located in Vista, California, Vista Community Clinic is a private, nonprofit outpatient community clinic located in North San Diego County serving people who experience social, cultural or economic barriers to health care in a comprehensive, high quality setting.

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RESPONSIBILITIES Provide consultation-liaison services for patients suffering from both psychiatric and medical disorders by focusing on the evaluation and treatment of patients, serving adolescents, adults, seniors and their families. Preferably able to serve children as well, but not required.

Located in Vista, California, Vista Community Clinic is a private, nonprofit outpatient community clinic located in North San Diego County serving people who experience social, cultural or economic barriers to health care in a comprehensive, high quality setting.

REQUIREMENTS · Graduation from a recognized school of medicine · Valid California medical license as MD or DO; Board certified or eligible · Authorized to practice psychiatry in California · Certified as a diplomat in the American Board of Psychiatry and Neurology in psychiatry · Completion of a psychiatric residency or family medicine/psychiatry residency in an ACGME approved residency program · Psychiatrist with Medicare and California Medicaid numbers prior to start of employment · Valid DEA certificate · 2 years experience working fulltime as psychiatrist and MD or DO in child and adult psychiatry

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PER DIEM WEEKEND PHYSICIAN UCLA Health - Playa Marina WalkIn Urgent Care is currently seeking an outgoing Urgent Care Physician to join our team located in beautiful Marina del Rey across from the marina. The facility is supported by well-trained staff and equipped with onsite x-ray machine. This position is for weekend shifts 9am -6pm and holidays.

REQUIREMENTS: •1 - 3 years of experience required within an Emergency Medicine or Urgent Care setting •BC/BE in Family Practice, Emergency Medicine, fellowship in Urgent Care •CA State Medical License •Excellent customer service skills •Professional appearance and communication For more information, visit uclahealthcareers.org or contact Reggie Glynn at RGlynn@mednet.ucla.edu. EOE

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How to Talk to Your Patients Prop 46 - A costly threat to people’s personal privacy Californians can’t afford.

By now, many of you are familiar with the MICRA lawsuit initiative that will appear on the November 4, 2014, ballot. Proposition 46 is being opposed a coalition of doctors, community health clinics, Planned Parenthood Affiliates of California, local governments, working men and women, business groups, taxpayer groups, hospitals and educators, all of whom know that the measure will lead to more lawsuits and higher health care costs. What’s more, it will threaten personal privacy and jeopardize people’s access to their trusted doctors or clinics.

This information is intended to be useful for coalition members who are on the ground working to defeat Prop.

46. To that end, please also visit www.NoOn46.com for updated campaign information and to find out what you can do to join the efforts as an individual or organization.

TALKING TO YOUR PATIENTS Communicating the No on 46 message to your patients will be critical to defeating the trial lawyers’ attacks on the medical profession. As a trusted medical expert, you are in a unique position to share how Prop 46 would truly affect all health care users and taxpayers. Please use the Frequently Asked Questions (FAQ) below to guide your conversation with patients.

WHAT WILL PROP. 46 DO? Prop 46 does three things: • Quadruples the limit on medical malpractice awards in California, which will cost consumers and taxpayers hundreds of millions of dollars every year in higher health care costs, and cause many doctors and other medical care professionals to quit their practice or move to places with lower medical malpractice insurance premiums – reducing access to care.

• Threatens your privacy by requiring a massive expansion of a personal prescription drug database.

• Requires alcohol and drug testing of doctors, which was only added to this initiative to distract from the main purpose.

Proposition 46 uses alcohol and drug testing of doctors to disguise the real intent – to increase a limit on the amount of medical malpractice lawsuit awards.

WHO OPPOSES PROP. 46?

Thousands of organizations and individuals representing doctors, nurses, community clinics, local governments, labor unions, business groups, education groups, taxpayer groups, hospitals, community groups and many others oppose Prop. 46 because it will lead to more lawsuits, higher health care costs, threaten people’s access to their trusted doctor or clinic, and jeopardize people’s personal prescription drug information.

WHO SUPPORTS PROP. 46?

One hundred percent of the reported contributions to pay for signature gathering to place this on the ballot in November 2014 came from trial lawyers and their allies.

HOW WILL PROP. 46 INCREASE HEALTH CARE COSTS? There is no question that more lawsuits against health care providers will increase costs, and someone has to pay. And that someone is consumers and taxpayers.

California’s former Legislative Analyst found Prop. 46 would increase health costs for consumers and the state by about $9.9 billion annually.

This translates to more than $1,000/year in higher health care costs for a family of four.

California’s current independent, non-partisan Legislative Analyst Office (LAO) said impacts to state and local

Physicians have faced over 90,000 alleged HIPAA violations. Make sure you’re prepared. *

For decades, The Doctors Company has provided the highest-quality medical malpractice insurance. Now, the professionals of The Doctors Company Insurance Services offer the expertise to protect your practice from risks beyond malpractice. From slips and falls to emerging threats in cyber security—and everything in between. We seek out all the best coverage at the most competitive prices. So talk to us today and see how helpful our experts can be in preparing your practice for the risks it faces right now—and those that may be right around the corner.

Call (800) 852-8872 today for a quote or a complimentary insurance assessment. n n n n

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