bradley j. berg 206.447.8970 | bergb@foster.com awphd a retreat for ceos and administrators only...

Bradley J. Berg206.447.8970 | bergb@foster.com

AWPHD

A Retreat for CEOs and Administrators Only

“Leading Wisely, Living Well”

The Heathman Lodge

Vancouver, WA

May 19-21, 2010

Leading Wisely, Living Well

PHD Collaboration Models

Merger/Consolidation

Sale

Lease

Management Agreement

Joint Venture Agreement

-- Joint Operating Agreement

-- Interlocal Agreement

Leading Wisely, Living Well

Key Variables in Collaboration Models

Who owns the assets?

Who is responsible for funding capital?

Who has the right to receive revenue and who has

responsibility for liabilities and expenses?

Who owns the licenses and provider agreements?

Who employs the staff?

Who is responsible for governance and management?

Leading Wisely, Living Well

Public Hospital District Issues

1. Statutory authority

2. Constitutional limitations

-- prohibition against gift of public funds or property

-- prohibition against lending public funds or public credit

-- prohibition against owning stock in any private company

-- requirement that public funds be used for public purposes

Leading Wisely, Living Well

Public Hospital District Issues

3. Statutory limitations

Requirement that public hospital districts appoint a

superintendent and that the superintendent be the "chief

administrative officer of the public district hospital and …

have control of administrative functions of the district."

Requirement that any sale of real property be preceded by

three appraisals and a public hearing and that the property

not be sold for a price less than 90% of the average of the

three appraisals.

Leading Wisely, Living Well

Public Hospital District Issues

Requirement that any lease of real property be preceded

by a resolution adopted by the commissioners finding

that the property "presently is not required for public

hospital district purposes. . . ."

Requirement that any meetings be held in compliance

with the provisions of the Open Public Meetings Act.

Requirement that any records be made available to the

public pursuant to the Public Records Act.

Leading Wisely, Living Well

Public Hospital District Issues

Prohibition against any public officer having any

beneficial interest in any contract that they approve or

supervise.

Requirement that any construction projects paid for with

public money be publicly bid and that the construction

workers be paid prevailing wages.

Leading Wisely, Living Well

Public Hospital District Issues

4. Common Law Limitations

Prohibition against a public officer simultaneously

holding a public office and an incompatible private office.

Other?

Leading Wisely, Living Well

Restrictions Relating to Outstanding Bonds

1. Bond Covenants

-- Restrictions on transfers of property

Unlimited tax general obligation bonds

Limited tax general obligation bonds

Revenue bonds

-- Restrictions on issuance of additional debt

Leading Wisely, Living Well

Restrictions Relating to Outstanding Bonds

2. Federal Tax Law Limitations

-- Restrictions on change in use of property financed

with the proceeds of tax-exempt bonds

-- Restrictions on management agreements or

services

agreements relating to the use of property

financed with the proceeds of tax-exempt bonds

Leading Wisely, Living Well

Government Approvals

1. Certificate of Need

2. Antitrust

-- Hart-Scott-Rodino filing

-- U.S. Department of Justice

-- Federal Trade Commission

-- State Attorney General

Leading Wisely, Living Well

Government Approvals

3. State Auditor

4. Washington State Department of Health

5. CMS

6. Other?

Leading Wisely, Living Well

Other Legal Issues

1. Labor Issues

-- Multiple unions

-- Jurisdiction of National Labor Relations Board

versus Public Employees Relations Commission

-- Compensation and benefits structures

-- Reductions in work force

-- Other?

Leading Wisely, Living Well

Other Legal Issues

2. Medicare Reimbursement

-- Billing under a single provider

-- Other?

Leading Wisely, Living Well

Other Legal Issues

3. Federal tax limitations relating to Section 501(c)(3)

organizations

4. State Tax Issues

-- Business and occupation tax and requirements

for

social welfare organizations

-- Property tax exemptions

Leading Wisely, Living Well

Other Legal Issues

5. Restrictions on assignment of existing contracts

including significant payers

6. Other?

Leading Wisely, Living Well

Collaboration Examples Involving Public Hospitals

Mason County PHD No. 2/Harrison Medical Center

New PHD formed for the purpose of collecting

taxes and contracting with Harrison to own

and operate an urgent care clinic within the

District

Leading Wisely, Living Well

Collaboration Examples Involving Public Hospitals

San Juan County PHD No. 1/Peace Health

PHD closing its ambulatory care clinic and

contracting with PeaceHealth to construct a new

critical care hospital, which will be owned and

operated by PeaceHealth, and a new EMS facility,

which will be owned and operated by the District

Leading Wisely, Living Well

Collaboration Examples Involving Public Hospitals

Grant County PHD No. 5/Mattawa Community Medical Clinic

PHD contracts with a separate nonprofit

corporation to operate a Federally Qualified Health

Center Look-A-Like in the PHD’s facilities

Leading Wisely, Living Well

Collaboration Examples Involving Public Hospitals

Snohomish County PHD No. 2/Swedish Health Services

PHD agrees to lease all of its health care facilities

to Swedish Health Services. Swedish will operate

the hospital under its license. The PHD is

exploring other functions beyond operating a

hospital.

Leading Wisely, Living Well

Collaboration Examples Involving Public Hospitals

University of Washington/Northwest Hospital

UW has become the sole corporate member of

the nonprofit corporation that owns and

operates Northwest Hospital and has been

granted certain reserved powers including the

power to appoint the board of directors of the

corporation.

Leading Wisely, Living Well

Collaboration Examples Involving Public Hospitals

Other examples

King County PHD No. 4/PeaceHealth

University of Washington/Harborview

Pacific Hospital and Preservation Development

Authority/Pacific Medical Centers

Leading Wisely, Living Well

New Financing Options for Public Hospital Districts

FHA 242 Program — HB 2510

USDA Financing

State LOCAL Program

Build America Bonds (currently expires 12/31/2010)

Increase in bank qualification from $10 M to $30 M

(currently expires 12/31/2010)

Leading Wisely, Living Well

Litigation Challenging Hospital’s Right to Employ Physicians

Columbia Physical Therapy v. Benton Franklin

Orthopedic Associates

Witham v. Clallam County PHD No. 2 and Olympic

Hospitalist Physicians

Leading Wisely, Living Well

Health Care Reform Changes

New requirements applicable to 501(c)(3) hospitals

Must conduct a health-needs assessment every three

years

Must adopt and make widely available a financial

assistance policy

Must limit charges for those eligible for financial

assistance policy to lowest amount charged to those

who have insurance

Must limit billing and collection practices

Leading Wisely, Living Well

Health Care Reform Changes

Fraud and abuse law changes

Amends anti-kickback statute to relax specific intent

requirement and to clarify that violation results in false

claim

Liberalizes the qui tam law

Requires expansion of RAC audits to Medicaid by

12/31/2010

Requires the establishment of a disclosure protocol for

violations of the Stark Law and permits settlements

Leading Wisely, Living Well

Health Care Reform Changes

Requires overpayments to be refunded within 60 days to

avoid a false claim

Requires all fee for service claims for services provided after

1/1/2010 within one year of the date of service

Requires physicians who own who operate imaging services

in their offices to inform patients in writing from an outside

source. Providers must also be accredited by 1/1/2012

Leading Wisely, Living Well

Health Care Reform Changes

Expands 340B drug program eligibility to critical

access hospitals (participating rural hospitals report

average monthly savings of $19,700 on total outpatient

drugs in 2006)

Leading Wisely, Living Well 29

Contact Information

Brad Berg

Telephone: 206-447-8970

Email: BergB@Foster.com

Foster Pepper PLLC

1111 Third Avenue, Suite 3400

Seattle, WA 98101

www.foster.com