bradley j. berg 206.447.8970 | [email protected] wsha/awphd health care leadership in dynamic times...

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Bradley J. Berg 206.447.8970 | [email protected] WSHA/AWPHD Health Care Leadership in Dynamic Times Collaborations and Partnerships-- Opportunities, Limits and Barriers The Edgewater Hotel Seattle, WA October 12, 2010

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Bradley J. Berg206.447.8970 | [email protected]

WSHA/AWPHD

Health Care Leadership in Dynamic Times

Collaborations and Partnerships--Opportunities, Limits and Barriers

The Edgewater Hotel

Seattle, WA

October 12, 2010

2Collaborations and Partnerships – Opportunities, Limits and Barriers

Introduction

Presentation will focus on collaborations and partnerships

involving public hospital districts

Collaborations may involve other public hospital districts

or other governmental entities, but may also involve

nonprofit and for profit hospitals and other types of health

care providers

Collaborations may take a wide variety of forms

3Collaborations and Partnerships – Opportunities, Limits and Barriers

Factors Motivating Collaborations

Reductions in payment and changes in payor mix

Reduction in demand

Increase in expenses

Inadequate supply of physicians and other trained personnel

Lack of capital for replacing/upgrading facilities and technology (including electronic medical record systems)

Health care reform encourages integration (Accountable Care Organizations, medical homes, bundled payments, payments for quality outcomes)

Increase in competition

4Collaborations and Partnerships – Opportunities, Limits and Barriers

Potential Responses

Do nothing

Get out of the health care business entirely

Substantially change or reduce the scope of services

Consider one or more collaboration options

5Collaborations and Partnerships – Opportunities, Limits and Barriers

Key Questions

What is your view of the future?

What is your vision for your hospital and health care

system and how can your mission best be served in the

future?

What is your financial strength?

What is your appetite for risk?

What is your need for control?

6Collaborations and Partnerships – Opportunities, Limits and Barriers

Key Evaluation Criteria—does the collaboration:

Maintain the hospital’s mission?

Maintain and expand services?

Improve quality?

Increase revenue and/or reduce costs?

Increase access to capital?

Increase access to specialized technology and personnel?

Reduce competitive threats?

7Collaborations and Partnerships – Opportunities, Limits and Barriers

Potential Collaborators

Public hospital districts

Other public health care providers

Nonprofit/for profit hospitals

Physicians

Community Health Clinics

Local governments

Payors

Others?

8Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Options

Contracts for specific services or involving specific service

lines

Joint venture agreements

Transfer of assets through lease or sale

Merger/Consolidation

Dissolution

9Collaborations and Partnerships – Opportunities, Limits and Barriers

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?

10Collaborations and Partnerships – Opportunities, Limits and Barriers

Do PHDs Have the Legal Authority to Collaborate?

PHD Boards have broad statutory authority to decide

- What services are provided

- How services are provided

- Who services are provided to

- Where services are provided

11Collaborations and Partnerships – Opportunities, Limits and Barriers

PHD Statute Authorizes:

Providing services directly or by contract

Providing services through facilities located outside the

boundaries of the district

Providing services through ventures with other public or

private entities including through joint venture entities

12Collaborations and Partnerships – Opportunities, Limits and Barriers

PHD Statute Provides Additional Authority for Rural PHDs

Rural PHD is defined as a PHD whose boundaries do not

include a city with a population > 30,000

Authorizes

Allocation of health services among PHDs

Joint purchasing of equipment and technology

Joint contracting with payors

Other cooperative arrangements

13Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving Public Hospitals

Joint payor contacting

Cooperative agreements such as

Rural Health Care Quality Network

and Western Washington Rural

Healthcare Collaborative

Service line joint ventures and

agreements

Hospital management agreements

Physician employment

14Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

Snohomish County PHD No. 2

Swedish Health Services:

PHD agreed 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

activities beyond operating a

hospital.

15Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

King County PHD No. 4

PeaceHealth:

In the 1980s, PHD leased all of its health care

facilities to PeaceHealth. PeaceHealth operated

the hospital under its license. The lease was

terminated in the early 90s and PHD resumed

operations.

16Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

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

17Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

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, licensed

and operated by PeaceHealth, and a new EMS

facility, which will be owned and operated by the

District

18Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

Grant County PHD No. 7

Wenatchee Valley Medical Center:

PHD contracts with Wenatchee Valley Medical Center

to operate a primary medical clinic and pharmacy

within the District

19Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

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

20Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

Skagit County PHD No. 1/Skagit County PHD No. 304

During the 1990s the Districts operated their health care

facilities on a joint basis under a joint operating

agreement.

21Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving PHDs

Skagit County PHD No. 1

Skagit Valley Medical Center:

PHD acquired a large multi-specialty physician

practice and now employs all of the physicians

22Collaborations and Partnerships – Opportunities, Limits and Barriers

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.

23Collaborations and Partnerships – Opportunities, Limits and Barriers

Collaboration Examples Involving Public Hospitals

Other examples

- University of Washington/Harborview

- Pacific Hospital and Preservation Development

Authority/Pacific Medical Centers

24Collaborations and Partnerships – Opportunities, Limits and Barriers

Public Hospital District Issues

1. 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

25Collaborations and Partnerships – Opportunities, Limits and Barriers

Public Hospital District Issues

2. Statutory limitations Relating to:

-- Appointment of a superintendent

-- Sale of real and personal property

-- Lease of real property

-- Open public meetings

-- Public records

-- Public bid

-- Prevailing wages

-- Conflicts of interest

26Collaborations and Partnerships – Opportunities, Limits and Barriers

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

27Collaborations and Partnerships – Opportunities, Limits and Barriers

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

28Collaborations and Partnerships – Opportunities, Limits and Barriers

Government Approvals

1. Certificate of Need

2. Special Approval for sales to for profit entities

3. Licensing

4. State Auditor

5. CMS

6. Antitrust

29Collaborations and Partnerships – Opportunities, Limits and Barriers

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?

30Collaborations and Partnerships – Opportunities, Limits and Barriers

Other Legal Issues

2. Medicare Reimbursement

-- Billing under a single provider

-- Other?

3. State Tax Issues

-- Business and occupation tax and requirements for

social welfare organizations

-- Property tax exemptions

31Collaborations and Partnerships – Opportunities, Limits and Barriers

Other Legal Issues

5. Restrictions on assignment of existing contracts

including significant payers

6. Other?

32Collaborations and Partnerships – Opportunities, Limits and Barriers

33Collaborations and Partnerships – Opportunities, Limits and Barriers 33

Contact Information

Brad Berg

Telephone: 206-447-8970

Email: [email protected]

Foster Pepper PLLC

1111 Third Avenue, Suite 3400

Seattle, WA 98101

www.foster.com