All individuals and industries have been impacted by COVID-19. As relevant to most of our clients, the medical industry has been heavily impacted. In June 2021, the Physicians Advocacy Institute (“PAI”) released the results of a study entitled: “COVID-19’s Impact on Acquisitions of Physician Practices and Physician Employment 2019-2020.” If you have questions about selling or purchasing a practice or physician employment questions, or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, email@example.com. You may also learn more about our law firm by visiting www.hamillittle.com.
A main takeaway from the study is that between January 1, 2019, and January 1, 2021, “48,400 additional physicians left independent practice and became employees of hospitals or other corporate entities – 22,700 of that shift occurred after the onset of COVID-19.” This is a 12% increase in the percentage of hospital-employed physicians over the two-year study period. Furthermore, during the two-year study period, there was a 25% increase in corporate-owned practices nationally.
Part of this change was the influx of doctors needed at hospitals during the onset of the pandemic. In addition, many smaller private medical practices struggled to survive as a result of the pandemic, and some had to close. A major factor in this increase is hospitals and corporate entities purchasing physician practices across the country. The general trend is not new. As we discussed previously on our Medical Practice Sales and Acquisitions webpage: “The trend of hospital or hospital system acquisition of medical practices has grown in recent years.” The trend, however, seems to have spiked even more during the pandemic. The PAI study found that at the end of 2020, “nearly seven in ten physicians” were employed by hospitals or corporate entities, with roughly five in ten physicians being employed by hospitals and two in ten by corporate entities.
Given this increase, it is likely many physician practice owners have been faced with the question of whether to sell their medical practice. When selling or purchasing a medical practice, it is important to consider many legal and practical aspects, including:
- the form of the transaction (stock v. asset purchase);
- how to value the assets of the practice taking into account fair market value and commercial reasonableness;
- the assignability of employee contracts;
- compliance with state and federal medical record retention laws, regulatory laws, and other relevant federal and state laws, including STARK and the Anti-Kickback Statute; and
- how to protect Patient Health Information during the negotiations, transaction, and transfer.
The selling or purchasing of a medical practice requires careful consideration and can have a long-term impact on both the seller and buyer. If you have questions about selling or purchasing a practice or physician employment questions or would like to discuss this blog post, you may contact our healthcare and business law firm at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta), or by email, firstname.lastname@example.org. You may also learn more about our law firm by visiting www.hamillittle.com.
*Disclaimer: Thoughts shared here do not constitute legal advice.