2024 Richmond Healthcare Forum: HR and Legal Compliance

Key takeaways from the HR and Legal Compliance panel discussion

Professionals across various roles in the healthcare sector gathered together at the Country Club of Virginia for an evening of knowledge sharing, networking, and socialization. This event was hosted by Prospect Blue, Truist Wealth, Williams Mullen, and Keiter. The forum included two panel discussions. The first on HR and Legal Compliance and the second panel discussed Merger Considerations: Private Equity or Independent Peer.

HR and Legal Compliance Panel

The first panel of the evening focused on compliance in healthcare. Audience members selected from a list of topics for our panelists to discuss and share feedback from a human resource and legal compliance perspective. Panelists included:

• Dominic P. Madigan, Esq. – General Counsel |Virginia Urology
• Courtney Miller – Head of People | Profound Research
• Jeremy Ball – Partner | Williams Mullen

The FTC’s new rule on non-compete agreements

A day before the Healthcare Forum, the Federal Trade Commission (FTC) released a new rule prohibiting non-compete agreements in employment contracts, potentially affecting a broader range of agreements.

• The rule could significantly change practices and other entities that rely on non-competes to maintain their competitive edge and retain staff.
• There is uncertainty about the rule’s impact on physician groups; some see non-competes as unnecessary if professionals prefer to leave, while others view them as essential for protecting investments.
• There are considerations about whether non-competes can still be applied in other contexts like shareholder agreements, operating agreements, asset purchase agreements, and stock purchase agreements.
• The rule includes exceptions, such as for the sale of business shares, suggesting non-competes might still apply under certain conditions even after leaving an employer.

Legal challenges have been filed and more are anticipated leading to a potentially long judicial process to fully establish the boundaries of the new rule. Panelists are taking a wait-and-see approach to understand the full implications of the rule.

Physician Compensation and the Stark Law – Evolving Challenges

Stark Law imposes strict regulations on referral relationships, but the Centers for Medicare & Medicaid Services (CMS) allowance for Stark Law exceptions for value-based enterprises provide new possibilities that were previously restricted, such as increased flexibility for entities taking on value-based risks.

• Dominic P. Madigan, Esq. expressed he was cautious about fully engaging in Value-Based Enterprise (VBE) activities due to the need to address the COVID-19 impact first.
• The potential for VBEs to disrupt traditional healthcare practices includes the formation of new types of physician joint ventures and changes in the relationships between different healthcare groups and entities.
• There is some anticipation that integrating revenue from value-based arrangements will introduce complexity into compensation plans and revenue allocation among physicians, posing significant challenges in understanding and managing these changes.

The overall sentiment is that although the implementation of these value-based arrangements introduces complexity, it is a manageable and legally navigable challenge, likely leading to significant shifts in healthcare practice structures.

Healthcare compliance challenges in private equity-backed groups

This discussion highlighted the challenges of ensuring compliance with regulations in healthcare, particularly for private equity-backed medical groups. Even compliance officers face difficulty in these settings which makes it necessary to offer a robust training program to maintain compliance.

• Private equity-backed groups might bring in management services to drive efficiency and handle compliance. This approach reflects a trend towards more centralized management within these groups.
• It is important to ensure all staff, particularly physicians, complete necessary training and adhere to compliance standards. Cloud-based systems are a popular method of distributing and monitoring compliance training among employees.
• Private equity may influence the management strategies of healthcare providers, bringing a focus to operational efficiency and the challenge of balancing this with regulatory compliance.

There is speculation about upcoming regulatory amendments, particularly those related to value-based care and HIPAA, that could redefine healthcare operations and compliance strategies. Panelists agreed that there is a need for clear regulatory guidance to facilitate care management and coordination under new healthcare models.

This was the 2^nd year for the Richmond Healthcare Forum which provides healthcare industry leaders an opportunity to ask about the latest trends in the industry and gain insights from the experiences of the featured panelists. Interested in attending future healthcare industry events? Join our seminar invitation list.