Vertical Integration in Healthcare Transactions: Mitigating Risks and Creating Firewalls

Description

In the healthcare industry, vertical integration occurs when, for example, a hospital acquires physician practices, or health plans acquire a pharmacy benefit manager, creating an expansion up or down the service chain beyond the organization's current offerings. The healthcare industry has seen an increase in vertical integration. However, when organizations integrate vertically to increase their service offerings, they face additional risks, including antitrust, fraud and abuse, corporate practice of medicine, and conflicts of interest.

Healthcare counsel and organizations must remain vigilant to mitigate these risks. For example, to reduce the risk of Stark violations, they must ensure that referrals for certain services are part of an enumerated exception and not the basis for physician compensation. If a physician has ownership in a vertically integrated service, that ownership must be carefully structured to comply with the Stark Law.

If there are actual or perceived conflicts of interest, firewalls must be put in place to reduce the risks associated with these conflicts of interest. Firewalls will also mitigate data sharing risks among the groups in the vertically integrated organization.

Listen as our authoritative panel of healthcare attorneys examines vertical integration and the potential legal risks that arise from fraud and abuse to corporate practice of medicine. The panel will discuss the key considerations when creating firewall structures and offer best practices for vertical integration.