Physician integration has been around since the early 1990s; at least I have been working on integration transactions since then.  There was a ground swell of integration transactions in the mid 1990s during the “great Clinton health care reform scare.”  I have a post coming soon that will bring back some memories for some of you from those early days of integration.   I was recently reflecting on how physician integration has transformed over the years.  There are some new laws out there and we have more to go on for legal guidance when structuring provider organizations.  On the other hand, a lot of what lies at the core of physician integration, the part where the “rubber meets the road,” has stayed fundementally the same.  Those physicians and groups who have not already thrown the towel in with a major health care system are looking for ways to stay independent.  In many cases, their best bet is to integrate with other independent providers.

Here are a few insights from a health care attorney that has been involved with physician integration for longer than he cares to mention:

1. Federal and state antitrust laws are still the primary laws governing the structure of these organizations.  Without antitrust laws, physicians would stay in separate groups and just band together informally to contract with managed care plans.
2. You still need to be clinically or financiallly integrated in order to pass the antitrust “sniff test.”
3. There is more definition regarding what it takes to become clinically integrated than there was “back in the day.”  That is the good news.  The bad news is that it is probably more difficult to clinically integrate than we thought it would be back in the 1990s.
4.  Group practices without walls are now called “divisional models” groups and come in all shapes, sizes and forms.  They are still the same thing; but someone thought it would be “cooler” to call them “divisional mergers.”
5. My guess is that a lot of the “divisional mergers” are actually “failed mergers” waiting to be called out because they have only a very minimal amount of actual integration.  A lot of people are trying to slice the pie to thin and we might just see some of these models be put to the test in the near future.  Some of the new divisional model groups are integrated on a shoestring and the FTC is beginning to look at their structure to determine whether they are truly a “single actor” for antitrust purposes.
6. The Stark Law has expanded to govern treatment of designated health services in integration transactions.  Back in the day, when we first started doing these transactions, the Stark Law was new and only applied to one line of service, clinical laboratory service; that is unless you were lucky enough to be in a state like Florida that had its own anti-referral law.
7. Compliance issues have come to the forefront as a significant part of these integration transactions.
8. Just like back in the olden days, there are plenty of people out there who will tell you exactly what you want to hear.  They usually have something to gain from you moving forward into a combined group; even if the combination is on a shoestring.  I am tempted now to go into a “you might just have an antitrust issue” tirade at this point.  But I will hold off on that for a later post.