Healthcare Transactions Lawyers: What You Need to Know
Structuring and executing a transactional deal can be relatively simple, extremely complicated, or somewhere in between. Add in a healthcare aspect and you’ve gone from zero to complex in no time. What with so many regulations and possible violations that physician owners must be wary of, it is increasingly important to have the right players on your team when doing a deal. One of those players should undoubtedly be an experienced healthcare transaction lawyer.
But what exactly is a healthcare transaction lawyer? What makes this type of attorney different from a general business lawyer? Moreover, how do you find the right lawyer for your unique situation?
Thankfully, we have reached out to the experts to answer these and other questions to help guide owners contemplating a healthcare transaction.
What is a Healthcare Transaction Lawyer?
While a healthcare transaction lawyer is similar to any other business transactions lawyer in the sense that the attorney’s goal is to assist the client in buying and selling, doing joint ventures or investitures, there are several key distinctions. Healthcare and business lawyer at Jones Walker, LLP, William Horton summarizes these distinctions.
“The practical reality is that lots of things which make perfectly good business sense in the rest of the world are potentially illegal in a healthcare M&A context,” Horton said. “This is because of several things if you’re dealing with a physician-owned business. One is the Anti-Kickback Statute (AKS), which makes it a criminal violation to offer, pay, solicit, or receive any remuneration for referring patients or generating business for a healthcare entity that’s going to get paid under federal healthcare programs.”
According to Horton, the government’s interpretation of the anti-kickback statute has resulted in a situation where any financial transaction between a referral source and an entity that benefits from those referrals can be deemed to have violated that statute.
Marissa Arreola, Partner at Strasburger & Price, LLP, explains how a healthcare transactions lawyer can help sift through the regulations and statutes.
“The correct person is not just someone with health care experience; it’s someone with the right experience in that particular niche of healthcare law,” she said. “Healthcare law is so broad. The best healthcare attorneys have a fundamental understanding of relevant health care laws and regulations and can spot health care issues in a deal. The best health care attorneys also recognize that there are subject matter specialists who can best serve a client’s particular needs and ensure that the right lawyer for the job is assigned to each client matter.”
Contrary to what some may think, there are very specific tasks that a healthcare transactional lawyer is more qualified to handle than a general business lawyer.
“A general transactional business lawyer won’t have that niche practice area knowledge,” said Conrad Meyer, healthcare attorney at Chehardy Sherman. “Healthcare lawyers should know the healthcare industry and the rules by which each hospital/facility or physician must abide by. Understanding the motivations of the parties as well as the regulatory/compliance background of each, a healthcare transactional lawyer will better understand how to not only make a better deal for the client, but also how to get that deal done more efficiently and in compliance with Federal and State regulations than a general business transactional lawyer.”
Finding the Right Lawyer
It should be emphasized that finding a healthcare transactions lawyer is different from finding the right lawyer. Oftentimes, an owner might be tempted to consult and hire someone in his or her acquaintance, feeling that any lawyer will suffice to get the job done; and hey, it’s always nice to give a buddy you business, right? Well, an analogy put forth by Meyer might have you thinking otherwise.
“If you have a heart issue, are you going to see a primary care physician because he’s your best friend, or are you going to go see a cardiologist who is a specialist in that field?” asks Meyer. “I think everyone would say that if they have a heart issue, they’re going to see a cardiologist; the best cardiologist you can. That’s akin to finding a good healthcare transactional lawyer. If you have a healthcare legal transactional issue you should seek a lawyer who specializes in healthcare.”
Having someone who understands specifically the types of issues that can come up when dealing in such things as the AKS and the Stark Law should not be overlooked.
“The problem you can run into is when you have even a highly qualified transactional lawyer who doesn’t have any industry experience,” Horton said. “That lawyer might not be aware of those trip-wires and trap doors that exist in the healthcare setting, and thus may recommend a structure that would make all kinds of business sense but that could present significant regulatory problems when you’re dealing with healthcare businesses. The regulatory environment isn’t based on common sense; it’s based on, in some cases, a fairly arbitrary set of rules.”
The qualities and qualifications of the right lawyer include being able to navigate a client through business law issues, healthcare transactional issues and healthcare regulatory issues, according to Arreola.
“That person would have a strong network of colleagues to whom they can refer client matters that are outside their area of expertise,” she said. “Being able to spot an issue and being able to adequately address those concerns for a client are two different things. The best lawyers recognize what they can do and what they can’t do.”
What to Expect in Terms of Cost
Just as in every other aspect of buying or selling an outpatient center or practice, cost is a factor that should be addressed. You want to find the best possible fit for your deal, but you don’t want to break the bank, so to speak.
According to Arreola, alternative fee arrangements are becoming increasingly more popular in this area of transactional law and are being seen more with litigation. However, the cost is going to rely heavily on the size of the deal being done.
“The client needs to learn the attorney’s billable rates, perhaps get an estimate of what prior deals have cost, she said. “But that is an estimate, and it varies on the complexity of the deal and how responsive the other parties to the deal are.”
Many such deals are also done on hourly rates as well. However, as in all aspects of business, there really isn’t a “one-size-fits-all” answer.
“I would start from the assumption that most people are going to be doing this work on an hourly basis,” Horton advises. “You can look at other variables there if you have a lawyer from a smaller firm or market. Sometimes those rates are going to be lower than the prevailing rates. The prevailing rates in middle market cities tend to be lower than those in larger cities. The first thing you’ve got to do is ask.”
A client also shouldn’t feel too shy about negotiating costs either.
“Bear in mind that, as in any other professional service, expertise costs money,” Horton said. “You might find that there’s someone who’s at a higher hourly rate because they might be able to get the deal done in a more efficient fashion, so you might end up spending less. That’s just a matter of talking to the professionals and getting a sense from them of what the total cost of the deal is going to be.”
Perhaps above all else, when searching for your attorney, keep in mind that the most helpful tactic will be to just sit down and have a conversation with the lawyer you’re considering.
“Objectively speaking, there’s any number of people out there that can do the technical side of the work at an equivalent level of quality, so it’s important to find someone who can not only do that, but who is someone you will be comfortable working with, someone who is going to take an approach that’s consistent with the philosophy and tone that you as the client want to take,” Horton said. “The way to do that is to spend some time talking and be very honest about what your expectations are as the client.”
From the other side of things, it’s also important to find a healthcare transaction lawyer capable of communicating well from their end.
“The best healthcare attorneys are the ones who are constantly discussing and updating deadlines with their clients and constantly explaining the specifics of healthcare law and regulations and how they apply to the client’s deal,” Arreola said. “Oftentimes, I see excellent healthcare attorneys who are running a deal well, but because they haven’t taken the time to explain things to the client or even to the other side, they don’t develop as good of a relationship with the client as they could.”
The best rule-of-thumb to keep when searching for a healthcare transactions lawyer according to Meyer is: do your homework.
“You want to find someone who primarily practices in healthcare transactional matters,” he said. “The best way to do it is do your research. You’re ultimately hurting yourself if you don’t find someone who has a niche in that field of law.”
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