PhyCor and one of its affiliated clinics have joined an effort to quash a ruling that threatens physician practice management deals in Florida.
Legal experts say last fall's ruling by the Florida Board of Medicine attacks the very mission of PPMs-aligning the incentives of physicians and managers. The case is expected to be heard this summer by a three-judge panel in the state appellate court in Tallahassee.
The appellants include two other major PPMs: West Palm Beach, Fla.-based PhyMatrix and Birmingham, Ala.-based MedPartners.
The Florida Board of Medicine, the state's disciplinary agency for allopathic physicians, ruled last fall that a contract between PhyMatrix and a 15-physician internal medicine group in Tampa, Access Health Medical Care, violates a state law prohibiting payments for patient referrals, also known as fee-splitting (Oct. 27, 1997, p. 28). MedPartners had previously joined the case as an interested party.
Under the contract, PhyMatrix receives 30% of practice net income. The contract is still in force pending the outcome of the appeal.
Nashville-based PhyCor and West Florida Medical Center Clinic, a Pensacola-based group of more than 150 physicians, recently submitted separate friend-of-the-court briefs in support of the appeal.
In its brief, the clinic argues that basing management fees on a percentage of net practice income, which is an industry standard, motivates management companies to maximize practice efficiency. Further, it says PhyMatrix could not have violated the law against physician referrals because it had no access to patients.
The brief says the ruling by the board, which consists of 12 physicians and three laypeople, "chills creative partnerships and practice management arrangements."
In a response that was planned to be filed last week, the Tampa doctors argue that their January 1997 agreement requires PhyMatrix to engage in activities aimed at expanding the practice's patient base, such as managed-care contracting, which constitute fee-splitting under the law.
The physicians argue that such arrangements can "distort the marketplace, mislead patients, increase insurance costs and lead to monopolization of medical services," according to a draft of the brief obtained by MODERN HEALTHCARE.
Jerry Sokol, a partner in the Miami office of the Chicago-based law firm McDermott, Will & Emery, says a few PPMs have switched to flat fee arrangements as a result of the ruling. But more commonly they are negotiating fallback contracts, which provide for flat fees if percentage arrangements are finally deemed illegal, he says.
Ironically, PhyMatrix has shifted its national strategy away from managing practices like Access Health to operating vast physician networks. But its activity in Florida has not slowed.
In December, it announced the acquisition of Urology Consultants of South Florida, an independent practice association with 120 physicians and capitated contracts for 700,000 enrollees.
In December, PhyCor acquired First Physician Care, a privately held PPM based in Atlanta, which has operations in Florida.