Specialists: Health Care Practice Group helps guide clients through maze of business transactions

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By Sheila Pursglove
Legal News

Today’s health care system is becoming as increasingly complex as intricate surgery. But the Health Care Practice Group at Maddin Hauser in Southfield is more than up to the task, under the leadership of shareholder Stuart M. Bordman.

Bordman, a Detroit native who also is a Certified Public Accountant, spearheads a team that includes fellow shareholders George V. Cassar, Charles M. Lax, Gary M. Remer, Ronald A. Sollish, Geoffrey N. Taylor, Marc S. Wise, Richard F. Roth and Kate S. Matlen, all experienced business attorneys who represent physicians, dentists, and other health care professionals in business transactions.

“While we’ve worked collaboratively for many years, our firm recently formalized a number of practice groups, including the Health Care Practice Group,” Bordman says.

Through the years, the attorneys have represented professional corporations in tax–free reorganizations and health care professionals in disputes through mediation, arbitration, and litigation. They advise clients and draft practice purchase and sale agreements, employment agreements, stock purchase and redemption agreements; qualified and non-qualified fringe benefits plans and non-compete agreements. They organize professional limited liability companies, professional corporations and handle the sale, merger, liquidation and dissolution of those entities – “something we’ve been doing a lot of lately,” Bordman says.

The manner in which physicians organize to deliver patient care has changed over the years, Bordman notes. In the early 1970s, physicians were incorporating their practices that generally consisted of one or a few physicians. In the 1980s, hospital systems were acquiring practices of general practitioners and employing the physicians who sold those practices.

“At the end of 1986, I represented physicians who sold their practice – consisting of about 20 primary care clinics and related real estate – to a hospital system for approximately $20 million,” Bordman says. “Subsequently, the hospital system, choked by debt and poor management, went into bankruptcy. The trustee in bankruptcy sold the clinics for a small fraction of what the hospital system paid for the same.”

It’s a challenge for today’s physicians to remain profitable in a small practice setting, according to Bordman. 

“Medical practices need capital for equipment and technology – and to justify the cost, the equipment must be used constantly,” Bordman explains. “A large group will have the patient flow for high usage.”

According to Bordman, providing for patient needs while dealing with complex billing rules; mandated electronic medical records; collection; hiring and supervising personnel; purchasing supplies and equipment; and otherwise administering a practice has become an overwhelming task. Physician groups are organizing multi-specialty practices that allow physicians to refer patients to other members of the group in a mutually beneficial
arrangement. Hospitals are acquiring surgical and other specialty practices.

Bordman is currently working on three sales; the first being a two-man specialty surgical group that is selling its practice and associated real estate to a hospital system. 

“While there are a number of motivating factors, one is the inability of the group to attract younger physicians,” he says. “Hospital systems and large groups have the ability to attract younger physicians and free physicians from the administrative burden of managing a practice.”

Bordman’s second transaction is an internist with a subspecialty who is joining a larger group; and the third is a physician who will join a large multi-specialty group and become head of a practice area.

“In this last case the physician realized if he did not join the group he would lose his referral base,” Bordman says.

In each case, the sellers will become employees of the purchaser. The physicians selling to the hospital system will be compensated based upon their work relative value units (WRVU). 

“Under this model, the physician receives a specified amount per unit,” Bordman explains. “Different surgical procedures have a different number of WRVUs – the more WRVUs performed, the greater the physician’s compensation.”

In other settings the physician is treated as a profit center, compensated based on revenue collected attributable to his efforts less the associated expenses.

“The physician may receive additional compensation if the group has a profit from ancillary services such as X-ray and lab,” Bordman says.

“However, current law prohibits a direct relationship between the compensation a physician receives and the ancillary services he orders.”

In one case, Maddin Hauser represented a medical group with a physician who had signed an employment agreement containing a post termination agreement not to compete – but when he was terminated, the physician claimed the non-compete provision was unenforceable. The Group persuaded the Oakland County Circuit Court to rule otherwise.

Bordman and his colleagues have also been involved in the life cycle of practices, working with the founders and assisting them with a variety of matters as the group expanded; and Bordman has worked with the practices in developing a program for senior members to reduce their workload and subsequently retire.

“What I’ve enjoyed the most is dealing with physician clients through the life cycle of the practice,” he says.

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