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How to sever your practice from Allegheny

By Joan M. Roediger, J.D., LLM

Many Allegheny Health System doctors who sold their practices a few years ago may be faced, in the upcoming weeks, with the task of re-establishing their practice or finding alternate practice arrangements. To further complicate matters, many physicians will need to file a claim for any unpaid amounts with the bankruptcy court. There are a number of steps these physicians should be taking right now.

Read your current agreements with Allegheny. Most likely, you are owed something by Allegheny under your employment and other agreements. If you own the space where your office is located, you should also familiarize yourself with the terms of your office lease.

Prior to filing your claim with the bankruptcy court, you will need to develop a comprehensive list of all things owed to you by Allegheny. This list could include such items as unpaid salary, bonus, rent, expense reimbursement and retirement moneys. Also submit copies of any unpaid bills. Remember, if you do not submit a claim for these items, you will never be paid for them. Make sure you prepare your bankruptcy claim in accordance with the timelines established by the court.

Evaluate your options. It is clear that all Allegheny physicians will need to forge new practice arrangements. Assume that Allegheny does not “assume” the physician employment agreements, but instead “rejects” the physician employment agreements with the bankruptcy court. Also assume that the court approves this petition of Allegheny’s. If this happens, the physicians will, in short order, no longer be employed by Allegheny. Accordingly, now is the time to evaluate your practice opportunities.

Start by reviewing your level of satisfaction with your prior employer. How could things have been better? What steps can you take to see that those situations do not occur again? Consider all options, including employment with another health system and re-establishing or joining a private practice. Make a list of items that are important to you. Prioritize your concerns.

If you are considering joining another health system, you should be speaking with them already about potential employment arrangements. Don’t focus only on salary and benefits. Look to other important issues, such as who will be responsible for practice billing and the existence of restrictive and non-solicitation covenants.

Make sure you do your due diligence on your prospective new employer. What assurances will you have that you will not be in the same position two years from now? Talk to other physicians who are employed by the same system about their experiences. Make sure you negotiate an agreement you can live with.

If you will be re-establishing your private practice or joining another practice, what do you need to do? Most importantly, you need to be contacting your payors and either establishing new billing numbers or re-activating your pre-Allegheny billing numbers. While you cannot bill or collect moneys for services performed while you were employed by Allegheny, you need to be prepared for the separation of your practice from Allegheny. Assume that you will be given very little notice prior to the separation of your practice. If you do not have billing numbers already established, you will be unable to bill for your services until you obtain these numbers. For some payors, it can take up to six or eight weeks to get billing numbers, so you need to get started now establishing your contracts.

You should also contact a reputable insurance broker and select a new insurance carrier. This entails filling out a new application and completing your claims history. It may take more than a week for an insurance company to approve your application, so the sooner you start this process, the better off you will be.

Decide how your practice will bill for its services. Will you use a billing company or perform billing yourself? If you are going to use a billing company, you should be talking with various companies and getting written proposals from them. Talk with physicians at other practices using the same billing company. Similarly, if you will be performing billing in your practice, you need to select a reputable computer and billing system. Selecting the wrong billing company or computer system is a preventable costly mistake.

Review your current practice staff. Are any changes needed? Don’t hire all of your exiting employees and assume that you will make changes later. If your current staff members do not meet your expectations, either revise their job descriptions or replace them. Consider what benefits you will offer. You are not obligated to continue any benefits, such as vacation and sick time, offered by Allegheny. It is Allegheny’s responsibility to compensate your employees for any benefits they accrued while they were employed by Allegheny.

Your new practice will likely have the need for financing to assist in the payment of office expenses. Develop your new practice budget and estimate what expenses you are likely to incur in the first few months of your new practice. Obtain any necessary financing now.

Regardless of which option you choose, time is your enemy. You need to be making plans now to transition your practice. Evaluate and choose your options wisely.

Joan M. Roediger, J.D., LLM, is a consultant with The Health Care Group, Inc., and an attorney with Health Care Law Associates, P.C., based in Plymouth Meeting, PA.

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