Vascular access centers (VAC) are a common ancillary service offered by a variety of physicians, mostly nephrologists. They provide a unique setting for patients requiring interventional vascular services in connection with things like oncology, dialysis, nutritional delivery, wound healing, pain management and more. Unlike many surgical services, however, they are typically not provided via a surgery center, but rather as part of (and inside) the physician’s practices.
Establishing VACs in Florida typically involves compliance with corporate laws, “in office surgery” regulations and applicable self referral laws. Since VAC reimbursement is generally better in an office setting than an ASC setting, they are normally established as a “physician practice.” Bringing in non-physician owners (such as large dialysis providers) will trigger the need to obtain healthcare clinic licensure (HCCL). Moreover, structuring the ownership will typically involve formation of a limited liability company with either (1) multiple physician owners, or (2) a physician ownership group, plus a corporate owner/manager. Control and restrictive covenant issues are particularly important, especially when a corporate “partner” is involved. Normally, when the corporate partner invests a substantial amount of money, the physician owners give up a certain degree or leverage and income (e.g. via a management contract with the corporate partner).
Self-referral issues typically arise in light of the Florida Patient Self Referral Act of 1992 (PSRA) and the so called Stark Law. On the set up side, physicians need to consider applicable structure restrictions and patient notice requirements. On the sale side, corporate owners are sensitive to the Investment Interest Safe Harbor and Sale of Practice provisions which drive not only structure (typically a new corp, since the VAC is often intertwined with a physician practice(s)), but also the amount of ownership help by physician owners.
On the “back end,” many corporate dialysis companies are looking to purchase existing VACs that are entirely physician owned. Typically, those transactions involve the corporate entity buying a controlling interest. Owner physicians negotiating for certain control rights will be essential. Physician also need to consider the “enterprise value” of the transaction, in the sense that these transactions not only entail the purchase of a going concern (the VAC), but also professional service fees (the value of which, over the long haul, can outstrip the ownership profit) and lease income. In many instances, VACs derive income from not only facility fees, but also professional fees (where the interventionalist) is employed. Finally, given how many VACs are intertwined with medical practices delivering a variety of services, disentangling the VAC from the practice can be tricky.
On a scale of 1-5, with 5 being highly complex, the establishment of VACs are a solid 3 (since the legal and business issues closely resemble those of surgery centers), but their sale or joint venture is a solid 5.
With nearly 30 years of healthcare law experience following his experience as legal counsel for the Florida Medical Association, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law. With a strong background and expertise in transactional healthcare and corporate matters, particularly as they relate to physicians, Mr. Cohen’s practice involves him in regulatory, contract, corporate, compliance and other healthcare law related matters. He can be reached online at jcohen@floridahealthcarelawfirm.com.
