ACOs, Mergers, Consolidations, Affiliations & Other Coordinated Activity

Since the passage of the Patient Protection and Accountable Care Act (the “ACA”), there has been a significant amount of mergers, acquisitions, affiliations and other forms of coordination between hospitals, physicians, physician groups and other players in the healthcare field.  The ACA’s creation of so-called accountable care organizations (“ACOs”) played a major role in this activity.  Additionally, the many programs and changes encouraging coordination of care and increased efficiency to qualify for bonus or level payments also spurred the affiliation activity.  However, what is unclear is which organizations or individuals should lead these new entities.  Prior experiences with hospital led groups, or the hospitals themselves, suggest that large institutions may not be the most appropriate leaders.  In fact, recent studies suggest that physicians are taking the lead in ACOs in particular, which helps generate greater focus.

Massachusetts in particular has seen an extraordinary number of mergers, affiliations and ACOs.  At times it feels as if a new merger or affiliation was announced weekly.  Additionally, Massachusetts is home to 5 Pioneer ACOs and 12 Medicare Shared Savings Program ACOs.  On top of the federally qualified ACOs, the most recent round of Massachusetts healthcare reform, Chapter 224, also encourages the creation of ACOs, pursuant to as yet undefined criteria.  With all of the consolidation, will markets become too constrained and will there be enough patients to fill all of the ACOs.  These issues, among others bear watching in the coming months and years.

Lastly, Chapter 224 significantly impacts future mergers and affiliations.  If providers, whether it be a hospital or physician group, propose a “material change”, the newly created Health Policy Commission gets the chance to review.  The initial review will occur within 30 days of a notice of material change being filed, but if the Health Policy Commission determines the change could impact the Commonwealth’s ability to meet cost containment goals, then a cost and market impact review will occur.  The cost and market impact review can be described as a 360 degree look at all aspects of the proposed deal.  This is a major undertaking, which is akin to an antitrust review, though different because not under the auspices of the Attorney General of the Federal Trade Commission of Department of Justice.

If you would like more information about issues involved with mergers, affiliations, ACOs or other coordination among healthcare entities, please contact the Mirick O’Connell Health Law Group, in particular Matthew Fisher or Robert Lombardi.

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About Matt Fisher

Matt is the chair of Mirick O'Connell's Health Law Group and a partner in the firm's Business Group. Matt focuses his practice on health law and all areas of corporate transactions. Matt's health law practice includes advising clients with regulatory, fraud, abuse, and compliance issues. With regard to regulatory matters, Matt advises clients to ensure that contracts, agreements and other business arrangements meet both federal and state statutory and regulatory requirements. Matt's regulatory advice focuses on complying with requirements of the Stark Law, Anti-Kickback Statute, fraud and abuse regulations, licensing requirements and HIPAA. Matt also advises clients on compliance policies to develop appropriate monitoring and oversight of operations.
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