Winter 2013


Focus on Health Care Valuation Insights

Editor for This Issue: Charles A. Wilhoite, CPA
Health Care Reform Insights

Thought Leadership:
Health Care Reform: The Impact on Academic Health Centers

Joe Robertson, MD
Currently, health care reform generally is focused on expanding access to primary care and promoting wellness and prevention. Oregon Health & Science University (OHSU), operating as a major, comprehensive academic health center, embraces the reform. However, OHSU faces the challenge of continuing to deliver high-level health education and biomedical research while health reform measures threaten to shift funding toward primary care and prevention. Society depends on the ability of academic health centers (1) to innovate and disseminate new knowledge and (2) to intervene effectively with regard to treating and curing complex and debilitating medical conditions. Because the objectives of health reform are consistent with the mission and values of academic medicine, OHSU recognizes, particularly in the face of declining resources, that it has a special obligation to lead change. OHSU leads change by developing new systems of care, new methods of training for providers, and more rapid ways to apply science.

Achieving Real Health Care Transformation: Policy, Populations, and Partnerships
George J. Brown, MD, FACP
Successful health care reform will require as much focus on addressing the determinants of health status—the socioeconomic factors of education, health literacy, housing, and employment—as coordinating efficient and effective care delivery among providers and payers. The “3P Solution” embraced by Legacy Health in Oregon emphasizes the need to develop comprehensive national policy. That policy should be based on an understanding of community populations that successfully motivates collaboration among partners in a shared, transformative quest to improve the overall health of our nation.

A Time to Transform—A Potential to Partner
Mark B. Ganz
Cambia Health Solutions is focused on changing the health care equation. Formerly known as The Regence Group, Cambia looks holistically at the health needs of our communities and then invents, invests, and integrates solutions to support a more person-focused and economically sustainable future. Consistent with the health-reform-driven theme of coordinated care through effective partnerships, Cambia Health Solutions recognizes that, together, insurers, providers, and investors become the connective tissue that puts the individual first and delivers the right care at the right time in the right place, with quality health outcomes paramount in measuring performance.

Improving Health Care Value through Shared Accountability
Bert Zimmerli
Rising costs and increasing demand for health care services requires a broader approach to health care reform than the insurance mandates incorporated in the Affordable Care Act. At Intermountain Healthcare, an approach focused on “Shared Accountability” was designed to increase the effectiveness and lower the cost of health care by emphasizing the “Triple Aim” of better care, better health, and better cost management.

Health Care Reform—An Integrated Health Care Delivery System Perspective
Andrew McCulloch
A national imperative: True health care reform requires innovation and integration to improve the health and care of our nation. Kaiser Permanente’s integrated approach to health care places the patient at the center of the care model, and it enables seamless and effective care for members—whether care is provided in one of its own medical offices or hospitals or at a contracted facility.

Health Care Regulatory and Compliance Insights

Best Practices:
Responding to the Paradigm Shift in Health Care

Christopher B. Anderson, Esq., and Fatema F. Zanzi, Esq.
Health care reform continues to emphasize the perceived need to further integrate operations. The process of identifying potential hospital system affiliation partners requires risk assessment with regard to both (1) the optimal affiliation strategy and (2) the potential anticompetitive effects of an affiliation. It is also important for hospital systems to clearly identify and document the “pro-competitive” effects of a proposed affiliation. And, it is very important for hospital systems to effectively communicate the benefits of a potential affiliation to stakeholders, such as patients, employees, community leaders, physicians, and payers.

Oregon’s Coordinated Care Organizations—Health System Transformation or Managed Care Revisited?
Barbara Nay, Esq., and Kelly Knivila, Esq.
A greater focus on coordinated care, or global health management, is the direction that health care reform is driving the health care industry. Oregon’s approach to global health management is to replace fully capitated health plans, physician care organizations, and mental health organizations with coordinated care organizations. Further, Oregon is proceeding in the direction of moving physical and behavioral health, as well as dental health under the coordinated care organization umbrella. The ultimate goal is to coordinate as much health care as possible under a global care structure that will facilitate the delivery of improved care to more people at a lower overall cost.

The Ongoing Debate in the Valuation Community Heightens Stark Legal Risk
Paul M. Torgerson, Esq.
The myriad of physician-hospital transactions and relationships established in pursuit of the “triple aim” objectives of health reform continue to be challenged by increasing compliance risk relating to regulatory guidelines, such as the Stark Law. As legal counsel works to provide guidance to clients for the purpose of minimizing compliance risk, considerable uncertainty remains regarding when the “fair market value” hurdle has been cleared. Clarity on this topic can be provided by greater consistency of practice within the valuation profession, published positions by the regulatory authorities, and judicial precedent.

Health Care Transaction Insights

Health Care Reform Impact—Are Hospitals Now Worth More?
Scott R. Miller and Charles A. Wilhoite, CPA
On June 28, 2012, the U.S. Supreme Court upheld the Affordable Care Act, initially signed into law by President Obama on March 23, 2010. The central provision of the Act, requiring individuals to purchase medical insurance or pay a fine, was considered by many observers to be the most controversial aspect of the legislation. Conservative opponents of the Act argued that granting the federal government the power to compel an individual to acquire medical insurance was tantamount to conferring to the federal government the power to force an individual to buy almost anything. Ultimately, a significant and targeted outcome of the Act was to extend medical insurance to over 30 million uninsured individuals. As a result, many observers anticipate that hospitals may reap significant benefit, receiving insurance payments in the future for services that historically would have been delivered as uncompensated care.

The Value of Accountable Care Organizations
Brian Holloway
Many observers view accountable care organizations (ACOs), created by the Accountable Care Act, as the current health care reform version of managed care. A payment and care delivery model, ACOs were created to coordinate health care delivery among providers, resulting in lower overall health care costs for defined patient populations, while also meeting performance standards on quality of care and other measures. Health care entities seeking to determine whether to form an ACO will typically rely on a net present value (NPV) analysis as the rational financial investment basis.

Health Care Litigation Insights

Valuation of Physician Contracts and Structuring Physician Compensation—Insights from Recent Judicial Precedent
James Rabe, CPA
Health care reform continues to motivate health care service providers to establish relationships that enhance or expand medical service capabilities and capacity. Many times, the relationships established include transactions that result in service contracts between physicians and health systems. When the relationships are established, the contracting parties should be sure that the arrangements comply with federal regulations, including the federal Anti-Kickback Statue and the federal Self-Referral Law (i.e., Stark Law). Judicial decisions provided in the matters of Singh, M.D. v. Bradford Regional Medical Center and Drakeford, M.D. v. Tuomey Healthcare System, Incorporated, provide insights with regard to establishing acceptable compensation arrangements between health systems and physicians.


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