Selling to a hospital derailed my career

June 16, 2006

Event after strange event led him down an inevitable road, the author says. We asked some experts for advice that can help you avoid a similar fate.

After 14 years, I lost my medical practice because of an unusual turn of events.

My affiliation dated back to 1991, when I joined what was then a private family practice, located in a small town in the mountains of western North Carolina. In 1995, right before one partner left, the remaining two partners and I sold the practice to our not-for-profit community hospital, turning all of us into its employees. Three years later, the hospital built us a nice new facility on its campus. The future seemed bright.

Pressure to buy back our practice

Before long, the hospital hired two ob/gyns, who took obstetrical patients away from us and caused a recently hired physician to quit. Reluctantly, I agreed to buy back the practice with my two younger partners, even though the combination of flattening revenues and increasing expenses was causing our incomes to decline.

The terms of the sale, the hospital said, were non-negotiable; that only increased my concern. For example, the hospital raised the value of the building that housed our facility by $320,000 over its original construction cost. We wanted our current rent frozen until we could afford to buy the now-higher-priced building, but the hospital refused; in fact, it notified us that our rent would increase. When I complained to the trustees, the administrators invoked the Stark rules, saying that they couldn't rent or sell the building below "fair market value." (The hospital had hired an outside appraiser to determine the building's current market value.)

There were other problems with the terms of the sale, as well. The hospital retained ownership of the land our facility sat on, as well as the right, after 45 years, to condemn the structure and tear it down.

A brand-new practice-and then disaster

Frustrated, I submitted my six-month notice. But my two younger partners wouldn't join me, since one was pregnant and going on leave and the other didn't want to make waves.

I looked for other family practice opportunities, but my wife and I were reluctant to leave our picturesque little town. Soon, I tried to rescind my notice, but my two partners told the hospital that they couldn't be partners with me: They believed I was a risk to leave, despite the fact that I had agreed to forfeit my investment if I left the practice within two years. Finally, they offered to hire me on a production basis, penalizing me 10 percent for my new nonpartner status. When the hospital backed their decision, I decided to go out on my own.

I bought a building for $350,000, and spent the next two months renovating it. I hired a new PA graduate and recruited five staff members, mostly from my old practice. From Day One, we were paperless, thanks to an integrated EHR/practice management system. Most of my former patients flocked to the new practice, keeping me busy from the start.

But eight weeks into the new practice, we noticed something peculiar: Our Medicare checks weren't coming in. Although I'd signed a termination of Medicare benefits at the prior practice, somehow this hadn't reached our local Medicare carrier, Cigna.

In time, we discovered that Medicare had assigned me a new Provider Identification Number that differed from my former number by one end-letter. Unaware of our mistake, we had been submitting claims under the old number. And because this number was still associated with my prior practice, Medicare had been sending all our checks to it. The practice had been returning the checks to Medicare, but that extra step meant my reimbursement was delayed, by as much as six months. The fact that my former practice hadn't terminated my old Medicare number seemed wrong, but lawyers whom I consulted informed me that I had no legal recourse.