Legal’s Role in Business Strategy By Jason Gehman and Jimmie Strong
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awyers are trusted advisors, but what happens when lawyers choose to be more? Can outside legal counsel be in a position to effectively advocate for your business? Advocacy can take many forms: cultivating collaboration across business units, creating new customer and vendor relationships, and more. The most successful of these endeavors occur when lawyers help businesses achieve legal protection and compliance while fully considering business realities such as operations, profit and importance of the contemplated deal, process or arrangement. The tension between business realities and legal protection and compliance is heightened in the “gray areas” in which business leaders often operate. The natural tendency for lawyers confronted with gray areas is to find the safest path forward notwithstanding profitability. That path normally includes working with business leaders to simply get out of the gray area. Although that isn’t a bad first step, it is just a first step. In some instances, the busiJason Gehman is ness model and the chief executive growth potential officer at PRSM are attributable to Healthcare. Gehman co-founded PRSM willingness of the Healthcare in 2011. business to operate It is a leading proin the gray area. vider of gastroenterIn these situations, ology patient recall services. outside legal coun-
sel can offer valuable perspectives and insights to help navigate difficult questions, help with close calls at the strategy level, and provide detailed steps to avoid pitfalls at the operational level. Facing a recent business challenge, PRSM Healthcare and its outside counsel worked in this collaborative fashion to drive business value and customer acquisition.
RECONCILING TENSION BETWEEN BUSINESS MODEL AND LEGAL CONCERNS PRSM Healthcare, a domestic, “skin-inthe-game” medical scheduling service in Wellsboro, Pennsylvania, partners with various gastrointestinal (GI) practices to provide medical scheduling services. The skin-in-the-game model was a significant gray area causing tension between the company’s business model and legal regulations. The anti-kickback statute makes it illegal for healthcare providers to accept remuneration for generating Medicare, Medicaid or other federal health care program business. To avoid this issue, medical scheduling services are typically paid based on talk time or number of patients scheduled. In PRSM’s model, PRSM is only paid after the practice is paid for a procedure scheduled by PRSM. If the practice isn’t paid, PRSM isn’t paid. PRSM’s model solves a business problem for medical practices. The typical model puts the practice somewhat at odds with the scheduling service, as the scheduling service is incentivized to keep patients on the phone if paid per minute of talk time, or quickly schedule and rush patients off the phone if paid
per scheduled visit. PRSM contacts and pursues patients through all forms of communication at no cost to the medical practice, documents everything in its cloud-based software system, and schedules patients directly through integration with the medical practice’s systems. PRSM earns a flat fee only after a patient presents for treatment and has a procedure, and the physician bills the payer. In this case, the solution to a business problem for medical practices raised legal questions for PRSM. This skin-inthe-game system appeared to violate the anti-kickback statute. When discussing the potential antikickback issue, a couple of things became clear: The skin-in-the-game model is particularly important for PRSM’s target customers, GI practices. The model positions PRSM for scalable growth. Unlike in many healthcare sectors, the Centers for Medicare & Medicaid Services (CMS) spells out specific guidelines for GI practices. Colorectal and GI cancers are amongst the most common causes of cancer death in the United States. CMS has gone to great lengths to ensure that GI physicians are seeing, diagnosing, and treating their patient populations to catch early-stage cancer signs and prevent cancer recurrence. This creates a regular rhythm of patient visits and necessitates processes for patient communication to schedule follow-up appointments and screenings. PRSM’s GI practice clients, however, are not paid unless and until a patient elects a procedure and it is performed by the practice. PRSM fills an essential gap in the medical scheduling space by enabling GI practices to choose a partner
