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CON Laws, Scope of Practice Restrictions, and Provider Non-Compete Clauses Targeted in New Trump Adm
Darcy Devine • December 4, 2018
On Monday, December 3, 2018, the Department of Health and Human Services (HHS) – in collaboration with the Departments of the Treasury and Labor, the Federal Trade Commission, and several offices within the White House – released a report detailing recommendations for improving choice and competition in the healthcare industry. The report identifies areas where the Administration believes federal and state rules restrict choice and competition. It also identifies actions the states or the federal government can take to significantly improve the American health care system.
Per the report, considerations that Congress and the states should make include:
- Scrutinize horizontal and vertical integration by providers
- Eliminate rigid collaboration and supervision requirements between non-physician providers and physicians
- Repeal or weaken Certificate of Need (CON) laws
- Make it easier for physicians and healthcare providers to practice in multiple states
- Allow physicians with training from certain foreign medical residency training programs to forgo completing an American residency program
- Amend the Federal Trade Commission Act to extend the FTC’s jurisdiction to nonprofit healthcare entities to prevent unfair methods of competition
- Scrutinize restrictive covenants such as non-compete clauses with providers
- Repeal the physician self-referral law that limited physician-owned hospitals
For more details regarding the Administration’s findings and recommendations, read the full 119-page report here. A summary of the recommendations starts on page 107.
We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The lowest reported price to EBITDA multiples (10x or lower, sorted alphabetically) are listed below.
We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple.
We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The highest reported price to EBITDA multiples (15x or higher, sorted alphabetically) were as follows:
Healthcare services organizations rely on a variety of intangible assets to create business value, including patient and customer relationships, medical records, trade names, assembled workforce, licenses and certifications, non-compete clauses, proprietary technology, software, and others.
For those of you who’ve been involved in a transaction where the only asset transferred is a certificate of need, you’ve probably found that market data is scarce for CON-only deals.
One of the questions we get asked a lot is how valuations have changed over time.
One of the many benefits of tracking healthcare transactions closely and maintaining a very large database of deals where we can get reliable price to EBITDA and revenue multiples is that it provides insight into profit margins for segments where other financial benchmarking information is sparse.
The most important component of a valuation of an accountable care organization (or other multi-provider network that relies on risk-based shared savings models) is the revenue forecast, which involves “probability-adjusting” future shared savings payments in some manner.
CMS' offers a helpful online tool that shows provider market saturation levels at the national-, state-, and county-levels for the following health services:
Earlier this year, radiation therapy provider SightLine Health reached a $11.5m settlement with the DOJ in a lawsuit alleging it knowingly violated the federal physician self-referral and anti-kickback laws.
