Marketing in Healthcare: It Ain’t What It Used to Be

By: Jeff Cohen

Healthcare professionals and businesses are routinely barraged with people who claim to be able to generate business for them.  The business of healthcare is like none other in its abhorrence of anything that even smells like payment for patient referrals, so professionals and businesses alike have to be extremely cautious and well advised in crafting marketing and related business-enhancing relationships.

The key here is to realize that, while the laws haven’t changed, what regulators are doing with them has!  The environment of healthcare marketing has never been more treacherous than it is today.  So what’s changed?  How about:

  1. Commission based marketing and sales involving federal or state payers, even those that arguably comply with the personal services arrangement and management contract safe harbor, are detested by federal regulators;
  2. The regulators will look to pierce any enterprise, including those consisting of multiple tax ID entities, in hopes of making the case that commercial based marketing payments were in exchange for even one drop of federal/state payer money;
  3. Both health insurers and large providers (e.g. labs, pharmacies) work hand in hand with federal regulators to pursue suspicious activity, the result of which is to support the large provider; and
  4. Targets of enforcement activity who have obtained good legal advice often pay just to put an end to the enforcement because there’s a risk of losing and “winning” can feel like losing when one considers the enormous defense costs.

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The Reality of the “Economic Realities Test”

contractBy: Valerie Shahriari & Jacqueline Bain

Across the healthcare industry, providers and healthcare businesses are consistently faced with the decision of whether to employ or contract with their workers.  Whether it’s a physician working with a group practice, or a marketer on behalf of a healthcare service, correctly structuring relationships between healthcare businesses and their workers is important.  For tax reasons, many workers strongly prefer to enter into independent contractor relationships.  However, simply calling oneself an independent contractor is not enough to solidify the relationship.  Many times, workers who call themselves independent contractors are actually employees in the minds of the government.  And sometimes, so-called “employees” with several part-time positions are actually viewed as independent contractors.

On July 15, 2015 the Administrator of the Department of Labor’s Wage and Hour Division (WHD) provided additional guidance regarding the application of the standards for determining who is an employee under the Fair Labor Standards Act (FLSA).  The goal of the guidance is to help the regulated community in classifying workers and decreasing misclassification.  The Administrator’s Interpretation reviews the pertinent FLSA definitions and the breadth of employment relationships covered by the FLSA.  The Administrator’s Interpretation then addresses each of the factors of the “economic realities test”.

According to the Administrator, when determining whether a worker is an employee or independent contractor, the application of the economic realities factors should be guided by the FLSA’s statutory directive that the scope of the employment is very broad.  The FLSA’s definitions establish the scope of the employment relationship under the Act and provide the basis for distinguishing between employees and independent contractor.

The Supreme Court and Circuit Court of Appeals have developed a multi-factorial “economic realities” test to make the determination whether a worker is an employee or an independent contractor under the FLSA.  The test focuses on whether the worker is economically dependent on the employer or in business for him or herself.  The factors include: Continue reading