1. PAYING PHYSICIANS FOR BETTER QUALITY
presented by
ROBERT H. ROSENFIELD
Partner
McDermott, Will & Emery
(310)
August 21, 2006
PPT-QC

2. OVERVIEW
A. PAYMENTS TO PHYSICIANS
PARTICIPATING BONDS
EXAMPLE

3. A. PAYMENTS TO PHYSICIANS
FORMS
REGULATORY RESTRICTIONS

4. 1. FORMS OF PAYMENT A. FOR SERVICES B. FOR COST REDUCTION
C. INVESTMENT RETURNS

5. 2. REGULATORY RESTRICTIONS
FEDERAL AK STATUTE
STARK LAW
CMP LAW
STATE LAWS
INTERNAL REVENUE CODE

6. B. PARTICIPATING BONDS DESCRIPTION KEY FEATURES BENEFITS
ACCEPTABILITY

7. 1. DESCRIPTION
PHYSICIANS
HOSPITAL

8. 1. DESCRIPTION
HOSPITAL
SURGEONS
ASC
MSO

9. 2. KEY FEATURES HIGH RATES “PARTICIPATING” FIXED YIELD
PERFORMANCE TARGETS

10. PERFORMANCE TARGETS 1. FINANCIAL TARGETS
2. QUALITY AND PATIENT SATISFACTION
OTHER
MODIFICATION

11. EXAMPLE
Margin 3.1% % % % %
% Earned 11% % % % %
% Paid % % % % %
Pre-Tax % % % % %

12. 3. BENEFITS A. HIGH RETURNS B. LOW RISKS C. PRACTICAL BENEFITS
D. LOW COSTS AND TAXES

13. LOW COSTS / TAXES FINANCING COSTS $2,135,000
SERVICES AND SUPPLIES ,000
PROPERTY TAXES 1,423,201
(2.7%)
SALES TAXES ,111,687
(8.25% x 49%)
INCOME TAXES ,822,525
TOTAL $7,092,413

14. 4. ACCEPTABILITY a. 20 YEARS OF USE b. IRS c. OIG d. BOND AUTHORITIES
e. BOND COUNSEL

15. C. EXAMPLE SPECIFIC HOSPITAL COMPETITIVE THREAT PERFORMANCE TARGETS
OUTCOME

16. QUESTIONS?