November 28, 2025 • 41 mins
How can attorneys better navigate the business realities behind health care transactions, manage compliance pressures, and work with valuation experts in a practical way? Rob Holland, Director, HMS Valuation Partners, speaks with Eric Neff, President, Neff Associates, Ragini Acharya, Partner, Husch Blackwell, and Kyle Faget, Partner, Foley & Lardner, about their “behind the scenes” experiences with fair market value and health care transactions and the tips and strategies they have learned along the way. Sponsored by HMS Valuation Partners.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:04):
This episode of AHLA Speaking of Health Law is
sponsored by HMS ValuationPartners.
For more information, visitHMSvalue.com.
SPEAKER_05 (00:17):
Welcome to today's AHLA Speaking of Health Law
Podcast.
I'm Rob Holland, Director withHMS Valuation Partners, and I'll
be your moderator today.
Today's episode is titled Beyondthe Paperwork: Practical
Insights for Navigating FairMarket Value and Healthcare
Transactions.
We'll be talking about howattorneys can better navigate
(00:37):
the business realities behindhealthcare transactions, manage
compliance pressures, and workwith valuation experts in a
practical way.
We have three fantastic guestswith us today, so let's kick
things off with introductions.
Would each of you share a bit ofyour background and highlight
the areas of health law you workin?
Eric, let's begin with you.
SPEAKER_04 (01:00):
Okay.
Thanks, Rob.
I appreciate it.
I uh started practicing in 1992,uh specializing healthcare in
93, uh, starting in privatepractice and then uh most of my
career in-house.
Uh I was at uh Penn Medicine inPhiladelphia for 18 years or so.
That was where I spent most ofmy time and did most of the sort
(01:22):
of larger transactions for thesystem.
Uh, and I've been in privatepractice now under NEF Health
Law for the last four years inConnecticut.
SPEAKER_05 (01:31):
Very good.
Thanks, Eric.
Let's go to Ragani.
Why don't you go next?
SPEAKER_02 (01:36):
Hi, I'm Ragani Acharya.
I am a partner at Hush Blackwellin the healthcare regulatory
group.
I do a lot of healthcaretransactions and the associated
regulatory work along with thosetransactions and transactions
involving um not just MA, butalso strategic partnerships, uh
(01:56):
collaborations, affiliations.
Um I've been working in thisspace for 11 years now.
Um and yeah, I've been at a firmum in the in the big firm life
uh for the last 11 years and umlearned a lot of really cool
lessons, and I'm excited toshare some of those today.
SPEAKER_05 (02:12):
Very good, very good.
And finally, last but not least,Kyle, why don't you share a
little bit about yourself?
SPEAKER_03 (02:18):
Thank you so much.
Hi, Kyle Fajey.
Thanks for having me.
I'm a partner in the Bostonoffice at Fully and Larner.
And I sort of straddle the lifescience and healthcare world
both.
So I do quite a bit of umresearch and development,
collaboration, clinical trial,and then commercialization and
(02:38):
compliance building and scalingfor life science companies.
And then I kind of do the samething on the other side of the
house, the provider side of thehouse, in particular, um helping
building and scalingtelemedicine companies to into
50 state offerings.
So um, you know, friendly PCstructure, corporate practice of
medicine, all those sort ofhealthcare specific
(03:00):
considerations.
SPEAKER_05 (03:02):
Very good, very good.
Well, thank you all for uh beingon the show today.
And uh let's get started.
Let's start with the idea of uhgetting your hands dirty or you
know, really engaging in thebusiness dynamics behind a deal.
Um, Eric, when you think abouthow attorneys can maybe add
value beyond just draftingdocuments and you know passing
(03:23):
them back and forth between theparties, what is what does that
look like uh for you and yourpractice?
SPEAKER_04 (03:29):
Yeah, so I I would say uh in my experience, a lot
of particularly younger lawyersum have a misconception about
transactional lawyering thatI've often referred to as Ivory
Tower lawyering, which by whichI mean uh I will sit here in my
ivory tower, and when you havean issue, you come to me, I'll
(03:50):
sort of pronounce judgment onit, you take it back to your
business, and that's how we'llinteract.
And um I I actually so I thinkthat level of passivity might
work in some context, maybe inlitigation, where you know, it's
sort of a pleadings typepractice.
In transactional lawyering, it'sit's really just bad lawyering.
And if you think about it, thethe main reason is I I think you
(04:12):
know, transaction, one of thegreat things about transactional
lawyering is you're um you'reyou're always working on
something that's positive foryour client.
Not always, but you know, you'reyou're you're you're working on
a growth part of the business.
Maybe it's an acquisition, maybeyou're you're just you know
doing a new telecommunicationscontract and it's about cost
savings, but it's usually anopportunity for the client.
(04:35):
And their primary uh their theirprimary thing that they want to
accomplish is to get it done.
Um they want to not get introuble too.
So I'm I'm not sort ofminimizing fraud abuse and other
regulatory issues, but they wantto get the deal done.
And and that's really, I think,you know, lawyers need to take
that on as their role.
(04:56):
Uh when when I was a younglawyer, my first in-house
position, I had um the presidentof the division that I worked
for at Novacare uh in King ofProject, Pennsylvania, took me
down to his office.
He was really struggling withme.
And he said to me, uh, Eric, Idon't need a lawyer.
I need a business partner withlegal skills.
(05:16):
And that was really one of thegreat aha moments in my career.
I I had not understood thatbefore that moment.
And it really has changed mywhole approach.
And I I've sort of bandied aboutthis, you know, this metaphor of
the tennis player lawyer whohits the ball over the net and
then waits for the other side tohit it back, and the hunter
(05:37):
lawyer who uh chases it downuntil it's dead.
Uh and uh what I would say isyou want to cultivate a
reputation for being a hunterbecause clients who see that
will seek you out.
And clients that see that you'repassive about doing
transactional work and you'rejust sort of pushing documents,
(05:59):
they'll see that too.
And that will reflect on thesuccess of your practice.
SPEAKER_05 (06:03):
Very good, very good.
Uh Ragani, from yourperspective, you're often in the
middle of these negotiations,structuring the governance and
working on the joint ventures.
How do you balance legalprecision with helping the
clients uh move the dealsforward efficiently?
SPEAKER_02 (06:21):
I think that's a that's a really good question.
And I kind of want to echo a lotof what Eric said.
Um, audience can't see this, butI'm wearing my tennis racket
necklace, actually.
And hope nobody will judge mefor it as a tennis player.
But I think he may it makes alot of sense to say that yeah,
you don't want to just be in asituation where you're volleying
drops back and forth.
Um, and a in a way to make surethat that doesn't happen in my
(06:42):
experience is to I kind of set afew roles.
One is um be effective andefficient about communications.
And so what that means is knowwho has what roles and who's
supposed to be communicatingabout what when it comes to a
transaction.
Um, make sure those channels areclear.
Um, you're not asking questionsabout, you know, decision making
(07:04):
that somebody is not in the roleto be answering questions about
that.
Um the lawyers can kind of helpfacilitate those conversations
and figuring out who should beum answering questions.
And I think it's reallyimportant for the lawyers to
make sure that the businessteams know who those people are.
And in that same vein, it'sreally important also to
understand who the stakeholdersare.
(07:24):
Um and, you know, it's not justalways going to be the folks in
the C-suite that have aninterest in making sure a
transaction goes through andwhat um what the result is at
the end of the day.
You know, there's employees,there are um clinical staff, you
know, the the list can really goon.
Um, so it's not just your yourowners or your C-suite folks.
(07:44):
Um and so in understanding whothe stakeholders are, that can
help you understand whereflexibility can be built.
And if there's flexibility, thatcan also create efficiencies.
Um my third role is to settimelines and milestones.
Um, you know, you know you haveto um accomplish certain things
in in in the process of atransaction, you know, certain
(08:07):
documentation, certain filings,and knowing those up front is
really important so that youdon't lag behind in making
certain decisions while otherthings are kind of sitting out
there.
So um kind of keeping thesethree things in mind, I think
those have always been helpfulin helping to create those types
of efficiencies.
And, you know, while we'realways really concerned about
making sure every I is dottedand T is crossed, um, knowing
(08:30):
what's important and where tofocus your energy, um, keeping
these kind of rules in mind willhelp move that along.
SPEAKER_05 (08:37):
Very good, very good.
And Kyle, from your experienceunder a corporate integrity
agreement, you've seen how maybebeing too reactive can create
risk.
How do you stay proactive inyour approach to compliance and
deal making?
SPEAKER_03 (08:51):
Yes, that's a good question.
I mean, and I think this is whatmakes, of course, healthcare
transactions a bit differentthan other types of
transactions.
You're in such a heavilyregulated space.
And often in diligence, you endup uncovering issues, like say
you're looking to acquire andyou're doing diligence on a
target.
(09:11):
And you really have tounderstand what's your what's
your client's risk tolerance.
And similarly, when you'readvising a client that maybe
preparing to be acquired or toacquire, um, I think it's really
understanding the risk.
Like there's, you know, don'tlet good be the enemy of perfect
kind of thing that uh, you know,you can you can really get
(09:35):
caught up in the weeds and tryto have everything be absolutely
perfect, but in the process ofdoing that, you're gonna grind a
business to a complete and utterhalt.
So kind of understanding wherethere is some gray and being
able to communicate thateffectively with clients and
help them understand, okay, ifthis, if this decision um
(09:56):
doesn't pan out or goes south,like what are the consequences?
And though it could be legalconsequences and there could be
business consequences, sometimesboth.
And being able to parse thoseout for clients, I think is
really important.
SPEAKER_05 (10:09):
Very good.
And I'll just open this up forfor any of you guys.
Where do you see attorneysadding the most value when you
take on a more hands-on role?
Where do you or maybe even wheredo you see maybe missed
opportunities when counselremains too distant, you know,
from the business discussion?
SPEAKER_02 (10:30):
I think there's a lot of um value to be given um
in using prior experiences.
Um I think that sometimes, Ithink to Eric's point, a lot of
maybe younger attorneys um viewa lot of things in a silo.
And it's helpful to to maybethink about, you know, anecdotal
evidence of where things havegone right, where things have
(10:51):
gone wrong in past um pasttransactions or collaborations
and um kind of be able to usethat experience on a going
forward basis.
SPEAKER_04 (11:00):
Yeah, I'll I'll I'll just underscore one thing Rogani
just said.
It's you know, when you thinkabout building experience, it's
not something you do overnight.
And I I have this mental imageof how the internet grew, you
know, from the from the 90s tilltill now with little tendrils
going out and creatingconnections.
And I think that's a good modelfor what you need to do, just
(11:21):
over time um create a fund ofknowledge for yourself and build
a web of knowledge so that whenissues come up in transactions,
you have something to draw fromthat's relevant.
And it's amazing how, you know,in a few years and after doing a
a number of deals, you'll startto make connections between this
(11:42):
deal and the deal you did threeyears ago.
And and it's very helpful, notonly for you in terms of
efficiency, but for your clientand occasionally just having a
you know, aha, oh wow, we couldmaybe that's a good idea.
SPEAKER_05 (11:55):
Very good.
And and kind of follow up onthat point, a lot of these
transactions and everything,it's very complex and there's a
lot of high stakes involved inthese types of decisions.
I imagine oftentimes clients getthey hesitate or they get stuck
in analysis paralysis type uhmindsets.
(12:15):
How do you help guide themtowards clarity and taking
confident action while staying,you know, firmly within your
role as legal counsel?
SPEAKER_03 (12:27):
A lot of times it's helping assess risk, right?
Like I think that if youoveranalyze, you'll there's risk
everywhere, right?
Then understanding what what isrisk that can be minimized, what
is risk that you may have tojust uncomfortably move forward
with if you want a deal to moveforward.
Um, and helping be a thoughtpartner in that exercise, I
(12:50):
think, is really important.
SPEAKER_04 (12:52):
I I think you'll often be called upon as a
thought leader in a lot oftransactions.
Uh, you know, and for a lot ofclients, especially smaller and
mid-sized clients, they're notdoing this kind of stuff every
day if it's an acquisition or uheven a lot of contracts.
And so they don't necessarilyknow what all the steps in the
process.
And so being a leader withoutbeing pushy, but being a leader,
(13:16):
maybe a little pushy, um, andyou know, saying this is what we
need to do to get from point Ato point B can be enormously
helpful in getting them throughthat paralysis that they might
feel from just not having doneit before.
SPEAKER_05 (13:30):
Very good.
Okay, very good.
Uh, let's let's turn to anotheruh important skill.
Uh that is understanding theclient's business.
I mean, in healthcare, legaldecisions often depend you know
heavily on operational orfinancial and uh regulatory
context involved with thetransaction.
(13:52):
So, Eric, how do you approachmaybe learning the operational
financial details behind yourclient's organization?
SPEAKER_04 (14:00):
Yeah, I uh and also not just the organization, but
just how the healthcare systemworks in general.
I I I think you know, I wouldsort of sum it up in two words.
It's really about intellectualcuriosity.
Um, you know, making, you know,taking the time to ask your
client questions about howsomething in the practice works,
taking the time to Googlesomething you don't understand
(14:21):
in a document or in aregulation, sort of some, you
know, something that you read ina Medicare rule that you didn't
quite get.
Um it's so important.
And and one piece of advice Iwould give that has served me
very, very well, but maybedifficult for some people.
I'd be interested actually tohear what Rodney has to say
about this is uh um because I Iwork in in the environment I
(14:46):
work on, it's in it's relativelyeasy to say to a client, by the
way, I'm not gonna charge youfor the next you know five or 10
minutes, okay?
But I want to know facts aboutyour business.
And I've never had a client thatI can think of be sort of
irritated by that.
They're always delighted thatyou want to learn.
But, you know, I think you needto sort of be explicit that
(15:06):
they're not, you're you're offthe clock for a little while.
Now, I think that might be a bitof a challenge sometimes if
you're in a firm and there mightbe, you know, there's pressures
to bill a certain number ofhours, and maybe you work for a
partner is not, you know, isopen to that.
But I I have found that some ofthe best conversations I've ever
had and the best learning I'veever had is chatting with a CEO
(15:27):
for you know 10 minutes aboutsome aspect of their business.
And again, it's incremental.
Over time, um, you really buildup a big fund of knowledge.
But if you don't, if you're notthe kind of person that has that
type of person, uh that thattype of curiosity, um, it's
gonna be more of a struggle, Ithink.
SPEAKER_02 (15:47):
I I have to agree with that, Eric.
Um, and I think that's a reallygood point.
But, you know, your commentabout, you know, I'm not gonna
charge you for the next five, 10minutes, think of it as I think
it's really important to thinkof that time.
You're investing in your owncareer by asking those questions
and gaining that knowledge.
So that's something an attorneycan really, you know, yeah,
you're not charging a client,but you're you're adding value
(16:09):
to your own um, to your ownknowledge base and and to your
own career down the line.
So it's really worth it tounderstand those questions.
SPEAKER_03 (16:18):
I totally agree with that.
I think that it makes a ton ofsense.
And um, you have to invest inyour client, you have to be
interested in your client, orthey'll move on to another
council that is, in fact,interested in what it is that
they're doing.
SPEAKER_05 (16:34):
Excellent.
Excellent.
Uh, I'd like to just take uh asecond to real quickly touch on
uh the growing presence ofartificial intelligence type
tools that we have.
How do you see technologysupporting transactional
practice and and where might itwhere might it fall short
compared to say, you know, thehuman judgment that's informed
(16:55):
by what you've been talkingabout, the real business
understandings?
Would anyone like to share maybeyour thoughts on what role AI
can or maybe should play?
SPEAKER_03 (17:06):
I mean, I can see AI being able to undertake
diligence in some ways and beable to at least flag uh
important documents in a muchmore efficient manner than human
beings can do going through thetraditional document review,
data room, uh deep dive.
(17:27):
But how to make sense of whatthe documents mean, that I think
is a human exercise as opposedto an AI exercise.
SPEAKER_02 (17:35):
Yeah, absolutely.
I I completely agree with you,Kyle.
And I don't know who said this.
So um I apologize for not beingable to give credit for the to
this quote, but somebody um hassaid that lawyers aren't going
to be replaced by AI, but AI isgoing to, oh sorry, now I'm
gonna blank on the exact phrase.
But it's basically like lawyerswho know how to use AI are gonna
(17:58):
replace those that don't knowhow.
I I um didn't articulate that asbeautifully as I intended, but I
think the idea is there is thatit's a tool to be used.
And I definitely see itcontinuing to play a role in
transactions going forward.
I think to Kyle's point in thediligence process, being more
efficient about basicallycondensing and and summarizing
all the information that youneed to digest in order to
(18:18):
conduct the transaction itself.
SPEAKER_04 (18:21):
I tend to be a little bit more skeptical about
how long it's gonna take beforelarge language models are gonna
overtake lawyers in certainareas.
But I I think it in terms of youknow drafting, because I think a
lot of us in the transactionalworld worry about the production
of documents.
Um, I, you know, I think it'sgonna be longer than a lot of
people think, but I think it'sgonna be a heck of a lot longer
(18:44):
for things that requirereasoning.
And and so, you know, if youwant to differentiate yourself,
you you've got to start, you'vegot to move past document
production and sort of thinkingas the deal, as the negotiation
of the documents, and startthinking of the deal as a cog in
your in your client's businessthat the documents are
(19:06):
supporting.
And I I don't see um I you knowI don't see large large language
models overtaking lawyers inthat type of reasoning, uh,
probably within the career spanof anybody who's graduating from
law school soon.
SPEAKER_05 (19:22):
All right, very good, very good.
Um, so let's uh shift gears justa little bit and uh we can we
can talk a little about umregulatory complexities and and
valuation um and where thosekind of intersect.
Um I'll start with um Kyle.
So why do like um healthcareprovider consulting
(19:44):
arrangements, why do thoseattract so much scrutiny from
regulators, just kind of as ajumping off point?
SPEAKER_03 (19:51):
Sure.
Well, I mean your garden varietyconsulting agreement um can be
used as a mechanism to umincentivize prescribing.
And so that implicates theanti-kickback statute.
So it's actually reallyimportant that consulting
agreements are undertaken for alegitimate bona fide business
(20:16):
need, and that the payment thatoccurs occurs as a result of
actual work performed, and thatit's in line with fair market
values, so that it is not thecase that um industry is lining
the pockets of clinicians toultimately prescribe their drug
or utilize their medical deviceor app or whatever else um you
(20:40):
know might be on the table foruse.
That that's really the biggestpiece.
So then understanding what it isthat is fair market value for
work undertaken is reallyimportant.
And lawyers don't determine whatis fair market value.
We just let our clients knowthat you need to figure it out
and that's what you should pay.
(21:01):
And that's where valuation firmsare critical.
SPEAKER_05 (21:04):
How about also maybe within the uh clinical trial
related compensationarrangements?
Same thing.
Is that another area where youfind kind of the the fair market
value being a challengechallenge?
SPEAKER_03 (21:18):
It is, um, because you have to figure out like what
are the what's the actualprocedure cost?
Um and so if you're an industrysponsor paying um or
underwriting a clinical trial,you need to figure out like even
something as simple as, okay,are you paying like per
procedure, per visit, per totalpatient?
(21:41):
Uh because when a regulatorcomes in and looks, there's like
a whole bunch of different waysyou can slice the pie to ensure
that any given payment um isactually fair market value.
So, yes, absolutely clinicaltrials are like you know, a huge
budget that can be analyzed fromfair market value perspective
(22:03):
upside down and backwards, to behonest.
SPEAKER_05 (22:06):
For Eric or Ragani, do you see similar challenges in
your practice for differentkinds of transactions?
SPEAKER_04 (22:15):
I mean, I I see that um uh I think there are certain
kind I think there are certainsituations where valuations are
critical and certain situationswhere valuations um can sort of
uh take a little bit more of aninformal route.
(22:37):
And I there's so many variablesin that.
But um, you know, uh atransaction where there's an
acquisition of a practice uh andyou need a practice valuation,
and the two parties are are uhreferral sources to one another
is kind of a no-brainer.
I I guess I would say in inresponse to that, that one thing
I would make I would peopleshould be um uh sensitive to the
(23:02):
fact that when you'rerecommending a valuation to a
client, um your recommendationcomes with a cost.
Uh, they're gonna have to payfor that valuation.
And you need to be sensitive tothat, and you need to um you
need to uh educate yourself insuch a way that you can justify
your position on that.
And if you think about it withinlarger companies in particular,
(23:25):
um uh, you know, there's abudget process, and the person
you're speaking to on the phoneis responsible for getting this
transaction done within acertain budget.
And it's you know, it's toughsometimes for them to accept the
fact that, God, I got to spendyou know$14,000,$16,000 on a
valuation.
And suddenly you become theenemy in that situation.
The lawyer's making me do this,right?
(23:46):
And you you've got to besensitive to that.
I'm not saying don't recommendvaluations when they're
appropriate.
I'm saying be aware that it'snot done in a vacuum and um and
make sure that you canarticulate why it's necessary
and um and why it's gonna helpthem down the line.
SPEAKER_02 (24:06):
I I think to jump off of that too, I think it's
important to consider andarticulate to um the clients and
providers what what the pointsof negotiation would be when it
comes to obtaining a valuation,right?
Like you, it's not just go get avaluation.
It's okay, well, are both theparties or all of the parties
going to obtain a valuation orjust one of them, who's paying
(24:26):
for it?
Um, what are the parameters andassumptions that are going to be
associated with that valuation?
Um, what information from thatvaluation is gonna be shared
amongst the parties?
Um, you know, you may have to doa common interest agreement.
Um, so those are all things toconsider about, you know, when a
client's trying to decidewhether or not to even obtain a
(24:46):
valuation, you know, it's notjust do you get it yes or no?
It's what does it mean when youactually do get it?
Um, who's paying for it and andwhat's the scope?
SPEAKER_05 (24:58):
Very good.
And and Kyle, having a practiceunder the constraints of a
corporate integrity agreement,what was that experience like?
And what lessons can attorneysuh draw from that level of
external oversight?
SPEAKER_03 (25:13):
Yeah, I mean, what's difficult is that your whole
program is going to be auditedon an annual basis by an
independent review organization.
And so you're really livingunder a microscope.
Um, so you don't have as muchlatitude to um assume risk where
you otherwise might, becauseagain, you're operating under a
(25:36):
microscope.
So it can be very taxing, it'svery expensive.
Um, you don't sort of thinkrisk-benefit analysis if you uh
undertake a risk on the one handand maybe don't get that
valuation, and then findyourself on the wrong end of an
accusation of kickback, forexample.
Um, I promise you're gonna endup paying a whole lot more than
(25:57):
you ever were going to for thevaluation in the first instance.
SPEAKER_05 (26:03):
Very good.
Um, would anyone else want toshare some similar type
experience where having beenmore proactive, or had you been
more proactive, it might havehelped the client avoid getting
into that type of situation inthe first place?
SPEAKER_02 (26:20):
Where do where do I begin?
I mean, um obviously myexperience is gonna be different
than Kyle's working on um, youknow, uh clinical trial
agreements and um mine aremostly in the context of of
transactions, you know, where uma formal valuation wasn't
obtained um at the front endwhen it probably should have
been or when one was obtained,but it wasn't done under the
(26:42):
right parameters.
Um so I mean it's it's helpfulto work with I think your
attorney and like explain theprocesses that you've that the
client is going through and andthe decisions and the um the
factors informing thosedecisions.
So um again, I'm gonna harp oncommunication channels um to
make sure that you know the lessthings that can go awry do.
(27:08):
Eric, I don't know if you've hadany experience with that.
SPEAKER_04 (27:12):
I have.
Um I I would say that uh I'mtrying to think of situation.
I I don't re I can't recall asituation where we went back and
said, gee, I wish we had uh youknow gotten a more formal
valuation and we didn't, or wedid something sort of more seat
of our pants.
Um uh I can't think of asituation like that.
(27:34):
I can think of situations wherethe quality of the valuation was
not strong, uh, and thatquestions came up in in an
investigation where um therewere some uncomfortable
questions that the valuationperson that we had hired was not
really very effective inanswering them, and they weren't
really in the report.
And that created uh ultimatelythe the outcome was okay, but it
(27:58):
just created consternation withthe the regulators in this sort
of general sense that we had notdone things as uh as as uh
completely as we could have.
SPEAKER_05 (28:10):
Very good.
So um Eric, then what what makesuh what makes a valuation firm
what makes them good to workwith?
Like what do you as attorneys uhwhat do you need from them to
feel confident the valuationwill hold up?
SPEAKER_04 (28:24):
Yeah, I I so uh I I would say that um uh probably
the thing I value most, youknow, uh first of all, I would
say that you need to beinvolved, if you can be, in
vetting a valuation firm.
In some cases, it's you knowsomebody who's well established
and it's not an issue.
(28:45):
But I I I've I've had a numberof people who are CPAs, don't
have a lot of valuationexperience, it may not be
properly credentialed, but saythey can value a practice, and
really don't understand thehealthcare industry well enough
to do that.
I mean, reimbursed the revenueend of uh valuation in this
industry is about as complex asit gaps.
It's not like valuing aninventory in a shop or something
(29:07):
like that.
Um and um so being involved inthat vetting process, I think is
really important because you'regonna be looking for things that
the client might not be lookingat.
Um, I would I would say thething I value most probably is
integrity.
Um, and uh what I mean by thatis I've I've had a couple of
occasions over my career wherethe the the person on the other
(29:29):
end of the phone, sort ofwanting to get the business,
said something along the linesof, I'll make the numbers say
what you want them to say.
And um I I the rest of theconversation to me is wah wah
wah wah and that immediatelydisqualifies them um as far as
I'm concerned.
I'm I mean, I understand there'ssome flexibility and some range,
(29:49):
but that's just that's off thetable as far as I'm concerned.
So that that's that's I thinkpart of it.
The other thing I would say isyou've you've got to, this goes
back to what we were talkingabout before.
Got to educate yourself aboutthe fundamentals of the
valuation process as a lawyer tounderstand how to make a
recommendation and whether tomake a recommendation.
(30:09):
So, you know, how does a howdoes a discounted cash flow
analysis work?
Um, what is EVITA?
What is an appropriate multipleof EVITA in a case like this?
Is you know, can you just do a acost, uh uh an approximate cost
and then divide it by the numberof hours?
How do real estate valuationswork?
Uh is common space part of it?
(30:30):
Is is uh uh dead space part ofthe um uh part of uh how the
calculation works.
Um and uh I guess uh in in inconcert with that, I would say
um develop a relationship withan experienced valuation person
and use that person or or workwith that person as an ally,
(30:54):
right?
Because um if you need toconvince a reluctant client
about an expensive valuation,having somebody that you know
next to you saying, yeah, Iagree, and this is why, but with
the financial end of theexperience is critical.
And also having somebody to uh,you know, as a founding board.
I mean, I've I've developed alot of rules of thumb over the
(31:14):
years uh, you know, to sort ofapproximate do we need
evaluation in this case?
You know, uh are there um arethere stark issues where uh you
know intent is is uh not not uhrelevant, or is this in you know
in a situation where we've gottwo referral sources?
But I've kind of developed somerules of thumb, but I I
generally call somebody and say,here, this is the way I'm
(31:35):
thinking about it.
What do you think?
And if you have somebody thatyou can call uh and and develop
that kind of an alliance with, Imean, and somebody who's willing
to sort of play that role andand uh uh it's just I mean, it's
indispensable uh as far as I'mconcerned.
SPEAKER_05 (31:52):
Very good.
Uh Ragney, you want to share anyum insights you have on how to
work with or or choose a goodvaluation partner?
SPEAKER_02 (32:01):
Um I think I have to echo everything Eric just said.
Um, I don't think um I could sayit any better than that.
But the one thing I would addis, you know, be be aware um
there are a lot of valuationconsultants out there,
obviously.
And everybody I think has theirum has like their area of
expertise.
And so it's important whenyou're picking, you know, a
valuation consultant or as anattorney, you you know, you're
(32:23):
helping your client vetvaluation consultants, you
understand what their areas ofexpertise could be and how they
can help, you know, identifyvalue drivers and um things that
somebody else might overlook.
So that would be the only thingI would add to that.
SPEAKER_05 (32:36):
Very good.
And Kyle, would you like to addanything on on that?
SPEAKER_03 (32:40):
I mean, I just want to echo what Eric said about
disqualifying any anybody thatsays we'll make the numbers work
for you, because that's gonnaend up being indefensible.
And so you just, you know, it'syou might as well light money on
fire.
SPEAKER_04 (32:57):
By the way, I'll I'll I'll add to that a little
bit too.
And I I uh pal, feel free tocall me on this because you have
more experience with this than Ido.
But when you're vetting someone,think of them as, you know,
you're sitting at a table with aregulator explaining what the
theory of this deal was, and whodo you want sitting next to you?
You you want somebody who'sarticulate, knowledgeable, and
(33:20):
comfortable in a high stresssituation where it matters what
they say, and they're notbumbling around to looking at
numbers and and and all thatkind of stuff.
So part of the vetting processis how is this person going to
play at the table with aregulator if if we ever have the
misfortune of getting to thatpoint?
SPEAKER_05 (33:42):
Very good.
Very good.
Well, y'all have shared someexcellent insights into you know
the challenges, complexities ofFMV and compliance.
Uh for our final uh segment, I'dlike to turn to maybe more the
practical side.
Let's talk a little about theskills and maybe habits that can
make attorneys uh betteradvisors in these types of
(34:05):
transactions.
So uh let's start with Ragani.
Uh for a uh for attorneysworking on their maybe their
first governance project orjoint venture, what practical
advice uh would you offer maybeparticularly around setting
expectations or like youmentioned before, managing
(34:27):
different stakeholder interests?
SPEAKER_02 (34:28):
Yeah.
SPEAKER_05 (34:29):
Just to avoid those, you know, those pitfalls.
SPEAKER_02 (34:32):
Yeah, absolutely.
I mean, I'm just gonna reiterateit again.
I think knowing who thestakeholders are, you know, you
have owners and you have yourC-suite, but knowing who is
really making the enterprisework and who's making the
venture work, and it's notobviously just that group of
people, it's also youremployees, your clinical staff.
Um, so I think it's reallyimportant to consider all of
(34:53):
those stakeholders' interestsand you know where where those
interests may fall in thedrafting of agreements and and
structuring of um structuring ofgovernance.
So um, you know, by way ofexample, if you think about an
ASC, right, you don't just haveyour board of managers, you also
have your medical director, youradministrator, your medical
executive committee.
(35:13):
And so um, and knowing that asyou're drafting all the
documents, that kind of thosefoundational documents that
address, you know, theresponsibilities and roles that
everybody's playing, you need toknow, you know, who's playing
those roles.
So really think about it from abig picture perspective.
I don't um, you know, we get weget taught a lot of, you know,
A, B, and C in law school, likethat, you know, you have a
(35:34):
purchase agreement or you havean operating agreement, but
there's a lot more to it thanthat.
And I think sometimes some ofthat, those ancillary documents
and and thinking about theseadditional folks um kind of
falls by the wayside and it itshouldn't, it really shouldn't.
Um, I mean, I think uh a coupleother things I would mention,
we've which we've kind of talkedabout already today, but um, you
(35:56):
know, managing buyer, buyerseller, you know, the your
clients' expectations when itcomes to um timing and um what
it's gonna take to complete um aproject, you know, from a
regulatory perspective, youknow, if you're doing a
transaction and it's gonnarequire some sort of um state
agency transaction approval, um,you know, setting those
(36:16):
expectations from the start, youknow, it could set you out five,
six, you know, 10 months a year,and you know, making sure that
the parties are aware of whatthat means operationally.
Um and then finally, this is mypersonal one.
It's it's knowing which hills todie on and um when it's when
it's not necessary to be a jerk.
Um, I think I I think Eric wouldagree with me on that, but you
(36:40):
know, knowing exactly um whenit's worth fighting over a small
point or or you know, languagein a form.
Um sometimes we kind of want to,you know, stick our feet in and
dig our heels in and say that,oh, it's my way, my draft is the
best draft, my my articulationof this is better than yours.
And really at the end of theday, your goal is to get your
clients to a place of agreementand get your clients to an end
(37:03):
goal, you know, thispartnership, this collaboration,
and um, being a jerk isn't gonnaget you there.
So that's my that's my lasttidbit.
SPEAKER_05 (37:12):
Very good.
And and Kyle, for uh when whenattorneys are uh working with uh
compliance teams or valuationexperts, what practices or
approaches uh do you follow thatmight lead to smoother, you
know, more effectiverelationships and and and what
missteps you know should theyavoid?
SPEAKER_03 (37:31):
Yeah, I mean, I think taking time to listen to
all the various viewpoints andconsider them before figuring
out and deciding what hillyou're gonna die on.
I think that's a reallyimportant exercise.
SPEAKER_05 (37:47):
Very good.
And Eric, from your perspective,like what did what is it what
does it look like for anattorney to uh evolve into that
uh trusted advisor role ratherthan just someone who is more
reactive to issues?
And what practical steps youknow might help attorneys uh
make that transition?
SPEAKER_04 (38:07):
I was thinking about this earlier before we got on
this podcast, and uh uh there'sa story I like to tell about uh
Richard Feynman, who was aphysicist who won the Nobel uh
prize for physics years ago.
And uh he talks in some papersabout his relationship with his
father when he was a child.
His father was not a scientist,but they used to look at ants
and insects together.
And and Feynman said, you know,the the the best gift that you
(38:30):
can uh instill in your childrenis uh the gift of intellectual
curiosity.
And I think that's good atcareer advice also, because um
asking questions and not beingafraid of ignorance, of your own
ignorance is is such a great wayto advance uh your knowledge and
(38:52):
your career.
Rogney made made reference tothis earlier, um that you know
uh uh that uh sort of early inyour career, uh you might you
you might be um you might beinclined to sort of there just
think gonna be things you don'tknow.
And and um yeah, saying I Idon't know what that is, uh, and
(39:12):
taking the risk of sort oflooking ignorant about something
is a great, a great way tolearn.
And the more pieces you put intothe puzzle, the better you'll
get at it, and the more valuableyou will be to clients, and the
more calls you'll get, to befrank.
SPEAKER_05 (39:29):
Very good.
Well said.
Well said.
Um, so I guess one if there'sone final uh piece of advice and
anyone would like to share onefinal thought that uh maybe we
touched on briefly, you want toexpound upon.
Now's your chance.
Uh, we can uh try to share withour uh the audience today um
just something to help likelooking ahead and going forward.
(39:52):
What's one last piece of adviceyou might offer?
Uh Kyle, how about you go first?
SPEAKER_03 (39:57):
Ask questions.
I think that was really great.
Just you know what Eric said.
I parrot that 100%.
Ask questions.
It's okay if you don't knowsomething, it's actually not
okay to pretend that you do whenyou don't.
SPEAKER_04 (40:10):
I would say doing doing deals is fun.
It's one of the most fun partsabout being a lawyer.
I've been other stuff that's notquite as fun.
Um have fun.
Do it.
If you have fun, you'll get goodat it.
Promise.
Very good.
SPEAKER_02 (40:27):
Um, I will echo that and say, you know, again, um
don't don't get stuck on tryingto always be like be the winner.
Um, you know, always rememberthat what the end goal is and
that, you know, being a niceperson will sometimes get you
further towards that goal thanthan just sticking your heels in
the sand about stuff.
SPEAKER_05 (40:49):
Very good.
Uh well, thank you all for thisthoughtful and um and really
practical conversation.
Uh, your insights into dealdynamics and fair market value
challenges and just generalbusiness-minded lawyering are
incredibly valuable.
And to our AHLA listeners,thanks for being with us.
We hope you found thisdiscussion uh relevant and
(41:11):
useful and take care, everybody.
SPEAKER_01 (41:19):
If you enjoyed this episode, be sure to subscribe to
AHLA Speaking of Health Lawwherever you get your podcasts.
For more information about AHLAand the educational resources
available to the health lawcommunity, visit AmericanHealth
Law.org and stay updated onbreaking healthcare industry
news from the major mediaoutlets with AHLA's Health Law
Daily Podcast, exclusively forAHLA comprehensive members.
(41:42):
To subscribe and add thisprivate podcast feed to your
podcast app, go toamericanhealthlaw.org slash
daily podcast.
This episode of AHLA Speaking of Health Law is
sponsored by HMS ValuationPartners.
For more information, visitHMSvalue.com.
SPEAKER_05 (00:17):
Welcome to today's AHLA Speaking of Health Law
Podcast.
I'm Rob Holland, Director withHMS Valuation Partners, and I'll
be your moderator today.
Today's episode is titled Beyondthe Paperwork: Practical
Insights for Navigating FairMarket Value and Healthcare
Transactions.
We'll be talking about howattorneys can better navigate
(00:37):
the business realities behindhealthcare transactions, manage
compliance pressures, and workwith valuation experts in a
practical way.
We have three fantastic guestswith us today, so let's kick
things off with introductions.
Would each of you share a bit ofyour background and highlight
the areas of health law you workin?
Eric, let's begin with you.
SPEAKER_04 (01:00):
Okay.
Thanks, Rob.
I appreciate it.
I uh started practicing in 1992,uh specializing healthcare in
93, uh, starting in privatepractice and then uh most of my
career in-house.
Uh I was at uh Penn Medicine inPhiladelphia for 18 years or so.
That was where I spent most ofmy time and did most of the sort
(01:22):
of larger transactions for thesystem.
Uh, and I've been in privatepractice now under NEF Health
Law for the last four years inConnecticut.
SPEAKER_05 (01:31):
Very good.
Thanks, Eric.
Let's go to Ragani.
Why don't you go next?
SPEAKER_02 (01:36):
Hi, I'm Ragani Acharya.
I am a partner at Hush Blackwellin the healthcare regulatory
group.
I do a lot of healthcaretransactions and the associated
regulatory work along with thosetransactions and transactions
involving um not just MA, butalso strategic partnerships, uh
(01:56):
collaborations, affiliations.
Um I've been working in thisspace for 11 years now.
Um and yeah, I've been at a firmum in the in the big firm life
uh for the last 11 years and umlearned a lot of really cool
lessons, and I'm excited toshare some of those today.
SPEAKER_05 (02:12):
Very good, very good.
And finally, last but not least,Kyle, why don't you share a
little bit about yourself?
SPEAKER_03 (02:18):
Thank you so much.
Hi, Kyle Fajey.
Thanks for having me.
I'm a partner in the Bostonoffice at Fully and Larner.
And I sort of straddle the lifescience and healthcare world
both.
So I do quite a bit of umresearch and development,
collaboration, clinical trial,and then commercialization and
(02:38):
compliance building and scalingfor life science companies.
And then I kind of do the samething on the other side of the
house, the provider side of thehouse, in particular, um helping
building and scalingtelemedicine companies to into
50 state offerings.
So um, you know, friendly PCstructure, corporate practice of
medicine, all those sort ofhealthcare specific
(03:00):
considerations.
SPEAKER_05 (03:02):
Very good, very good.
Well, thank you all for uh beingon the show today.
And uh let's get started.
Let's start with the idea of uhgetting your hands dirty or you
know, really engaging in thebusiness dynamics behind a deal.
Um, Eric, when you think abouthow attorneys can maybe add
value beyond just draftingdocuments and you know passing
(03:23):
them back and forth between theparties, what is what does that
look like uh for you and yourpractice?
SPEAKER_04 (03:29):
Yeah, so I I would say uh in my experience, a lot
of particularly younger lawyersum have a misconception about
transactional lawyering thatI've often referred to as Ivory
Tower lawyering, which by whichI mean uh I will sit here in my
ivory tower, and when you havean issue, you come to me, I'll
(03:50):
sort of pronounce judgment onit, you take it back to your
business, and that's how we'llinteract.
And um I I actually so I thinkthat level of passivity might
work in some context, maybe inlitigation, where you know, it's
sort of a pleadings typepractice.
In transactional lawyering, it'sit's really just bad lawyering.
And if you think about it, thethe main reason is I I think you
(04:12):
know, transaction, one of thegreat things about transactional
lawyering is you're um you'reyou're always working on
something that's positive foryour client.
Not always, but you know, you'reyou're you're you're working on
a growth part of the business.
Maybe it's an acquisition, maybeyou're you're just you know
doing a new telecommunicationscontract and it's about cost
savings, but it's usually anopportunity for the client.
(04:35):
And their primary uh their theirprimary thing that they want to
accomplish is to get it done.
Um they want to not get introuble too.
So I'm I'm not sort ofminimizing fraud abuse and other
regulatory issues, but they wantto get the deal done.
And and that's really, I think,you know, lawyers need to take
that on as their role.
(04:56):
Uh when when I was a younglawyer, my first in-house
position, I had um the presidentof the division that I worked
for at Novacare uh in King ofProject, Pennsylvania, took me
down to his office.
He was really struggling withme.
And he said to me, uh, Eric, Idon't need a lawyer.
I need a business partner withlegal skills.
(05:16):
And that was really one of thegreat aha moments in my career.
I I had not understood thatbefore that moment.
And it really has changed mywhole approach.
And I I've sort of bandied aboutthis, you know, this metaphor of
the tennis player lawyer whohits the ball over the net and
then waits for the other side tohit it back, and the hunter
(05:37):
lawyer who uh chases it downuntil it's dead.
Uh and uh what I would say isyou want to cultivate a
reputation for being a hunterbecause clients who see that
will seek you out.
And clients that see that you'repassive about doing
transactional work and you'rejust sort of pushing documents,
(05:59):
they'll see that too.
And that will reflect on thesuccess of your practice.
SPEAKER_05 (06:03):
Very good, very good.
Uh Ragani, from yourperspective, you're often in the
middle of these negotiations,structuring the governance and
working on the joint ventures.
How do you balance legalprecision with helping the
clients uh move the dealsforward efficiently?
SPEAKER_02 (06:21):
I think that's a that's a really good question.
And I kind of want to echo a lotof what Eric said.
Um, audience can't see this, butI'm wearing my tennis racket
necklace, actually.
And hope nobody will judge mefor it as a tennis player.
But I think he may it makes alot of sense to say that yeah,
you don't want to just be in asituation where you're volleying
drops back and forth.
Um, and a in a way to make surethat that doesn't happen in my
(06:42):
experience is to I kind of set afew roles.
One is um be effective andefficient about communications.
And so what that means is knowwho has what roles and who's
supposed to be communicatingabout what when it comes to a
transaction.
Um, make sure those channels areclear.
Um, you're not asking questionsabout, you know, decision making
(07:04):
that somebody is not in the roleto be answering questions about
that.
Um the lawyers can kind of helpfacilitate those conversations
and figuring out who should beum answering questions.
And I think it's reallyimportant for the lawyers to
make sure that the businessteams know who those people are.
And in that same vein, it'sreally important also to
understand who the stakeholdersare.
(07:24):
Um and, you know, it's not justalways going to be the folks in
the C-suite that have aninterest in making sure a
transaction goes through andwhat um what the result is at
the end of the day.
You know, there's employees,there are um clinical staff, you
know, the the list can really goon.
Um, so it's not just your yourowners or your C-suite folks.
(07:44):
Um and so in understanding whothe stakeholders are, that can
help you understand whereflexibility can be built.
And if there's flexibility, thatcan also create efficiencies.
Um my third role is to settimelines and milestones.
Um, you know, you know you haveto um accomplish certain things
in in in the process of atransaction, you know, certain
(08:07):
documentation, certain filings,and knowing those up front is
really important so that youdon't lag behind in making
certain decisions while otherthings are kind of sitting out
there.
So um kind of keeping thesethree things in mind, I think
those have always been helpfulin helping to create those types
of efficiencies.
And, you know, while we'realways really concerned about
making sure every I is dottedand T is crossed, um, knowing
(08:30):
what's important and where tofocus your energy, um, keeping
these kind of rules in mind willhelp move that along.
SPEAKER_05 (08:37):
Very good, very good.
And Kyle, from your experienceunder a corporate integrity
agreement, you've seen how maybebeing too reactive can create
risk.
How do you stay proactive inyour approach to compliance and
deal making?
SPEAKER_03 (08:51):
Yes, that's a good question.
I mean, and I think this is whatmakes, of course, healthcare
transactions a bit differentthan other types of
transactions.
You're in such a heavilyregulated space.
And often in diligence, you endup uncovering issues, like say
you're looking to acquire andyou're doing diligence on a
target.
(09:11):
And you really have tounderstand what's your what's
your client's risk tolerance.
And similarly, when you'readvising a client that maybe
preparing to be acquired or toacquire, um, I think it's really
understanding the risk.
Like there's, you know, don'tlet good be the enemy of perfect
kind of thing that uh, you know,you can you can really get
(09:35):
caught up in the weeds and tryto have everything be absolutely
perfect, but in the process ofdoing that, you're gonna grind a
business to a complete and utterhalt.
So kind of understanding wherethere is some gray and being
able to communicate thateffectively with clients and
help them understand, okay, ifthis, if this decision um
(09:56):
doesn't pan out or goes south,like what are the consequences?
And though it could be legalconsequences and there could be
business consequences, sometimesboth.
And being able to parse thoseout for clients, I think is
really important.
SPEAKER_05 (10:09):
Very good.
And I'll just open this up forfor any of you guys.
Where do you see attorneysadding the most value when you
take on a more hands-on role?
Where do you or maybe even wheredo you see maybe missed
opportunities when counselremains too distant, you know,
from the business discussion?
SPEAKER_02 (10:30):
I think there's a lot of um value to be given um
in using prior experiences.
Um I think that sometimes, Ithink to Eric's point, a lot of
maybe younger attorneys um viewa lot of things in a silo.
And it's helpful to to maybethink about, you know, anecdotal
evidence of where things havegone right, where things have
(10:51):
gone wrong in past um pasttransactions or collaborations
and um kind of be able to usethat experience on a going
forward basis.
SPEAKER_04 (11:00):
Yeah, I'll I'll I'll just underscore one thing Rogani
just said.
It's you know, when you thinkabout building experience, it's
not something you do overnight.
And I I have this mental imageof how the internet grew, you
know, from the from the 90s tilltill now with little tendrils
going out and creatingconnections.
And I think that's a good modelfor what you need to do, just
(11:21):
over time um create a fund ofknowledge for yourself and build
a web of knowledge so that whenissues come up in transactions,
you have something to draw fromthat's relevant.
And it's amazing how, you know,in a few years and after doing a
a number of deals, you'll startto make connections between this
(11:42):
deal and the deal you did threeyears ago.
And and it's very helpful, notonly for you in terms of
efficiency, but for your clientand occasionally just having a
you know, aha, oh wow, we couldmaybe that's a good idea.
SPEAKER_05 (11:55):
Very good.
And and kind of follow up onthat point, a lot of these
transactions and everything,it's very complex and there's a
lot of high stakes involved inthese types of decisions.
I imagine oftentimes clients getthey hesitate or they get stuck
in analysis paralysis type uhmindsets.
(12:15):
How do you help guide themtowards clarity and taking
confident action while staying,you know, firmly within your
role as legal counsel?
SPEAKER_03 (12:27):
A lot of times it's helping assess risk, right?
Like I think that if youoveranalyze, you'll there's risk
everywhere, right?
Then understanding what what isrisk that can be minimized, what
is risk that you may have tojust uncomfortably move forward
with if you want a deal to moveforward.
Um, and helping be a thoughtpartner in that exercise, I
(12:50):
think, is really important.
SPEAKER_04 (12:52):
I I think you'll often be called upon as a
thought leader in a lot oftransactions.
Uh, you know, and for a lot ofclients, especially smaller and
mid-sized clients, they're notdoing this kind of stuff every
day if it's an acquisition or uheven a lot of contracts.
And so they don't necessarilyknow what all the steps in the
process.
And so being a leader withoutbeing pushy, but being a leader,
(13:16):
maybe a little pushy, um, andyou know, saying this is what we
need to do to get from point Ato point B can be enormously
helpful in getting them throughthat paralysis that they might
feel from just not having doneit before.
SPEAKER_05 (13:30):
Very good.
Okay, very good.
Uh, let's let's turn to anotheruh important skill.
Uh that is understanding theclient's business.
I mean, in healthcare, legaldecisions often depend you know
heavily on operational orfinancial and uh regulatory
context involved with thetransaction.
(13:52):
So, Eric, how do you approachmaybe learning the operational
financial details behind yourclient's organization?
SPEAKER_04 (14:00):
Yeah, I uh and also not just the organization, but
just how the healthcare systemworks in general.
I I I think you know, I wouldsort of sum it up in two words.
It's really about intellectualcuriosity.
Um, you know, making, you know,taking the time to ask your
client questions about howsomething in the practice works,
taking the time to Googlesomething you don't understand
(14:21):
in a document or in aregulation, sort of some, you
know, something that you read ina Medicare rule that you didn't
quite get.
Um it's so important.
And and one piece of advice Iwould give that has served me
very, very well, but maybedifficult for some people.
I'd be interested actually tohear what Rodney has to say
about this is uh um because I Iwork in in the environment I
(14:46):
work on, it's in it's relativelyeasy to say to a client, by the
way, I'm not gonna charge youfor the next you know five or 10
minutes, okay?
But I want to know facts aboutyour business.
And I've never had a client thatI can think of be sort of
irritated by that.
They're always delighted thatyou want to learn.
But, you know, I think you needto sort of be explicit that
(15:06):
they're not, you're you're offthe clock for a little while.
Now, I think that might be a bitof a challenge sometimes if
you're in a firm and there mightbe, you know, there's pressures
to bill a certain number ofhours, and maybe you work for a
partner is not, you know, isopen to that.
But I I have found that some ofthe best conversations I've ever
had and the best learning I'veever had is chatting with a CEO
(15:27):
for you know 10 minutes aboutsome aspect of their business.
And again, it's incremental.
Over time, um, you really buildup a big fund of knowledge.
But if you don't, if you're notthe kind of person that has that
type of person, uh that thattype of curiosity, um, it's
gonna be more of a struggle, Ithink.
SPEAKER_02 (15:47):
I I have to agree with that, Eric.
Um, and I think that's a reallygood point.
But, you know, your commentabout, you know, I'm not gonna
charge you for the next five, 10minutes, think of it as I think
it's really important to thinkof that time.
You're investing in your owncareer by asking those questions
and gaining that knowledge.
So that's something an attorneycan really, you know, yeah,
you're not charging a client,but you're you're adding value
(16:09):
to your own um, to your ownknowledge base and and to your
own career down the line.
So it's really worth it tounderstand those questions.
SPEAKER_03 (16:18):
I totally agree with that.
I think that it makes a ton ofsense.
And um, you have to invest inyour client, you have to be
interested in your client, orthey'll move on to another
council that is, in fact,interested in what it is that
they're doing.
SPEAKER_05 (16:34):
Excellent.
Excellent.
Uh, I'd like to just take uh asecond to real quickly touch on
uh the growing presence ofartificial intelligence type
tools that we have.
How do you see technologysupporting transactional
practice and and where might itwhere might it fall short
compared to say, you know, thehuman judgment that's informed
(16:55):
by what you've been talkingabout, the real business
understandings?
Would anyone like to share maybeyour thoughts on what role AI
can or maybe should play?
SPEAKER_03 (17:06):
I mean, I can see AI being able to undertake
diligence in some ways and beable to at least flag uh
important documents in a muchmore efficient manner than human
beings can do going through thetraditional document review,
data room, uh deep dive.
(17:27):
But how to make sense of whatthe documents mean, that I think
is a human exercise as opposedto an AI exercise.
SPEAKER_02 (17:35):
Yeah, absolutely.
I I completely agree with you,Kyle.
And I don't know who said this.
So um I apologize for not beingable to give credit for the to
this quote, but somebody um hassaid that lawyers aren't going
to be replaced by AI, but AI isgoing to, oh sorry, now I'm
gonna blank on the exact phrase.
But it's basically like lawyerswho know how to use AI are gonna
(17:58):
replace those that don't knowhow.
I I um didn't articulate that asbeautifully as I intended, but I
think the idea is there is thatit's a tool to be used.
And I definitely see itcontinuing to play a role in
transactions going forward.
I think to Kyle's point in thediligence process, being more
efficient about basicallycondensing and and summarizing
all the information that youneed to digest in order to
(18:18):
conduct the transaction itself.
SPEAKER_04 (18:21):
I tend to be a little bit more skeptical about
how long it's gonna take beforelarge language models are gonna
overtake lawyers in certainareas.
But I I think it in terms of youknow drafting, because I think a
lot of us in the transactionalworld worry about the production
of documents.
Um, I, you know, I think it'sgonna be longer than a lot of
people think, but I think it'sgonna be a heck of a lot longer
(18:44):
for things that requirereasoning.
And and so, you know, if youwant to differentiate yourself,
you you've got to start, you'vegot to move past document
production and sort of thinkingas the deal, as the negotiation
of the documents, and startthinking of the deal as a cog in
your in your client's businessthat the documents are
(19:06):
supporting.
And I I don't see um I you knowI don't see large large language
models overtaking lawyers inthat type of reasoning, uh,
probably within the career spanof anybody who's graduating from
law school soon.
SPEAKER_05 (19:22):
All right, very good, very good.
Um, so let's uh shift gears justa little bit and uh we can we
can talk a little about umregulatory complexities and and
valuation um and where thosekind of intersect.
Um I'll start with um Kyle.
So why do like um healthcareprovider consulting
(19:44):
arrangements, why do thoseattract so much scrutiny from
regulators, just kind of as ajumping off point?
SPEAKER_03 (19:51):
Sure.
Well, I mean your garden varietyconsulting agreement um can be
used as a mechanism to umincentivize prescribing.
And so that implicates theanti-kickback statute.
So it's actually reallyimportant that consulting
agreements are undertaken for alegitimate bona fide business
(20:16):
need, and that the payment thatoccurs occurs as a result of
actual work performed, and thatit's in line with fair market
values, so that it is not thecase that um industry is lining
the pockets of clinicians toultimately prescribe their drug
or utilize their medical deviceor app or whatever else um you
(20:40):
know might be on the table foruse.
That that's really the biggestpiece.
So then understanding what it isthat is fair market value for
work undertaken is reallyimportant.
And lawyers don't determine whatis fair market value.
We just let our clients knowthat you need to figure it out
and that's what you should pay.
(21:01):
And that's where valuation firmsare critical.
SPEAKER_05 (21:04):
How about also maybe within the uh clinical trial
related compensationarrangements?
Same thing.
Is that another area where youfind kind of the the fair market
value being a challengechallenge?
SPEAKER_03 (21:18):
It is, um, because you have to figure out like what
are the what's the actualprocedure cost?
Um and so if you're an industrysponsor paying um or
underwriting a clinical trial,you need to figure out like even
something as simple as, okay,are you paying like per
procedure, per visit, per totalpatient?
(21:41):
Uh because when a regulatorcomes in and looks, there's like
a whole bunch of different waysyou can slice the pie to ensure
that any given payment um isactually fair market value.
So, yes, absolutely clinicaltrials are like you know, a huge
budget that can be analyzed fromfair market value perspective
(22:03):
upside down and backwards, to behonest.
SPEAKER_05 (22:06):
For Eric or Ragani, do you see similar challenges in
your practice for differentkinds of transactions?
SPEAKER_04 (22:15):
I mean, I I see that um uh I think there are certain
kind I think there are certainsituations where valuations are
critical and certain situationswhere valuations um can sort of
uh take a little bit more of aninformal route.
(22:37):
And I there's so many variablesin that.
But um, you know, uh atransaction where there's an
acquisition of a practice uh andyou need a practice valuation,
and the two parties are are uhreferral sources to one another
is kind of a no-brainer.
I I guess I would say in inresponse to that, that one thing
I would make I would peopleshould be um uh sensitive to the
(23:02):
fact that when you'rerecommending a valuation to a
client, um your recommendationcomes with a cost.
Uh, they're gonna have to payfor that valuation.
And you need to be sensitive tothat, and you need to um you
need to uh educate yourself insuch a way that you can justify
your position on that.
And if you think about it withinlarger companies in particular,
(23:25):
um uh, you know, there's abudget process, and the person
you're speaking to on the phoneis responsible for getting this
transaction done within acertain budget.
And it's you know, it's toughsometimes for them to accept the
fact that, God, I got to spendyou know$14,000,$16,000 on a
valuation.
And suddenly you become theenemy in that situation.
The lawyer's making me do this,right?
(23:46):
And you you've got to besensitive to that.
I'm not saying don't recommendvaluations when they're
appropriate.
I'm saying be aware that it'snot done in a vacuum and um and
make sure that you canarticulate why it's necessary
and um and why it's gonna helpthem down the line.
SPEAKER_02 (24:06):
I I think to jump off of that too, I think it's
important to consider andarticulate to um the clients and
providers what what the pointsof negotiation would be when it
comes to obtaining a valuation,right?
Like you, it's not just go get avaluation.
It's okay, well, are both theparties or all of the parties
going to obtain a valuation orjust one of them, who's paying
(24:26):
for it?
Um, what are the parameters andassumptions that are going to be
associated with that valuation?
Um, what information from thatvaluation is gonna be shared
amongst the parties?
Um, you know, you may have to doa common interest agreement.
Um, so those are all things toconsider about, you know, when a
client's trying to decidewhether or not to even obtain a
(24:46):
valuation, you know, it's notjust do you get it yes or no?
It's what does it mean when youactually do get it?
Um, who's paying for it and andwhat's the scope?
SPEAKER_05 (24:58):
Very good.
And and Kyle, having a practiceunder the constraints of a
corporate integrity agreement,what was that experience like?
And what lessons can attorneysuh draw from that level of
external oversight?
SPEAKER_03 (25:13):
Yeah, I mean, what's difficult is that your whole
program is going to be auditedon an annual basis by an
independent review organization.
And so you're really livingunder a microscope.
Um, so you don't have as muchlatitude to um assume risk where
you otherwise might, becauseagain, you're operating under a
(25:36):
microscope.
So it can be very taxing, it'svery expensive.
Um, you don't sort of thinkrisk-benefit analysis if you uh
undertake a risk on the one handand maybe don't get that
valuation, and then findyourself on the wrong end of an
accusation of kickback, forexample.
Um, I promise you're gonna endup paying a whole lot more than
(25:57):
you ever were going to for thevaluation in the first instance.
SPEAKER_05 (26:03):
Very good.
Um, would anyone else want toshare some similar type
experience where having beenmore proactive, or had you been
more proactive, it might havehelped the client avoid getting
into that type of situation inthe first place?
SPEAKER_02 (26:20):
Where do where do I begin?
I mean, um obviously myexperience is gonna be different
than Kyle's working on um, youknow, uh clinical trial
agreements and um mine aremostly in the context of of
transactions, you know, where uma formal valuation wasn't
obtained um at the front endwhen it probably should have
been or when one was obtained,but it wasn't done under the
(26:42):
right parameters.
Um so I mean it's it's helpfulto work with I think your
attorney and like explain theprocesses that you've that the
client is going through and andthe decisions and the um the
factors informing thosedecisions.
So um again, I'm gonna harp oncommunication channels um to
make sure that you know the lessthings that can go awry do.
(27:08):
Eric, I don't know if you've hadany experience with that.
SPEAKER_04 (27:12):
I have.
Um I I would say that uh I'mtrying to think of situation.
I I don't re I can't recall asituation where we went back and
said, gee, I wish we had uh youknow gotten a more formal
valuation and we didn't, or wedid something sort of more seat
of our pants.
Um uh I can't think of asituation like that.
(27:34):
I can think of situations wherethe quality of the valuation was
not strong, uh, and thatquestions came up in in an
investigation where um therewere some uncomfortable
questions that the valuationperson that we had hired was not
really very effective inanswering them, and they weren't
really in the report.
And that created uh ultimatelythe the outcome was okay, but it
(27:58):
just created consternation withthe the regulators in this sort
of general sense that we had notdone things as uh as as uh
completely as we could have.
SPEAKER_05 (28:10):
Very good.
So um Eric, then what what makesuh what makes a valuation firm
what makes them good to workwith?
Like what do you as attorneys uhwhat do you need from them to
feel confident the valuationwill hold up?
SPEAKER_04 (28:24):
Yeah, I I so uh I I would say that um uh probably
the thing I value most, youknow, uh first of all, I would
say that you need to beinvolved, if you can be, in
vetting a valuation firm.
In some cases, it's you knowsomebody who's well established
and it's not an issue.
(28:45):
But I I I've I've had a numberof people who are CPAs, don't
have a lot of valuationexperience, it may not be
properly credentialed, but saythey can value a practice, and
really don't understand thehealthcare industry well enough
to do that.
I mean, reimbursed the revenueend of uh valuation in this
industry is about as complex asit gaps.
It's not like valuing aninventory in a shop or something
(29:07):
like that.
Um and um so being involved inthat vetting process, I think is
really important because you'regonna be looking for things that
the client might not be lookingat.
Um, I would I would say thething I value most probably is
integrity.
Um, and uh what I mean by thatis I've I've had a couple of
occasions over my career wherethe the the person on the other
(29:29):
end of the phone, sort ofwanting to get the business,
said something along the linesof, I'll make the numbers say
what you want them to say.
And um I I the rest of theconversation to me is wah wah
wah wah and that immediatelydisqualifies them um as far as
I'm concerned.
I'm I mean, I understand there'ssome flexibility and some range,
(29:49):
but that's just that's off thetable as far as I'm concerned.
So that that's that's I thinkpart of it.
The other thing I would say isyou've you've got to, this goes
back to what we were talkingabout before.
Got to educate yourself aboutthe fundamentals of the
valuation process as a lawyer tounderstand how to make a
recommendation and whether tomake a recommendation.
(30:09):
So, you know, how does a howdoes a discounted cash flow
analysis work?
Um, what is EVITA?
What is an appropriate multipleof EVITA in a case like this?
Is you know, can you just do a acost, uh uh an approximate cost
and then divide it by the numberof hours?
How do real estate valuationswork?
Uh is common space part of it?
(30:30):
Is is uh uh dead space part ofthe um uh part of uh how the
calculation works.
Um and uh I guess uh in in inconcert with that, I would say
um develop a relationship withan experienced valuation person
and use that person or or workwith that person as an ally,
(30:54):
right?
Because um if you need toconvince a reluctant client
about an expensive valuation,having somebody that you know
next to you saying, yeah, Iagree, and this is why, but with
the financial end of theexperience is critical.
And also having somebody to uh,you know, as a founding board.
I mean, I've I've developed alot of rules of thumb over the
(31:14):
years uh, you know, to sort ofapproximate do we need
evaluation in this case?
You know, uh are there um arethere stark issues where uh you
know intent is is uh not not uhrelevant, or is this in you know
in a situation where we've gottwo referral sources?
But I've kind of developed somerules of thumb, but I I
generally call somebody and say,here, this is the way I'm
(31:35):
thinking about it.
What do you think?
And if you have somebody thatyou can call uh and and develop
that kind of an alliance with, Imean, and somebody who's willing
to sort of play that role andand uh uh it's just I mean, it's
indispensable uh as far as I'mconcerned.
SPEAKER_05 (31:52):
Very good.
Uh Ragney, you want to share anyum insights you have on how to
work with or or choose a goodvaluation partner?
SPEAKER_02 (32:01):
Um I think I have to echo everything Eric just said.
Um, I don't think um I could sayit any better than that.
But the one thing I would addis, you know, be be aware um
there are a lot of valuationconsultants out there,
obviously.
And everybody I think has theirum has like their area of
expertise.
And so it's important whenyou're picking, you know, a
valuation consultant or as anattorney, you you know, you're
(32:23):
helping your client vetvaluation consultants, you
understand what their areas ofexpertise could be and how they
can help, you know, identifyvalue drivers and um things that
somebody else might overlook.
So that would be the only thingI would add to that.
SPEAKER_05 (32:36):
Very good.
And Kyle, would you like to addanything on on that?
SPEAKER_03 (32:40):
I mean, I just want to echo what Eric said about
disqualifying any anybody thatsays we'll make the numbers work
for you, because that's gonnaend up being indefensible.
And so you just, you know, it'syou might as well light money on
fire.
SPEAKER_04 (32:57):
By the way, I'll I'll I'll add to that a little
bit too.
And I I uh pal, feel free tocall me on this because you have
more experience with this than Ido.
But when you're vetting someone,think of them as, you know,
you're sitting at a table with aregulator explaining what the
theory of this deal was, and whodo you want sitting next to you?
You you want somebody who'sarticulate, knowledgeable, and
(33:20):
comfortable in a high stresssituation where it matters what
they say, and they're notbumbling around to looking at
numbers and and and all thatkind of stuff.
So part of the vetting processis how is this person going to
play at the table with aregulator if if we ever have the
misfortune of getting to thatpoint?
SPEAKER_05 (33:42):
Very good.
Very good.
Well, y'all have shared someexcellent insights into you know
the challenges, complexities ofFMV and compliance.
Uh for our final uh segment, I'dlike to turn to maybe more the
practical side.
Let's talk a little about theskills and maybe habits that can
make attorneys uh betteradvisors in these types of
(34:05):
transactions.
So uh let's start with Ragani.
Uh for a uh for attorneysworking on their maybe their
first governance project orjoint venture, what practical
advice uh would you offer maybeparticularly around setting
expectations or like youmentioned before, managing
(34:27):
different stakeholder interests?
SPEAKER_02 (34:28):
Yeah.
SPEAKER_05 (34:29):
Just to avoid those, you know, those pitfalls.
SPEAKER_02 (34:32):
Yeah, absolutely.
I mean, I'm just gonna reiterateit again.
I think knowing who thestakeholders are, you know, you
have owners and you have yourC-suite, but knowing who is
really making the enterprisework and who's making the
venture work, and it's notobviously just that group of
people, it's also youremployees, your clinical staff.
Um, so I think it's reallyimportant to consider all of
(34:53):
those stakeholders' interestsand you know where where those
interests may fall in thedrafting of agreements and and
structuring of um structuring ofgovernance.
So um, you know, by way ofexample, if you think about an
ASC, right, you don't just haveyour board of managers, you also
have your medical director, youradministrator, your medical
executive committee.
(35:13):
And so um, and knowing that asyou're drafting all the
documents, that kind of thosefoundational documents that
address, you know, theresponsibilities and roles that
everybody's playing, you need toknow, you know, who's playing
those roles.
So really think about it from abig picture perspective.
I don't um, you know, we get weget taught a lot of, you know,
A, B, and C in law school, likethat, you know, you have a
(35:34):
purchase agreement or you havean operating agreement, but
there's a lot more to it thanthat.
And I think sometimes some ofthat, those ancillary documents
and and thinking about theseadditional folks um kind of
falls by the wayside and it itshouldn't, it really shouldn't.
Um, I mean, I think uh a coupleother things I would mention,
we've which we've kind of talkedabout already today, but um, you
(35:56):
know, managing buyer, buyerseller, you know, the your
clients' expectations when itcomes to um timing and um what
it's gonna take to complete um aproject, you know, from a
regulatory perspective, youknow, if you're doing a
transaction and it's gonnarequire some sort of um state
agency transaction approval, um,you know, setting those
(36:16):
expectations from the start, youknow, it could set you out five,
six, you know, 10 months a year,and you know, making sure that
the parties are aware of whatthat means operationally.
Um and then finally, this is mypersonal one.
It's it's knowing which hills todie on and um when it's when
it's not necessary to be a jerk.
Um, I think I I think Eric wouldagree with me on that, but you
(36:40):
know, knowing exactly um whenit's worth fighting over a small
point or or you know, languagein a form.
Um sometimes we kind of want to,you know, stick our feet in and
dig our heels in and say that,oh, it's my way, my draft is the
best draft, my my articulationof this is better than yours.
And really at the end of theday, your goal is to get your
clients to a place of agreementand get your clients to an end
(37:03):
goal, you know, thispartnership, this collaboration,
and um, being a jerk isn't gonnaget you there.
So that's my that's my lasttidbit.
SPEAKER_05 (37:12):
Very good.
And and Kyle, for uh when whenattorneys are uh working with uh
compliance teams or valuationexperts, what practices or
approaches uh do you follow thatmight lead to smoother, you
know, more effectiverelationships and and and what
missteps you know should theyavoid?
SPEAKER_03 (37:31):
Yeah, I mean, I think taking time to listen to
all the various viewpoints andconsider them before figuring
out and deciding what hillyou're gonna die on.
I think that's a reallyimportant exercise.
SPEAKER_05 (37:47):
Very good.
And Eric, from your perspective,like what did what is it what
does it look like for anattorney to uh evolve into that
uh trusted advisor role ratherthan just someone who is more
reactive to issues?
And what practical steps youknow might help attorneys uh
make that transition?
SPEAKER_04 (38:07):
I was thinking about this earlier before we got on
this podcast, and uh uh there'sa story I like to tell about uh
Richard Feynman, who was aphysicist who won the Nobel uh
prize for physics years ago.
And uh he talks in some papersabout his relationship with his
father when he was a child.
His father was not a scientist,but they used to look at ants
and insects together.
And and Feynman said, you know,the the the best gift that you
(38:30):
can uh instill in your childrenis uh the gift of intellectual
curiosity.
And I think that's good atcareer advice also, because um
asking questions and not beingafraid of ignorance, of your own
ignorance is is such a great wayto advance uh your knowledge and
(38:52):
your career.
Rogney made made reference tothis earlier, um that you know
uh uh that uh sort of early inyour career, uh you might you
you might be um you might beinclined to sort of there just
think gonna be things you don'tknow.
And and um yeah, saying I Idon't know what that is, uh, and
(39:12):
taking the risk of sort oflooking ignorant about something
is a great, a great way tolearn.
And the more pieces you put intothe puzzle, the better you'll
get at it, and the more valuableyou will be to clients, and the
more calls you'll get, to befrank.
SPEAKER_05 (39:29):
Very good.
Well said.
Well said.
Um, so I guess one if there'sone final uh piece of advice and
anyone would like to share onefinal thought that uh maybe we
touched on briefly, you want toexpound upon.
Now's your chance.
Uh, we can uh try to share withour uh the audience today um
just something to help likelooking ahead and going forward.
(39:52):
What's one last piece of adviceyou might offer?
Uh Kyle, how about you go first?
SPEAKER_03 (39:57):
Ask questions.
I think that was really great.
Just you know what Eric said.
I parrot that 100%.
Ask questions.
It's okay if you don't knowsomething, it's actually not
okay to pretend that you do whenyou don't.
SPEAKER_04 (40:10):
I would say doing doing deals is fun.
It's one of the most fun partsabout being a lawyer.
I've been other stuff that's notquite as fun.
Um have fun.
Do it.
If you have fun, you'll get goodat it.
Promise.
Very good.
SPEAKER_02 (40:27):
Um, I will echo that and say, you know, again, um
don't don't get stuck on tryingto always be like be the winner.
Um, you know, always rememberthat what the end goal is and
that, you know, being a niceperson will sometimes get you
further towards that goal thanthan just sticking your heels in
the sand about stuff.
SPEAKER_05 (40:49):
Very good.
Uh well, thank you all for thisthoughtful and um and really
practical conversation.
Uh, your insights into dealdynamics and fair market value
challenges and just generalbusiness-minded lawyering are
incredibly valuable.
And to our AHLA listeners,thanks for being with us.
We hope you found thisdiscussion uh relevant and
(41:11):
useful and take care, everybody.
SPEAKER_01 (41:19):
If you enjoyed this episode, be sure to subscribe to
AHLA Speaking of Health Lawwherever you get your podcasts.
For more information about AHLAand the educational resources
available to the health lawcommunity, visit AmericanHealth
Law.org and stay updated onbreaking healthcare industry
news from the major mediaoutlets with AHLA's Health Law
Daily Podcast, exclusively forAHLA comprehensive members.
(41:42):
To subscribe and add thisprivate podcast feed to your
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daily podcast.
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