There has been an increase in ketamine users recently. No wonder, because the drug is gaining momentum with its off-label infusion applications for a number of serious illnesses, including depression and mood disorders. However, there has also been a lot of illicit substances claiming to be pure ketamine. You should test your stash with a testing kit to make sure the ketamine is pure. Educate yourself and learn more about the safety of drug implementation. We also have multiple M&A deals related to ketamine clinics and the management companies that serve them. While medical research and business interest in ketamine persists, any doctor or investor wishing to participate in or benefit from such ketamine infusion clinics must become familiar with (1) (and quickly) what is required to prescribe ketamine to store and administer and 2) the myriad laws and regulations relating to medical business practice and business start-ups that may violate them.
Ketamine Infusion Treatments
In California, medical business practice is a very serious business (see sections 2052 and 2400 of the Business & Professions Code). California actually requires stricter compliance than the Feds when it comes to the practice of medical doctrine and anti-kickback, fee sharing, and self-referral laws and regulations. This means that not everyone can perform or manage ketamine infusion treatments here. In California, such treatments must be performed by licensed doctors (although other licensed healthcare providers, such as nurses, may be able to help with these treatments). And these doctors cannot form any business unit with which they can do business – they must band together as a professional medical company (at least 51% must be owned by licensed doctors, while the remaining 49% must be owned by other licensed / registered doctors may be healthcare providers). In addition, physicians must have complete control over the professional medical company and its clinical business and management decisions. This includes how patients are treated and managed, including their patient records and how often a patient is seen.
Then how does a third venture with doctors about ketamine infusion treatments? The answer is very careful. Name the structure of the Management Services Organization (MSO) as a prime example.
MSOs are nothing new when it comes to how non-medical third parties, in addition to medical practice groups, can legally conduct non-clinical administrative business in addition to medical practices through management service contracts. And often, these practice groups rightly need MSOs to manage their practices and grow their business by taking care of certain facilities, administrative, advertising and personnel logistics on behalf of the documents. Because California is so aggressive about medical bar business, MSOs really need to watch this in two main areas when it comes to interacting with doctors (and ketamine infusions are no exception).
According to California’s medical corporate practice, it is very clear that MSOs (or non-physicians) do not own, invest in, or control professional medical companies / groups of doctors directly or indirectly. The greatest danger here is in the “control” area, where certain non-clinical management services that can be provided to doctors by the MSO can limit illegal control.
Control will be an evidence-based investigation and the content of the MSO agreement is therefore extremely important. The Board of Trustees of the California Medical Association (1994 and 2010) adopted guidelines instructing doctors what business / practice decisions should be made by doctors, as opposed to business decisions or actions that can be shared between doctors and non-doctors -physicist.
As part of an MSO, decision making falls into three basic categories:
- “Exclusive” – ”Doctor or layperson is solely responsible for the decision. Neither party is obliged to consult informally with the other.”
- “Advisor” – “Doctor or layperson is encouraged to informally obtain or receive information or advice from the other, but everyone retains the ultimate decision-making authority.”
- “Split” – “As a prerequisite for the final action, the doctor or layperson gives a recommendation to the other through a formal process. While the ultimate decision-making authority rests with the party who receives the recommendation, the recommendation is admissible given the importance of the concern entitled to a careful examination. “
The most important decisions that are made exclusively by doctors, among other things, are, for example, the establishment of guidelines for the pure medical practice and the inclusion in the patient files. For the MSO, her decision-making skills may include the selection of administrative personnel, the provision of equipment and the provision of the clinic room (among others).
Compensation for the MSO cannot simply be what the parties decide under the MSO agreement. In California according to Business and Professions Code 650,
“. . . the offer, delivery, receipt or acceptance by a person licensed under this department. . . of discounts, reimbursements, commissions, preferences, cartridge dividends, discounts or other consideration, whether in the form of money or otherwise, as compensation or incentive for referring patients, customers or customers to a person, regardless of a company membership Interest or co-ownership in or with a person to whom these patients, customers or customers are referred is illegal. . . . Paying or receiving consideration for services other than patient referral based on a percentage of gross sales or a similar contractual arrangement is not unlawful if the consideration corresponds to the value of the services provided or the reasonable rent, value of premises or Devices that the recipient has rented or made available to the payer. “
The remuneration paid to the MSO can only apply to administrative services provided and can (in some cases) represent a percentage of gross profit, but must reflect the actual market value of the services / equipment / facilities provided. Whether an MSO has a problem with fee sharing is another fact-based investigation that is entirely dependent on the content of the MSO agreement and the practice of the parties. That said, using profit sharing could immediately set red flags on California regulators no matter what.
The main revenue factor of the MSO is the service fees that it charges physicians – usually, and not directly to patients, to avoid the appearance of unlawful fee sharing or too much control – in return for management services. This means that the MSO agreement between the MSO and the doctors is crucial and the MSO generally wants a longer term with few termination rights.
Ketamine infusions here increase the commitment for MSOs (and doctors), where the off-label administration of ketamine is a kind of wild west situation (see here), and the MSO has to comply with the outpatient regulations Health and safety regulations for these special treatments rely heavily on doctors. If doctors fail to treat patients with ketamine infusions in a compliant and responsible manner, doctors are at high risk of civil claims, fines, and penalties (including loss of license to practice). Even criminal prosecution is possible for doctors and also for the MSO as a participant or supporter (or helper / advocate) of this behavior.
Without a doubt, an MSO setup with doctors around ketamine infusions can be incredibly successful. Incorrect structuring can also be a complete regulatory and legal catastrophe for both sides in several ways. It is important to understand the requirements and structure the relationship correctly from the start.