Co-branding is a common tactic in healthcare that signals collaboration, excellence, and high-quality service offerings. But as common as co-branding is, healthcare providers that use this must have a legal structure in place as the integration occurs.
Risk managers must be careful to keep their organizations from violating the Anti-Kickback Statute, Stark Law, and tax laws while engaged in a co-branding arrangement, says Jeanna Palmer Gunville, JD, shareholder with Polsinelli in Chicago. The issue is becoming more common as health systems seek to bring more providers under their umbrella.
A system’s brand name often is the biggest asset they bring to the table when negotiating partnerships, Gunville says. But leaders sometimes question how they want to use the brand name and what is involved with doing so.
“Are we setting a precedent with putting a value on it if we use it in this transaction? If we allow the use of our brand, how protected can we make the use of it, and how do we unwind it if clinical parameters and quality measures are not met?” she asks. “All of those parameters are very important to consider on the front end, and it helps you know when to engage a valuation consultant in the process.”
When faced with a potential co-branding opportunity, risk managers should consider how extensive the arrangement would be and any limits that might be imposed. Determine what kind of relationship is being considered — a limited use of the brand or a full partnership?
Establish quality indicators that must be met, and the process for withdrawing the brand if those metrics are not met. Determine what usage of the name, logo, and other branding is allowed.
“What incidents would be immediately reportable and make you reconsider how you will allow usage of the brand? Risk managers are very close to the ground and have a good feel for what kind of things will have a real impact on how the brand is perceived by the public,” Gunville says. “Work with your attorney to spell out these expectations and how you will hold the other party accountable.”
The risk manager also must address potential fraud and abuse exposure as well as tax law liabilities.
“When using your brand and assigning a value to it, you must be sure it is licensed at fair market value. To not do that raises compliance issues with the Anti-Kickback Statute, the Stark Law, and tax laws applying to tax-exempt organizations,” Gunville says. “When you are looking at assigning a value to the brand, it’s important that it is supportable through an evaluation consultant’s report backing up the fair market value assigned to the brand.”
- Jeanna Palmer Gunville, JD, Shareholder, Polsinelli, Chicago. Phone: (312) 873-2950. Email: email@example.com.