April 2, 2020

Cross-industry partnerships are getting a legal boost amid the Covid-19 crisis

Daily Briefing

    As my colleagues, Colin Gelbaugh and Nick Hauger, wrote last week, hospitals and other members of the health care industry are entering into novel partnerships in response to the COVID-19 emergency. They are jointly operating call centers, sharing laboratory and testing capability, reallocating PPE and other equipment, repurposing hotels and dorms, and coordinating with retailers and other non-health care entities.  

    To combat COVID-19, should you team up with Walgreens? Lyft? (Or your competitors?)

    These types of collaborations often require federal approval in the form of a Federal Trade Commission (FTC) advisory opinion or a business review from the Antitrust Division of the U.S. Department of Justice (DOJ), either of which can take several months. But time is something hospitals and health care organizations working to treat the growing caseload of COVID-19 patients do not have.

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    DOJ, FTC expedite reviews for proposed collaborations

    Enter the DOJ and FTC. These government agencies recently enacted an expedited process to review proposed collaborations that are designed to address the COVID-19 pandemic.

    In their March 24 statement, the agencies acknowledge that addressing the pandemic will require "unprecedented cooperation" among government agencies and private businesses. To that end, the agencies announced they would "aim to respond expeditiously to all COVID-19-related requests, and to resolve those addressing public health and safety within seven (7) calendar days."

    The agencies gave examples of some likely permissible actions, including:

    • Joint ventures that aim to bring goods to at-risk communities, increase capacity, or bring new products or services to market;

    • Research and development collaborations;

    • "Sharing technical know-how";

    • Partnerships that aim to develop "suggested practice parameters… to assist providers in clinical decisionmaking";

    • "Most joint purchasing arrangements among health care providers"; and

    • Where health care facilities work together to provide resources and services "to communities without immediate access to personal protective equipment, medical supplies, or health care."

    Beyond providers, the agencies extended this effort to other businesses that may temporarily combine their "production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies they may not have traditionally manufactured or distributed."

    This announcement parallels that of HHS Secretary Alex Azar, who, on March 30, announced a blanket waiver of the Stark Physician Self-Referral Prohibitions for financial relationships, referrals, and remuneration that are due to the national COVID-19 emergency. The effect of this waiver is that CMS will pay claims for services, which would otherwise have violated Stark, to ensure that "sufficient health care items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid, and CHIP programs" and that health care providers that "furnish such items and services in good faith, but are unable to comply with one or more of the specified requirements … as a result of the consequences of the COVID-19 pandemic, may be reimbursed."

    What these actions mean for providers

    Together, these announcements are an invitation for health care and non-health care organizations to continue the creative efforts we have been seeing to combat the new coronavirus. In a crisis, the value of time and resources escalates; we can neither be all nor do all, and there are many, both within the health care industry and without, that are better positioned to meet some of these needs, and are able to do so at pace. Leveraging these partners is a path to success.

    We expect to see more collaborations along the lines my colleagues have highlighted, including funding the retooling of local production facilities to make face shields, collaborating with clothing manufactures to make gowns and masks, and other innovative partnerships across industries and regions. These regulatory changes should also facilitate the entry of private equity and other financial organizations into the forefront of our nationwide efforts to combat COVID-19.

    As your organization explores entering into these novel associations or seeks out new collaborators, we are happy to serve as a thought partner. Please email StevensMa@advisory.com to connect.

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