Negotiating roadblocks to IDS-physician equity joint ventures

Integrated delivery systems (IDSs) may find that forming an equity joint venture relationship with a physician group practice is the best way to integrate physicians into their networks. IDSs have a choice between two basic equity structures: affiliated group practice, in which a management services organization (MSO) handles all practice management infrastructure and the physician group is a physician-only organization; and integrated group practice, in which the physician group encompasses both the physician practice and the administrative infrastructure. The choice of equity structure and how it should be implemented hinge on several legal issues, including the existence of a corporate-practice-of-medicine statute in the IDS's state, compliance with the Federal antikickback statute and Stark laws, and various issues regarding the IDS's tax-exempt status. IDSs also should consider pragmatic issues, particularly those associated with aligning the economic incentives of the two partners.