Heritage Provider Network
Law School: USC Gould School of Law
Size of Legal Department: 3
Jonathon Gluck, who since February 2008 has led the legal department for one of the state's largest physician groups, woke up one day and realized he had become a health lawyer almost without noticing. Although it was no accident - he loves the work, it wasn't exactly planned either. In just a few years, he went from handling one case for Heritage Provider Network as a litigator at Bingham McCutchen to having a practice that was more than 50 percent comprised of Heritage's health care litigation.
Heritage, a managed care company based in Torrance, also has seen a boom in its business. The company contracts with thousands of physicians to provide the gamut of medical services for hundreds of thousands of HMO members. As a full-risk physician group, Heritage has the tricky task of not just providing whatever care the insurers will cover as well as managing patients and keeping them healthy.
Last year, Heritage more than doubled its reach by acquiring an ailing San Fernando Valley medical group. It now runs medical groups practicing in nine counties, from Tulare to San Diego, with a particularly large presence around Palm Springs, Bakersfield, Burbank and Glendale. With that increase in doctors - and the patients they treat - Heritage's contractual issues and litigation have grown, too.
Now, the company is preparing to ride a new wave of interest in their model of managed care set in motion by national health care reform.
A one-time big firm lawyer who worked several years at Rirodan McKenzie and then Altshuler Berzon, Gluck said he prefers running his three-person legal department. Not only that, he much prefers hiring small firm lawyers.
Gluck spoke recently with Staff Writer Evan George. Here's an edited version of what he had to say:
DJ: How would you describe Heritage's core business?
GLUCK: Heritage is responsible for providing all the medical care for a given HMO membership. When a person signs up for an HMO they choose a primary care doctor; those doctors are typically affiliated with large groups called Independent Physician Associations, or IPAs. The HMO will provide a set amount of money to the IPA to provide health care for that member. There are two types of IPAs: shared risk and full-risk. The full-risk entities are responsible for the institutional and professional care of the member. We are one of just a few full-risk IPAs in the state of California.
DJ: How has the company grown in recent years and has that increased regulatory work?
GLUCK: Approximately 5 years ago, Heritage and its affiliates provided care to around 300,000 individuals. Today, that number is around 600,000. We acquired a large competitor last year, which almost doubled the size of our L.A. operation. Heritage is the entity that holds the Knox-Keene license with the state of California, which allows it to take institutional risk for its members. It then contracts with its affiliated medical groups to provide the professional care to the members. It's simply a licensing issue. If you're taking hospital risk, which is where the big money is, the state requires that substantial reserves be set aside by the license holder.
DJ: What are the biggest legal challenges for Heritage?
GLUCK: We have the same kind of disputes any company our size would have: contract disputes, claims payment disputes, employment disputes. There's not a lot of mergers and acquisition legal work because we currently don't have that many acquisitions underway. Last year we had a major acquisition so there was a lot of time spent on it, but it just depends on what's going on. We have a lot of contracting issues that come up because we contract with lots of physicians. We also have 83 contracted hospitals in Los Angeles.
DJ: How do you decide what cases to handle and which to refer to outside counsel?
GLUCK: It depends on the level of complication and whether we have the expertise. Health care law is not something a single individual can know everything about; it's just impossible. The more complicated the case, the more likely we are to send it out. The more detailed and obscure the issue is, the more likely we are looking at outside counsel. Stark issues [governing anti-kickback laws] are a prime example, because Stark is very, very complicated with all kinds of minutiae.
DJ: What firms do you tap for certain expertise and why?
GLUCK: I give a lot of work to Mike Amir at Doll, Amir & Ely, who does most of our litigation work. I use the Miller Health Law Group for regulatory matters. Jeremy Miller has been doing this for many years. We've used Ervin Cohen & Jessup for mergers and acquisition work - they have a lot of health care experience. And Bingham McCutchen, when there is high-stakes litigation. For the larger claims cases, we use Locke Lord & Bissel & Lidell. They have to have the expertise. The health care bar is not that big. Everybody pretty much knows who's an expert in what area. Especially on regulatory stuff, I don't want to hire someone who has to start from square one on figuring out what the answer is. Reputation and cost effectiveness, and how pleasant you are to work with go into the mix too.
DJ: How have firms' increased rates impacted the company's outside litigation?
GLUCK: It makes it far more likely I'm going to try to find someone with expertise who does not work at a big firm, and I say that coming from a big firm and understanding the model. A lot of the time it's cost prohibitive, especially using junior lawyers who are billing at extremely high rates for things I can have very seasoned lawyers do at a smaller firm for a much cheaper price. That's a no-brainer.
DJ: The so-called Accountable Care Organizations, or ACOs, that health care wonks are talking about, are they something Heritage will try? Does it create additional legal work?
GLUCK: Its something we're looking at seriously. Everyone is; it's the model that is being discussed in Washington. As far as legal work, I don't know that it's all that different from any other model of business. It's just a different type of compensation arrangement. But also, I don't think anyone knows truly what its going to look like so we're going to have to wait and see. The interesting thing is that ACOs are already what we do. When you get to the bottom of it what is an ACO? An ACO requires that patient care be managed for a set sum of money - that's what the delegated model is. The best way to provide cost-effective, quality health care is to keep the patient healthy. That's what we've done for years. If you worry about it only once they get sick, game's over.
DJ: Your recent acquisition of Lakeside must have been tricky because it was such a large physician group to absorb. There were also access issues raised by some. Did that result in legal issues?
GLUCK: There were legal overtones, but there's wasn't much [action] to be honest because the transition was very seamless. Everyone kept their doctor. Lakeside didn't go bankrupt. No contracts were terminated. So if the patients read about it in the newspaper they probably knew about it, but other than that most of them probably never realized what had happened.
DJ: What do you enjoy most about this position?
GLUCK: I get to see much more than I would have been able to see as a litigation partner at a law firm. I do probably 30 percent legal work and 70 percent business operations - whatever comes down the road that day. I'm involved with all aspects of the company. To go from constantly fighting about document production to this role is highly recommended.