EXPERT OPINION: A Conversation with Hedy Rubinger - October 2009

Hedy Rubinger,
Partner,
Arnall Golden Gregory LLP

In this "Expert Opinion" interview, Hedy Rubinger discusses what it takes to bring an acquisition through the regulatory approval process and what has changed over the years, sharing her 20+ years of experience as an attorney specializing in long-term care regulatory law.

 

 

 

 

 

 

 

 

 

 

Listen now     Watch the video      Read the transcript

Ms. Rubinger is a partner in the firm whose practice primarily focuses on healthcare. She represents all types of healthcare providers including nursing homes, assisted living facilities continuing care retirement communities, hospitals, ambulatory surgery centers, ancillary service providers, and physicians in matters related to operations, regulatory compliance, certificate of need, managed care, reimbursement, change of ownership and employment issues. She also represents investors and lenders and has extensive experience in managing the regulatory aspects of healthcare transactions, ranging from single-facility purchases to some of the largest multi-state, multiple service-line transactions.
 
Ms. Rubinger was appointed by the Department of Community Health, Division of Health Planning to serve on a technical advisory committee charged with recommending changes to the inpatient healthcare delivery system. She lectures frequently on various issues relating to healthcare providers.  She was recently a Contributing Author for the"Fifty State Survey of Certificate of Need and Licensure: Nursing Homes, Assisted Living, Home Health, and Hospice," American Health Lawyers Association, 2009.

Ms. Rubinger was selected for inclusion in "Georgia Super Lawyers" in Atlanta Magazine each year from 2004 to 2009 for her work in Health Care Law. She was also listed as a "Top 50 Female Georgia Super Lawyer" in Atlanta Magazine for 2008 and 2009.

Contact Information:
Hedy Rubinger, Partner
Arnall Golden Gregory LLP
171 17th Street NW
Suite 2100
Atlanta, Georgia 30363-1031
404.873.8724  direct
hedy.rubinger@agg.com

Watch the video of the interview: 




Read the interview transcript:

Steve Monroe:
Okay, I am here tonight with Hedy Rubinger, she's a partner in the law firm of Arnall Golden Gregory.  She's got 20 years of health care legal practice, so we are dealing with a true specialist in health care regulatory law.

Hedy, as an attorney, you have been specializing in the regulatory approvals necessary for buyers to get acquisitions done in the senior care market.  Are there any tricks of the trade that you've come across in your 20 years that you specifically advise your clients to do or not to do in the process?

Hedy Rubinger:
Absolutely yes.  The most important thing is to have a game plan upfront.  And if you're dealing with a multi-state transaction, which is often the case, or if you're dealing with multiple types of providers within a given state, then you have various layers of approval that you need to make sure that you obtain before your transaction can close.

So in every state you need to get through a licensure process if you're dealing with a change of ownership or even a change of control in most states.  You need to deal with your Medicare provider agreement, you need to deal with your Medicaid provider agreement.  And in many states or many types of providers, you have to go through a CON or Certificate of Need approval process.

So the most important trick of the trade is to know the universe of what you're dealing with upfront.  And what we do is we have a whole game plan, because we do this throughout the country and for various types of providers.  And we line everything up so that we can get to the finish line at the same time.  And we really understand the nuances of each state and what needs to happen in terms of hearings, applications, financial reporting so that we build in a timeline so that it all can conclude concurrently.

Steve Monroe:
Which is why your clients probably prefer to hire you and not to have to do it themselves, because it's a little complicated.

Hedy Rubinger:
It is a little complicated and we also try to do it so that there's the least amount of disruption at the actual operator or provider level.

Steve Monroe:
What ends up being the biggest problem that results in delays.  I know transaction people will always say, "We're waiting for regulatory approval."  What's the big issue?  The time bomb?

Hedy Rubinger:
The time bomb is changing the transaction midway.  So that once you have your application filed, you want to make sure that that application is complete and you're not going back to the regulators with any changes.  And what happens is that often times tax issues and other business issues are not necessarily considered on the front end.  And so we file the application and then, when the tax guys get involved, they realize that the structure of the transaction needs to change and so we're going back to the regulators and asking for a do-over, if you will.  And, in some instances, that will start the clock anew.

Steve Monroe:
Over the years, has the approval process become easier or harder?

Hedy Rubinger:
I would say it's become harder.  Although in many instances, the laws have not necessarily changed and even the applications haven't changed, the level of scrutiny has increased and we're seeing, especially with the change of control, we're seeing that there's increased scrutiny of the actual individuals, even, who are at the top of the ownership, as opposed to just looking at the operator and at the base level.  The buzzword for the last few years has been transparency and we're actually seeing regulators really want to know much more about who's ultimately in charge of the nursing homes and caring for the residents and their needs.

Steve Monroe:
Are there any states that are the most difficult in the process?  Or the easiest?

Hedy Rubinger:
There is a great deal of variety amongst the states and, even within a given state, the CON process might be very difficult, but yet the licensure process is relatively simple.  So we just have a feel at this point of where the hot buttons are.  We know to focus on those, get those going first and then the rest will fall into place and then we can move the process along.

Steve Monroe:
You don't want to name any easy or hard states.

Hedy Rubinger:
No, I don't.  But I know which ones they are.

Steve Monroe:
Some states do a pretty thorough look-back on a buyer in the other states that they operate in, check on any quality issues, that kind of a thing.  One, how far back do they usually look?  And, are they really only looking at the serious quality of care issues or looking for anything?

Hedy Rubinger:
Well, if they do a look-back, and not every state does, but the states that do, they typically go back 10 years, which is quite a long time.  And they take a look at that and what they're looking at are patterns of quality of care problems, for the most part.  But what happens is, our clients that focus on buying a distressed portfolio will, because they're buying a challenged building, they will have problems and so it's really up to us to convince the regulators that they shouldn't necessarily penalize our client when our client comes back in the next time to do another deal and they're looking at the distressed one, it becomes a domino effect.

So we really work hard with the regulators to come up with creative solutions so that they can approve the deal enough that we can get the deal closed and then we sometimes have workarounds with these states.

Steve Monroe:
And when they go back in time and they do find a problem, are they relatively pragmatic in how they deal with that?  And understanding when there's a logical explanation?

Hedy Rubinger:
That varies state by state and regulator by regulator, as you would expect.  But what we've done is we have worked out with states where we will sign some sort of agreement with the state so that we can actually get our approval, but we will have compliance requirements that are over and beyond what would otherwise be required in the state.  So that's one workaround.

Another workaround is to have a provisional license so that we make it through the process, but we have to come back in a certain number of years so that the state looks to see how the operator's doing under the new ownership.  And then we'll get a permanent license at that point.

Steve Monroe:
Have you done any regulatory work for not-for-profit providers and, if you have, is it different?

Hedy Rubinger:
Well, it's different in that you have a few more issues that you have to deal with.  As I mentioned before, the biggies are licensure, Medicare, Medicaid and CON.  When you're dealing with a non-profit, the attorney general approval process is required in many states which will involve a hearing in many instances.  And you also, in certain states, have different certificate of need approval process if you're dealing with a non-profit.

Steve Monroe:
Is it easier or harder?

Hedy Rubinger:
Harder.  Not necessarily harder, but just one more factor that you have to factor in and make sure you leave enough time to complete the approval process.

Steve Monroe:
And I know a lot of your work, if not the majority, has been in the skilled nursing area.  Do you see in the assisted living side, are you seeing where the regulatory approval process, if you do any of those transactions, is that getting worse?  Do you ever see it becoming like skilled nursing 10 years ago?  From an approval process.

Hedy Rubinger:
Yeah, from the approval process, we do a great deal of assisted living work and what we are seeing is that it is every bit as complicated in certain states on the licensure side.  Now, what you eliminate when you're dealing with assisted living is you eliminate any Medicare approval.  And you're in most instances eliminating Medicaid approval, unless the assisted living has a special program with the state.

But within a state there's oftentimes various levels of assisted living, so you can even have a different process depending on the level of assisted living.  And what we also find is that, in some states, assisted living facilities must be surveyed before they get to a change of ownership process as opposed to after and that's something that needs to be factored in and you just need to know that that could be coming and that could be a cause of delay, if you aren't aware of it.

Steve Monroe:
How does one keep track of all those regulatory issues for skilled nursing, then you have assisted living and the various gradations of assisted living and you've got 50 states.  Do you really keep track of that much?

Hedy Rubinger:
It's a team approach and we do.

Steve Monroe:
And they're constantly changing.

Hedy Rubinger:
Yes.  That makes it more complicated to get the deal done, but that's our job.

Steve Monroe:
Now, the acquisition market, as I'm sure you know, has been pretty quiet in 2009.  Through your clients, are you seeing any uptick-and, obviously, you're not going to breach any confidentiality-but do you feel like there's a bit more momentum going on where they're talking about more transactions coming along?

Hedy Rubinger:
I would say yes is the answer to that, but what we're really seeing is that our clients are spending more time focused inward and they're restructuring, they're refinancing and, in many instances, a restructure and/or a refinancing requires a regulatory approval process.

So we're seeing more of that type of introspective work and we're seeing smaller transactions than we saw back in 2007, the year of the mega-transactions.  And we are seeing some positive signs for 2010.

Steve Monroe:
Thanks for spending time with me.