This Management Facility Services Agreement involves
Title: FACILITY AND MANAGEMENT SERVICES AGREEMENT
Governing Law: Washington Date: 8/23/2016
Industry: Healthcare Facilities Sector: Healthcare
FACILITY AND MANAGEMENT SERVICES AGREEMENT
THIS FACILITY AND MANAGEMENT SERVICES AGREEMENT (the “ Agreement” ), dated as of January 2, 2015, is by and between Northwest Cancer Care Management Company, LLC a Washington limited liability company (“ Manager” ), and Northwest Cancer Care Associates, P.C. a Washington professional corporation (“ Medical Group ”). Manager and Medical Group are each individually referred to in this Agreement as a “ Party ” and, collectively, as the “ Parties .”
A. Medical Group is a provider of radiation oncology (the “ Medical Specialty ”) in Benton County, Washington.
B. Manager operates and manages facilities used by licensed physicians to practice various professional medical services, including but not limited to the Medical Specialty.
C. Medical Group wishes to engage Manager to provide it with certain office facilities, equipment, nonclinical and administrative personnel, supplies and administrative services at the office located at 7379 W. Deschutes Ave., Suite 100, Kennewick, Washington 99336 (the “Office”).
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises and covenants of the Parties hereinafter set forth, and for their mutual reliance, the Parties, intending to be legally bound, hereby agree as follows:
1. Facilities, Equipment and Services to be Provided by Manager .
(a) Office . Manager hereby grants an exclusive license to Medical Group to utilize the Office (the “Licensed Premises”) and Medical Group agrees to license such Office from Manager from Monday through Friday during the hours of 8:00 a.m. through 6:00 p.m. and such other hours as mutually agreed upon between the Parties during the Term of this Agreement. Manager shall make all arrangements for and pay all costs associated with the utilities necessary for the operation of the Licensed Premises, including, without limitation, electricity, water, gas, telephone, waste (office and medical, including radioactive medical waste) collection and removal, and janitorial services. In no event shall Manager permit any other parties to utilize the Licensed Premises and all common area portions of the Office that will be shared by the Medical Group and the Manager, such as all the lavatory facilities, the waiting rooms and reception area and the general office area for faxes and copies during the term of this Agreement. Manager and its employees and representatives shall have the right to enter the Licensed Premises at all reasonable times for the purposes of inspection, making repairs and for any other reasonable purpose.
(b) Equipment . Manager hereby grants Medical Group an exclusive right to utilize such furniture, fixtures and equipment located in the Licensed Premises as are described on Exhibit A hereof (the “ Equipment ”) and Medical Group agrees to license the use of such Equipment from Manager. The Equipment provided hereunder shall, at all times, be and remain the property of Manager. Medical Group shall not remove the Equipment from the Licensed
Premises without the prior written consent of Manager. Manager shall maintain all Equipment in good repair, condition and working order, and shall furnish all parts and services for the Equipment reasonably required therefore including, without limitation, preventive and routine maintenance as necessary and appropriate, as determined by Manager, to maintain the Equipment in an acceptable state of repair and serviceability. The Parties agree and acknowledge that Medical Group shall be free to exercise its professional judgment with respect to the use of the Equipment.
(c) General Management . Manager shall have authority and responsibility to manage, conduct and administer the day-to-day administrative and non-professional operations of the Medical Group’s Practice and shall perform those functions pursuant to the terms of this Agreement and consistent with applicable laws, rules and regulations and applicable standards of care for like entities. Nothing in this Agreement shall be construed as permitting the Manager to engage in the practice of medicine, and Medical Group shall have sole and exclusive authority over the professional operations of the Licensed Premises. The duties of Manager shall include, but not be limited to:
(i) Supplies . Manager shall provide Medical Group with such office and medical supplies as are necessary for patient care and treatment and the operation of the Licensed Premises by Medical Group as reasonably determined by Medical Group in consultation with Manager.
(ii) Billing and Collections . Manager shall provide billing and collection services on behalf of Medical Group.
(iii) Scheduling . Manager shall maintain patient appointment scheduling services on behalf of Medical Group, which services shall include obtaining all appropriate pre-certification, demographic, insurance and related materials with respect to patients.
(iv) Required Licenses and Regulatory Fees . Manager shall procure and maintain all necessary licenses and permits for the installation, use and operation of the Equipment (if necessary) and the Licensed Premises (other than the professional medical licenses of Medical Group and its Physicians (as such term is defined in section 3)), and shall pay all related licensing, inspection and regulatory fees.
(v) Personnel .
(A) Manager shall provide, on behalf of Medical Group, all necessary non-professional support personnel (such support personnel are hereinafter referred to as “ Leased Personnel ”), receptionists, secretaries, clerks, management personnel and/or other personnel as necessary, as reasonably determined by the Manager upon consultation with Medical Group. Manager shall be responsible for recruiting, training, managing, supervising, compensating and terminating such personnel; provided , however , that Medical Group shall at all times have the ultimate authority and responsibility to supervise all such personnel to the extent they are engaged in the delivery of patient care services and shall participate in decisions of Manager with respect to the recruiting, training and terminating of all such personnel.
Manager shall be responsible for all salaries, fringe benefits, taxes and insurance necessary with respect to all such personnel.
(B) Leased Personnel shall remain employees of Manager, and not employees of Medical Group. At such times as the Leased Personnel are providing services on Medical Group’s behalf, Medical Group shall have authority and responsibility for (i) the supervision and control of the Leased Personnel (while providing services on Medical Group’s behalf); (ii) determining the means and methods by which Leased Personnel provide services hereunder; and (iii) determining charges for the services of Leased Personnel.
(vi) Contract Negotiations . Manager shall advise Medical Group with respect to and negotiate, on Medical Group’s behalf, all contractual arrangements with third parties as are reasonably necessary and appropriate; provided , however , that all such contractual arrangements shall be subject to final approval by Medical Group.
(vii) Financial Reports . Manager shall prepare and submit to Medical Group periodic financial reports reflecting the financial status and operations of the Medical Group.
(d) Prohibited Activities . Notwithstanding any other provision of this Agreement, Manager and Medical Group expressly acknowledge and agree that Manager is not being engaged by Medical Group to, nor at any time shall Manager:
(i) engage in the practice of medicine (including but not limited to determining what diagnostic tests are appropriate for a particular condition, determining the need for referrals to or consultations with another physician/specialist (or the identity of the physician for such referral or consultation) determining patient treatment options, or determining what is included in a particular patient’s medical records);
(ii) provide marketing services, directly or indirectly, to or on behalf of Medical Group;
(iii) select, hire and/or fire (as it relates to clinical competency or proficiency) Physicians, allied health staff and medical assistants;
(iv) set the parameters under which Medical Group will enter into contractual relationships with third-party payers;
(v) make decisions regarding coding and billing procedures for patient care services;
(vi) make decisions regarding the compensation of Medical Group’s Physicians; or
(vii) determine how many patients a Physician must see during any given period of time or how many hours a Physician must work.
Both Manager and Medical Group acknowledge and agree that by entering into this Agreement, Medical Group does not delegate to Manager any powers, duties or responsibilities which it is prohibited by law from delegating. Medical Group retains all authority not expressly delegated to Manager under this Agreement. Manager shall provide all services hereunder directly or, at Manager’s option, through one or more third parties engaged by Manager, provided, however, that any such delegation shall be on commercially reasonable terms and conditions. Medical Group acknowledges that certain of Manager’s services may be so delegated and may also be provided offsite.
2. Term . The term of this Agreement shall commence as of the effective date of termination of that certain Interim Facility and Management Services Agreement between Manager and Northwest Cancer Clinic, LLC, dated January 2, 2015 (the “Effective Date”), and shall, unless terminated sooner as provided herein, continue for an initial term often (10) years after the Effective Date (the “Initial Term”). Thereafter, this Agreement shall automatically renew for up to two successive five-year renewal terms (each a “Renewal Term”, and together with the Initial Term, the “Term”), unless either party gives the other party a written notice of non-renewal at least ninety (90) days before the beginning of any renewal term.
3. Responsibilities of Medical Group .
(a) Provision of Professional Services . Medical Group, as an independent medical practice, shall be and remain fully responsible for all professional medical services provided at the Licensed Premises. In connection therewith, Medical Group shall provide all related physician support through its physician-employees and/or other physicians otherwise engaged by Medical Group (including physician-owned professional corporations) (“ Physicians” ).
(b) Licensed Providers . Each Physician engaged by Medical Group to provide services at the Licensed Premises shall be duly licensed, without restriction, to practice medicine in the State of Washington, shall be board certified or board eligible in the Medical Specialty; shall maintain professional liability insurance in minimum amounts of $l,000,000.00/$3,000,000.00 annual aggregate; and shall have never been convicted of a criminal offense related to healthcare, or been listed by any federal or state healthcare program as excluded or otherwise ineligible to participate in such federal or state program.
(c) Licenses and Permits . Medical Group and each Physician providing services on behalf of Medical Group shall have all necessary licenses, certificates, permits, approvals, franchises, notices and authorizations issued by governmental entities or other regulatory authorities, federal, state or local, required for the ownership and operation of Medical Group and the operation of its medical practice at the Licensed Premises.
(d) Payor Requirements . Medical Group shall cause all services in the Medical Specialty performed at the Licensed Premises to be performed in accordance with all requirements of applicable third party payors, including Medicare, as necessary to obtain all available payments therefore, including providing necessary Physician supervision of all such services provided.
(e) Quality of Care . Medical Group shall regularly review the Medical Group’s quality assurance policies and procedures to verify that the Medical Group is continually providing services that are medical necessary and of appropriate quality. Medical Group shall promptly inform Manager of any deficiency in the Licensed Premise’s facilities, Equipment, supplies or provision of services by Manager’s personnel which, directly or indirectly, could adversely affect the rendition of services of high quality on a consistent basis.
(f) Medical Records . During the term of this Agreement, all medical records with respect to Medical Group’s patients shall remain in the custody and control of Medical Group. Such records shall be stored at such location or locations as Medical Group shall direct. Upon any termination of this Agreement, Medical Group, at its own expense, shall remove such records from such location or locations, if such removal is required to enable Medical Group to satisfy its obligations as set forth in this Section 3(f). Notwithstanding the foregoing, at all times during the term of this Agreement and thereafter, Manager shall be provided with access to such records, as requested, for billing and all other reasonable purposes, subject to applicable law regarding confidentiality. Manager’s rights set forth in this Section 3(f) shall expressly survive any termination of this Agreement
4. Manager Compensation.
(a) Manager shall be paid, and Manager shall accept as payment for all facilities, Equipment, supplies, personnel and services provided to Medical Group hereunder, an amount equal to (i) $650,000.00 (the “Management Fee”). For purposes of this Agreement, “Net Collected Dollars” shall mean the gross collections attributable to radiation therapy services provided by Medical Group at the Licensed Premises during the term of this Agreement, net of refunds, adjustments and overpayments.
(b) Following the expiration or other termination of this Agreement for any reason, Manager shall continue to be entitled to receive the Management Fee based on Net Collected Dollars attributable to radiation therapy services provided by the Medical Group at the Licensed Premises prior to the expiration or other termination of this Agreement but for which collections are actually received following such expiration or other termination of this Agreement.
(c) The parties hereto have reviewed and evaluated the compensation to be paid by Medical Group to Manager for the facilities, Equipment, supplies, personnel and services hereunder and have determined it to be commercially reasonable, to be commensurate with fair market value and to not in any way be based upon the volume or value of patient referrals or any other business generated between the parties hereto or any of their affiliates.
5. Billing and Collections .
(a) Manager shall engage Financial Services of Southwest Florida, a Florida limited liability company (“FSS”) to provide billing and collection services on behalf of Medical Group pursuant to that certain Billing Services Agreement between Manager and FSS (the “Billing Services Agreement”).
(b) All Net Collected Dollars of Medical Group shall be deposited in a lockbox bank account in the name of Medical Group (the “Account”) with a bank (“Bank”) mutually agreed upon by the parties until termination or expiration of this Agreement. Manager shall remain a required signatory on the Account and shall be authorized to make payments from such account on behalf of the Medical Group, including without limitation, the Management Fee. Medical Group shall cause FSS to instruct all third party payors to deposit their payments directly into the Account. Medical Group shall provide the Bank standing instructions that at the end of each day all of the funds in the Account shall be swept into another account maintained by Manager at the Bank or by wire transfer to appropriate account(s) of Manager. Such letter of instruction shall not be altered, modified, changed or supplemented by the Medical Group absent Manager’s prior written agreement. Any such alteration, modification or change may be deemed by Manager as an event of default by the Medical Group under the terms of this Agreement. To the extent that any Net Collected Dollars are not sent directly to the Account as required by this Agreement, or are received by Medical Group, such collection shall be immediately remitted, in the form received, to the Account immediately upon receipt by Medical Group. This Section 5(b) shall expressly survive any termination or expiration of this Agreement.
(c) The parties acknowledge that all collections of Medical Group shall be applied first to the expenses and obligations of Medical Group (excluding any amounts due and owing to Manager or FSS) as stated in Medical Group’s annual budget (which budget shall be subject to the approval of Manager), and then applied to any amounts due and owing to Manager hereunder or due FSS pursuant to the Billing Services Agreement, until such amounts are paid in full. On or before the 15th day after each month, Manager shall remit the remaining balance in the Account to Medical Group.
(d) So long as any Management Fee or Billing Services Fee or any other liabilities or obligations of the Medical Group under this Agreement remain unpaid, Manager shall, to the extent authorized by law, have a continuing first priority security interest in all of the accounts receivable of the Medical Group, whether now existing or hereinafter arising, and all replacements of, and substitutions to, proceeds and products of any of the foregoing The Medical Group shall promptly execute and deliver any and all further instruments and documents, and take all further action that Manager may request, in order to perfect any security interest granted or purported to be granted by the Medical Group hereunder. Without limiting the generality of the foregoing, the Medical Group shall execute and file such financing or continuation statements, or amendments thereto, and such other similar instruments or notices as may reasonably be deemed necessary or desirable by Manager, or as Manager may otherwise reasonably request, in order to perfect and preserve the security interests granted to Manager hereunder. The Medical Group shall promptly provide Manager with evidence of such filings upon receipt. In addition, Manager shall have the right, in its sole and absolute discretion, to assign, pledge or subordinate the security interests granted to Manager hereunder. The parties acknowledge and agree that this Section 5(d) does not constitute an assignment by the Medical Group of its Medicare/Medicaid receivables in violation of the Social Security Act, and the Medical Group is not required to have its Medicare/Medicaid funds be paid directly to Manager.
6. Disclaimer . MEDICAL GROUP ACKNOWLEDGES THAT MANAGER IS NOT THE MANUFACTURER OF THE EQUIPMENT, THE MANUFACTURER’S AGENT, OR THE DEVELOPER, ARCHITECT, OR OWNER OF THE PREMISES UPON WHICH
THE OFFICE IS LOCATED. ACCORDINGLY, MEDICAL GROUP HEREBY AGREES TO TAKE THE EQUIPMENT IN AN “AS IS” CONDITION. MANAGER HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER RELATING TO THE OFFICE OR THE EQUIPMENT, INCLUDING WITHOUT LIMITATION, THE DESIGN OR CONDITION OF THE OFFICE, THE EQUIPMENT’S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP, OR AS TO PATENT INFRINGEMENT OR THE LIKE.
7. Representations of Medical Group . Medical Group hereby makes the following representations, warranties and covenants to Manager, each of which shall be true as of the date hereof and shall continue to be true during the term of this Agreement:
(a) Duly Authorized . This Agreement has been duly authorized, executed and delivered by Medical Group and is binding upon Medical Group.
(b) Duly Organized . Medical Group is duly organized under the laws of the State of Washington and is authorized and qualified to do all things required of it under this Agreement.
(c) Capacity to Contract . Medical Group has the capacity and authority to fulfill the obligations required of it hereunder and nothing prohibits or restricts the right or ability of Medical Group to carry out the terms hereof.
(d) Violations of Law . Neither Medical Group nor any agreement, document or instrument executed or to be executed by it in connection with this Agreement, or anything provided in or contemplated by this Agreement, does or will violate any applicable law, rule or regulation or breach, invalidate, cancel, make inoperative or interfere with, or result in acceleration of maturity of, any contract or agreement to which Medical Group is bound which would affect Manager’s rights hereunder.
8. Manager’s Representations . Manager hereby makes the following representations, warranties, and covenants to Medical Group, each of which shall be true as of the date hereof and shall continue to be true during the term of this Agreement:
(a) Duly Authorized . This Agreement has been duly authorized, executed and delivered by Manager and is binding upon Manager.
(b) Duly Organized . Manager is duly organized under the laws of the State of Washington and is duly authorized and qualified to do all things required of it under this Agreement.
(c) Capacity to Contract . Manager has the capacity and authority to fulfill the obligations required of it hereunder and, to the best of Manager’s knowledge and belief, nothing prohibits or restricts the right or ability of Manager to carry out the terms hereof.
(d) Violations of Law . Neither Manager nor any agreement, document or instrument executed or to be executed in connection with this Agreement, or anything provided
in or contemplated by this Agreement, does or will, to the best of Manager’s knowledge and belief, violate any applicable law, rule or regulation or breach, invalidate, cancel, make inoperative or interfere with, or result in acceleration of maturity of, any contract or agreement to which Manager is bound which would affect the rights of Medical Group hereunder.
(e) Title to Office and Premises . Manager is the lessee of the Office and has the right to authorize the use of the Licensed Premises and the Office by Medical Group during the term of this Agreement pursuant to the written consent of the lessor which consent has been obtained by the Manager.
9. Independent Contractor .
(a) This Agreement is by and between Manager and Medical Group and is not intended, and shall not be construed, to create an employment relationship, partnership or other such association as between the Parties. Manager is independent and separate from the Medical Group.
(b) Neither Manager nor its employees or agents shall look to Medical Group for vacation pay, sick leave, retirement benefits, Social Security, worker’s compensation, disability or unemployment insurance benefits, or other employee benefits; nor shall Medical Group or its employees look to Manager for the same.
(c) In performing the services required hereunder, Medical Group and its Physician employees and contractors shall exercise independent professional judgment. Manager shall not exercise any control over matters of Medical Group involving the exercise of professional medical judgment.
(d) In the event the Internal Revenue Service or any other governmental agency shall, at any time, question or challenge the independence of either Party, the Party who received notice of same shall promptly notify the other Party and afford the other Party the opportunity to participate in any discussion or negotiation with the Internal Revenue Service or other governmental agency, irrespective of by whom such discussions or negotiations are initiated. The other Party shall participate in any such discussions or negotiations to the extent permitted by the Internal Revenue Service or other governmental agency.
10. Default by Medical Group .
(a) The occurrence of any one of the following shall constitute a default by Medical Group hereunder:
(i) if Medical Group fails to pay the Management Fees when due;
(ii) if Medical Group fails to observe or perform any of its other material obligations hereunder in any material respect and such failure continues uncured for a period of thirty (30) days after written notice thereof to Medical Group from Manager or, if such failure cannot be cured within such thirty (30) day period, Medical Group has failed to commence to cure such failure within such thirty (30) day period and diligently proceed to effect such cure;
(iii) if Medical Group (A) ceases to provide or arrange to be provided services in the Medical Specialty at the Licensed Premises; (B) makes an assignment for the benefit of creditors; (C) admits in writing its inability to pay its debts as they become due; (D) files a petition seeking reorganization, an arrangement, readjustment, or similar arrangement under any present or future statute, law or regulation; (E) files an answer admitting the material allegations of a petition filed against it in any such proceeding; or (F) consents to or acquiesces in the appointment of a trustee, receiver or liquidator of all or any substantial part of its assets or properties;
(iv) if, within sixty (60) days after the commencement of any proceedings against Medical Group seeking reorganization or similar relief under any present or future statute, law or regulation, such proceedings shall have not been dismissed, or if within sixty (60) days after the appointment (without Medical Group’s consent or acquiescence) of any trustee, receiver or liquidator of all or any substantial part of its assets or properties, such appointment shall not have been vacated;
(v) if Medical Group or any of its physician employees is finally determined, by an appropriate governing body or court, to have violated any applicable law, rule, regulation or ethical standard arising out of the conduct of the practice of medicine;
(vi) if Medical Group or any of its physician employees is suspended, excluded, debarred or otherwise ineligible to participate in any federal or state health program, including, but not limited to, the Medicare or Medicaid programs; or
(vii) if Medical Group or any of its physician employees is arrested for a felony or a misdemeanor involving moral turpitude, or has violated any rule, law, or administrative regulation (other than traffic violations or similar minor misdemeanors) that in Manager’s reasonable opinion impacts the Medical Group’s ability to provide services to patients or otherwise perform its obligations hereunder.
(b) Upon a default by Medical Group which has not been cured within an applicable cure period, Manager shall have the right to immediately terminate this Agreement.
11. Default by Manager .
(a) The occurrence of any one of the following shall constitute a default by Manager hereunder.
(i) if Manager fails to observe or perform any of its material obligations hereunder in any material respect and such failure continues uncured for a period of thirty (30) days after written notice thereof to Manager from Medical Group or, if such failure cannot be cured within such thirty (30) day period, Manager has failed to commence to cure such failure within such thirty (30) day period and diligently proceed to effect such cure;
(ii) if Manager: (A) makes an assignment for the benefit of creditors; (B) admits in writing its inability to pay its debt as they become due; (C) files a petition seeking reorganization and arrangement, readjustment or similar arrangement under the present or future statute, law or regulation, if any present or future; (D) files an answer admitting the material
allegations of a petition filed against it and any such proceeding; or (E) consents to or acquiesces in the appointment of a trustee, receiver, or liquidator of all or any part of its assets or properties; or
(iii) if, within sixty (60) days after the commencement of any proceedings against Manager seeking reorganization or similar relief under any present or future statute, law or regulation, such proceedings shall have not been dismissed, or if within sixty (60) days after the appointment (without Manager’s consent or acquiescence) of any trustee, receiver or liquidator of all or any substantial part of its assets or properties, such appointment shall not have been vacated.
(b) Upon a default by Manager which has not been cured within an applicable cure period, Medical Group shall have the right to immediately terminate this Agreement.
12. Termination .
(a) This Agreement shall terminate upon the following events:
(i) the mutual written agreement of the Parties;
(ii) as provided in Section 2; or
(iii) as provided in Sections 10 and/or 11.
(b) If this Agreement is terminated prior to the first anniversary of the Effective Date, then the parties will not enter into a successor agreement addressing the same or substantially the sa