The healthcare industry is complex, dynamic, and constantly evolving. Lawyers play a vital role in navigating the landscape. Rick Grossman, Senior VP and General Counsel at Sharp Healthcare in San Diego has made significant contributions to the field in his 44+ year career. MD Ranger was lucky enough to chat with Rick earlier this month about his extraordinary path in healthcare. The following article is taken from our conversation.
Tell us about getting your start as an attorney.
I received a Juris Doctor degree from Southwestern University School of Law and passed the California Bar in 1979. In 1981, I was awarded a Master of Law in Taxation degree by Georgetown University Law Center. Although my wife and I loved D.C., the job market was not great due to the change in presidential administrations and a federal hiring freeze, so we returned to Los Angeles and joined a boutique tax and estate planning firm.
Why did you decide to specialize in health law?
My initial foray into health law was never intentional and more accidental than anything.
In 1984, I changed law firms and joined Musick Peeler & Garrett based in Los Angeles. At the time, the hospital industry was undergoing significant change. Hospitals were reorganizing into more complex corporate structures and expanding into new services. Industry associations were growing, and hospital providers were looking at new ways to collaborate with each other. For example, in California, the hospital industry cooperated in the development of an insurance exchange to provide lower cost, readily available malpractice insurance when premiums were escalating. Similarly, many hospitals moved away from using local attorneys and engaged more sophisticated law firms to assist with complex legal matters.
Hospital-physician joint ventures were popular as an alignment and growth vehicle when I started at Musick Peeler & Garrett. This was before the enactment of the Stark Law and active enforcement of the Anti-Kickback Statute, so there were opportunities for hospitals to engage their physicians in partnerships intended to expand operations and enhance revenue sources. To do so, many hospitals formed clinical laboratories, diagnostic imaging, ambulatory surgery, and other joint ventures, and solicited physicians to become their partners. To offer and sell ownership or investment interests in these ventures, the hospital sponsors or their affiliates needed to satisfy the federal and state securities law, which included the preparation of a detailed offering memorandum that incorporated a description of the business opportunity, an outline of the risks associated with the investment, and an opinion detailing the tax consequences associated with the venture and an ownership interest in it. My first hospital-related legal work was preparing these tax opinions.
Tell us about your early days practicing healthcare law.
When I was in law school, there were no health law classes, no health law-related graduate legal degrees, and few attorneys who specialized in health care. The legal side of the industry was just emerging, with only very few law firms focused on the field. In Los Angeles at the time, only three law firms had a substantial health focus.
I had no intention of becoming a health lawyer when I joined Musick Peeler & Garrett. However, because of the firm’s many hospital clients and the types of transactions they were considering, the door opened for me to use my tax skills to support hospital-driven corporate and business transactions.
In 1985, less than a year after I started at Musick Peeler & Garrett, I was approached to join a new boutique health law practice. They told me that if I joined them, they would have a better mix of legal specialties and be more attractive to potential clients. I was a young lawyer with nothing to lose, so I took a chance. The new firm, known as Girard, Ellingsen, Christensen & West, was instantly successful based on the excellent reputations and client relationships of the lead attorneys. Throughout my career, I’ve benefitted from mentors who have supported my growth and development. One of these attorneys, Bob Girard, became my mentor and piqued my interest in focusing on the business-related aspects of health law. The work and the in-depth exposure to healthcare issues outside of tax and corporate matters pushed me to learn more about health law and the industry in general. This was my first deep dive into being a health lawyer.
In early 1989, Bob Girard and I left the firm and joined Jones Day with the goal of starting an organized health law practice. Jones Day was the largest US-based law firm and had the foresight to extend its legal services into the health field. We recruited additional health lawyers to the firm and grew the practice. For me, it was another chance to learn and work with highly regarded health lawyers and further my understanding of the economic, political, societal, and other forces driving the healthcare industry.
Health law was going through a dynamic change in the early 1990s. Congress passed the Stark law and the safe harbor regulations under the Anti-Kickback Statute were issued; everyone from the operators to the lawyers were trying to figure out what it all meant and what the impact would be on the future of provider business relationships. In California, IPAs were developing and consolidating at a rapid pace, physician practice management companies were creating new models for physician organizations, the first foundation model clinics were being established and tested under the federal tax exemption rules, managed care companies in California were converting from nonprofit to for-profit status, and hospitals aggregated and formed health systems and partnerships. The stars aligned for me as a lawyer in the middle of it all by providing the opportunity to mix my tax/business skills with an ever-increasing knowledge of health law.
How did you make the jump from having hospitals as clients to being inside counsel?
I left Jones Day and joined Manatt, Phelps & Phillips in early 1992. While at the firm, I worked on a project that put together a new IPA and designed a physician alignment strategy for a hospital in San Bernardino, California, which was part of a Catholic system based in Houston, Texas. One day in 1996, the client’s CEO told me that the hospital was joining a group of Catholic hospitals in Southern California to become part of Catholic Healthcare West (CHW), a Catholic health system headquartered in San Francisco. These Southern California hospitals were forming a new operating region, to be known as Catholic Healthcare West Southern California (CHWSC). The intent was to set up an office in Pasadena and organize an executive team that included a senior attorney. The hospital CEO, who was going to become the CHWSC Senior VP of Strategy and Development, asked me to come on board. I decided to take the leap and in January 1997 Regional General Counsel for CHWSC.
My health law expertise grew over the years and, when asked to become the Regional General Counsel, I was confident that my legal skills, my general understanding of the operational and other significant considerations facing health care organizations, and my ability to provide sound legal advice to executives on abroad variety of topics, would contribute to CHWSC’s success. In fact, my legal skills were tested every day, yet I was energized by the dynamic atmosphere and the fascinating challenges faced by CHWSC.
What were some of the highlights of your early days as inside counsel?
In the 1990s, UniHealth, an outgrowth of the Lutheran Hospital Society, was a large health system in Southern California and one of the first to try to become an integrated delivery system. When it faced substantial financial issues, in December 1998, CHW bought all UniHealth’s acute care hospitals and almost overnight grew from five to 15 hospitals. Soon after the acquisition, CHWSC quickly divested two of the newly acquired hospitals. I was the lead in-house lawyer responsible for guiding both transactions. At the time, not many nonprofit hospital transactions of this magnitude, which also included the integration of Catholic and non-Catholic facilities into a Catholic health system, had been completed. I am immensely proud of the work our team did on these deals and they represent early highlights of my in-house career.
Simultaneous with the purchase of UniHealth’s hospitals, we elected to expand CHWSC’s legal department to meet growing demand Over a relatively brief period, we added several lawyers, paralegals and other resources to enhance the functionality and effectiveness of CHWSC’s Legal Department.
As CHWSC’s Regional General Counsel, in addition to directing lawyers in business, tax and transactional-related matters, I oversaw, directed and supported the team on the full panoply of legal issues confronted by a regional health system, the hospitals and their related entities, such as medical staff, physician contracting, physician recruitment, compliance, real estate, and governance matters. In addition, as part of the CHWSC’s senior executive team, which was actively engaged in looking at strategic opportunities to expand the footprint in Southern California, I contributed to the business plans and strategies that helped CHWSC become a successful component of the larger CHW system.
As CHW grew, how did you grow and scale the legal department?
In July 2000, CHW brought on a new President/CEO, Lloyd Dean. Shortly after he took the helm, he reorganized the company. Most importantly, he successfully led the merger of multiple regional and local hospital corporations into a single entity, converting CHW from a holding company into an operating company. He also reduced and eliminated several layers of regional management and established direct accountability between local operations and the system-wide executive leadership team.
As a part of these changes, CHW’s then General Counsel took a major step to unify the semi-autonomous regional branches of the legal department into a single unit across the entire system. The Regional General Counsel title was eliminated and retitled as an Associate General Counsel. Many lawyers started working on projects outside of their historical geographies. he Department standardized practices and procedures and hiring shifted to attract lawyers with specific expertise to the entire organization, such as labor, information technology, supply chain, real estate, and construction, to enhance the overall quality, effectiveness, and consistency of its legal services.
When and where did you get your first General Counsel role?
In 2012, CHW was renamed Dignity Health. In 2013, I was designated as the Interim General Counsel concurrently fulfilling my regional Southern California role. I was appointed Dignity Health’s Executive Vice President and General Counsel in August of that year.
Dignity Health experienced the turbulence felt by many nonprofit systems around the country. As General Counsel, I was on the Executive Leadership Team that dealt with major challenges across the system. I undertook a much more active role with the governance processes as legal advisor to the Board of Directors and Executive Leadership Team, working closely with Lloyd Dean, President/CEO, Michael Blaszyk, Chief Financial Officer, Charlie Francis, Chief Strategy Officer, Elizabeth Shih, Chief Administrative Officer, and others. The team was dynamic, focused and engaged with the development and success of Dignity Health. During this time, Dignity Health formed a revenue cycle management joint venture with Optum Health, known as Optum360. To get the new venture off the ground, Dignity Health took a huge step and committed its entire system-wide patient financial services operation to engage the new company. Dignity Health also formed anew division for international initiatives, which included consulting on the design/development of a 1,000 bed hospital in the People’s Republic of China and partnering in the expansion of an international online health education platform. Being Dignity Health’s General Counsel offered many wonderful and fun experiences.
The combination of Dignity Health and Catholic Healthcare Initiatives (CHI) was one of the biggest nonprofit healthcare transactions in history. What was it like to work on that transaction?
The process of developing the structure, conducting due diligence, negotiating the legal documents, and implementing the transaction to form CommonSpirit Health, a Catholic health system that would own more than 150 hospitals, took us close to two years. It was a huge undertaking that became my major focus given the complexities and multi-jurisdictional aspects of each organization. The affiliation required the consent of the California Attorney General for each of Dignity Health’s California hospitals (more than 30), dealing with the conditions negotiated for each consent and holding public hearings in 18 counties across California. As General Counsel, I also was active in the governance processes and ultimately helped obtain approvals from Dignity Health’s Board of Directors and Sponsorship Council. Dignity Health’s outside counsel, Dan Higgins, and I negotiated every legal document that was part of the transaction. I participated in the post-transaction integration and implementation planning processes. One of the most interesting and rewarding parts of the transaction was interacting with the Catholic Church, most particularly the Archbishop of San Francisco, to gain his support and, ultimately, approval of the Vatican for the combination of these two significant Catholic health systems.
What have been the biggest accomplishments of your career so far?
If I had to pick one, the biggest achievement in my legal career would be the formation of CommonSpirit Health. It allowed me to leverage and apply all the legal skills I’ve developed over my years in practice. Although challenging and stressful, I am extremely proud of the parts of the transaction that I spearheaded and for the opportunities to work with Dignity Health’s extraordinary Executive Leadership Team, the fantastic set of outside law firms that represented Dignity Health, and the team at the California Attorney General’s Office.
Looking at this question in my role as a General Counsel, at Dignity Health we built an integrated legal team that delivered high quality and exceptional legal services across a large health system. We put together an excellent team of lawyers, paralegals, technology support, legal coordinators and others who understood their roles and worked hard to develop the processes and procedures needed for an effective legal department. For some key processes, we leveraged technology to improve our operations, like creating a physician contracting process with MD Ranger and implementing a matter management system. Ultimately, we developed expertise across the healthcare legal space that allowed us to successfully serve the organization. It was a great legal department and an incredible team of people who collaborated to make it function well. I am honored that I had the opportunity to be their leader for six and a half years.
Most recently, becoming the General Counsel of Sharp HealthCare in 2019 is a career highlight. Sharp HealthCare is a great organization comprised of wonderful people who are dedicated to being the best place to work, the best place to practice medicine, and the best place to receive care. I am privileged to be a part of its leadership team, to have helped guide the health system through the pandemic, and to participate in its future success.
You have led the legal departments of some incredible organizations. Do you have any guiding principles for leadership?
Yes. The first principle, which I practice on a regular basis, is active listening. I think the hardest job for any lawyer is to listen to what others are telling you, whether it is your clients, your colleagues, the lawyers representing the other side, or others involved with you in a matter. You learn tremendous amounts by listening first, reflecting on what you have heard and then responding. In fact, you cannot understand what you need to know unless you listen, and you can never effectively represent your clients unless you understand what they want you to know.
The second principle is communication. You must be able to communicate well with your team. In a large organization, there is no way that executive leadership can realistically communicate with everyone. Your job as a leader, whether for a department of one hundred or ten people, is to communicate what is going on in the organization, both positive and negative, so your direct employees can understand what is happening and why.
Depending on your role and who you are working with, the third principle is transparency. I believe that it is an obligation of a leader to be transparent whenever feasible and within the bounds of confidentiality. It is important to explain the rationale behind decisions and how they may affect the company, your department, and each individual working in your department. From my perspective, the more transparent and open a leader can be in communicating information, the better it is for all. It is critical for your success as a leader and for the respect of your team members.
What advice would you give a healthcare attorney who is just starting their career?
My first piece of advice is to spend time understanding the healthcare industry. It is incredibly complex and changing on a moment-to-moment basis, and there are multiple forces that impact everything. If you are a health lawyer and you don’t have a deep understanding of how the industry works and its outside influences, you can’t be fully effective in representing clients. I am not just talking about understanding hospitals. When we think about the landscape today, we have Amazon and Walmart who are in the healthcare business; we’ve got well-funded organizations like Optum buying key segments of the industry; we have private equity buying changing the dynamics; and the result is that you, as a healthcare lawyer, must understand what effect they're having and how they're changing what's going on across the healthcare sector.
Second, as a healthcare lawyer, you must recognize that you will have to work almost twice as hard as many other lawyers. First, you must learn the fundamentals to be an effective lawyer in the general area in which you want to practice, whether it be litigation, corporate, mergers/acquisitions, technology, taxation, or real estate. In addition, you must understand and build a foundation in the specialized laws and regulations that apply to health care. You can be the best general lawyer, but if somebody hands you a healthcare project, you will be out of your element when it comes time to do the work because you will have no clear idea about the fundamental aspects of the industry or the critical legal and regulatory issues. It takes a tremendous amount of effort, particularly in the early years of your practice, to build the knowledge and skills needed to be a good health lawyer. And the learning never stops throughout your career!
My third piece of advice is to be aware of what's going on politically and legislatively – on both a national and state level – so you can adequately advise your clients.
Finally -network! There are great associations for health lawyers, such as the American Health Lawyers Association, the California Society of Healthcare Attorneys, and the American Bar Association’s Health Law Section. Additionally, the California Hospital Association and American Hospital Association provide great opportunities to network with people in the industry more broadly, to expand your resources and to make contacts that will help advance your career.
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