AHS Medical Holdings LLC, which does business as Ardent Health Services, was founded in 1993 as Behavioral Healthcare Corp., a chain of psychiatric hospitals. Private equity firm Welsh, Carson, Anderson & Stowe bought a majority stake in 2001, kicking off a name change and major expansion. Today, the privately owned company owns and operates 10 acute-care hospitals, a rehabilitation hospital, a multispecialty physician group, a 250,000-member health plan and retail pharmacies. Its Lovelace Health Plan has 240,000 subscribers in New Mexico.
The company employs more than 9,000 people and maintains headquarters in Nashville, Tenn.
General counsel Steve Petrovich has been general counsel since the Behavioral Healthcare days. “The legal, compliance and risk-management departments report directly to me, although compliance also reports to the company’s board of directors,” he said. Petrovich operates from Nashville while two additional attorneys in Albuquerque, N.M., focus on health plan operations. Two paralegals help out.
“I am responsible for all legal services for all aspects of our company’s operations in all three states we operate in,” he said. “I handle matters [such as] corporate governance, health care regulatory advice, employment issues and transactional matters.”
“We have used a buy-it model and not a build-it model for our legal function,” Petrovich said — meaning that outside counsel handle most of the work. “But that may be changing in the next year.” He’s considering bulking up in-house to accommodate Ardent’s growth. “With all expansions, the company looks at how it can bring efficiencies and economies of scale to the operations. In-house legal services are no exception.”
Nashville-based Bass, Berry & Sims serves as primary outside counsel — basically, “a valued extension of our in-house department in most matters and for due diligence on transactions.” Patrick Clark in Ogletree, Deakins, Nash, Smoak & Stewart’s Atlanta office handles employment matters; Louis Glaser in Katten Muchin Rosenman’s Chicago office takes care of physician transactions; Stephen Braun of Birmingham, Ala.-based Bradley Arant Boult Cummings’ Nashville office handles hospital transactions; Bob Lewis and Mark Werner of Sidley Austin’s Chicago office do financing; Donna Bergeson and Robert Stone of Atlanta-based Alston & Bird take care of academic medical center issues; Jennifer Vaughan of Parker, Hudson, Rainer & Dobbs in Atlanta handles managed-care work.
“We also have strong ties to local counsel in our markets to handle the state-specific items,” he said.
“I use a pretty simple rule that I learned when I worked in the mail room at Alston & Bird when I was in college: A firm represents Coke or Pepsi, not both. I don’t waive conflicts very often as I don’t think that is the correct route.
“I have yet to find a businessperson who will understand why a firm represents us in one matter and then is opposed to us in another matter — whether directly or indirectly — regardless of the magnitude of the matter, placement of Chinese walls or any other device to keep matters separate. A firm is my firm or it is not.”
“With a small in-house shop, we outsource all litigation to lawyers who can and will go to trial,” Petrovich said. “We have the typical caseload of malpractice cases, employment litigation and various commercial cases. We try to resolve our cases early through mediation and early evaluation, if possible. If we cannot resolve early, then we will try cases. I don’t like to spend legal fees and also settlement fees. It does not make good business sense.”
Mediation, he finds, “gives the businesspeople a good sense of the strengths and weakness of a particular matter and helps us perform a risk assessment of the value of the case. We also use arbitration, although in my experience that is becoming less of a useful alternative, as it slows down the process and is more costly. Plus, it seems that finding good arbitrators is becoming more difficult.”
“With the presidential election settled, our biggest challenge will be implementing and adjusting to the changes being instituted by the Patient Protection and Affordable Care Act,” he said. As the law takes effect, “there will be changes in almost all aspects of the care continuum involving managed care, hospital operations and provider relationships. Each aspect of the care continuum will try to protect its operations and change the way it delivers quality care and service to people who are less sure about what the changes will mean to them.
“Staying in compliance with the newest round of regulations and changes will be challenging,” he said.
ROUTE TO THE TOP
Petrovich clerked for U.S. District Judge Harold Murphy of the Northern District of Georgia. “That was the best job I have had and will probably ever have. He was and remains the consummate judge in all aspects of what people ask for and expect in a judge in the traditional and honored sense of that post.”
What did the experience teach him? “That being a lawyer is an honored profession and that it should be treated as such. A lawyer is a counselor and adviser — and the advice and counsel given should not be colored or changed to fit the desired outcome.”
He worked in the Atlanta office of Columbia, S.C.-based Nelson Mullins Riley & Scarborough and then The Kelly Law Firm, concentrating on litigation, employment and health care regulatory work, before becoming litigation counsel for Charter Behavioral Health Systems Inc. That company suffered business reversals and filed for Chapter 7 liquidation in 2001. “I left in a planned departure shortly thereafter,” Petrovich said, for Ardent’s predecessor.
Petrovich graduated in 1991 from the University of Georgia School of Law, where he was editor of the Georgia Law Review, and he received his undergraduate degree from DePauw University in 1988.
He is married to Emilie Koers Petrovich, also a graduate of the University of Georgia School of Law. They have three children, aged 17, 16 and 13.
Petrovich is a big supporter of the Williamson County, Tenn., soccer community, where he has been a team manager and pro bono legal counsel. He and his family support several community groups that help families deal with cancer.
LAST BOOK AND MOVIE
Team of Rivals, by Doris Kearns Goodwin, and Lincoln. “I read a lot of biographies and historical work, and I am really enjoying the details and story of Team of Rivals.”