Earlier this year, I read a news piece on a health system in Memphis called Methodist Le Bonheur Healthcare that had announced that it would be closing the joint venture ASC that it operates in concert with over one hundred physician partners.
Category: ASC
Sure, you can buy a new 2019 Bentley Continental GTC for around $300,000. But you can pick up a gently used 2016 model for around half the price.
ASCs can be great investments for physicians. Oh, as long as they are real.
Was it really their decision? Or have the physician partners realized that they no longer need the hospital?
Look at it like this: You can finally say goodbye to all those folks in suits who have their hands in your pockets.
As the shift of surgeries from the hospital setting to the ASC setting accelerates, we’re seeing more fraud at the ASC level.
No, I’m not talking about the significant amount of fraud that comes from the “usual suspects,” criminal operators who bill for medically unnecessary procedures, for procedures that never occurred, and so on.
Instead, as more physicians rush to invest in ASCs, unscrupulous facility promoters/managers scheme to separate physician investors from their money.
This fraud on physicians takes various forms, from securities fraud arising from misrepresentations, failures to disclose, and outright disregard for federal and state securities regulations and the exemptions therefrom, to sophisticated (and even Clouseau-like bungled) financial fraud on investors within the facility’s business operation.
“Compliance” in terms of investing in a surgery center is generally thought of as paying attention to the federal Anti-Kickback statute, state law referral prohibitions, and similar concerns. However, for physician investors it’s equally important to pay particular attention to vetting the overall structure of the deal and its promoters, the past history of the center’s operations, and the conflicts of interest and related-party dealings of those purporting to “manage” the facility.
Think of it this way: The last time I checked, a “physician-money-ectomy” isn’t on the Ambulatory Surgery Center Fee Schedule.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
New Years Day, 2018.
Are you prepared to be unreasonable this year?
Or would you rather continue to bet on the healthcare status quo, that is, on a hospital-centric system?
Or, is being “unreasonable” actually more reasonable?
George Bernard Shaw stated that “the reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” Clearly in the “unreasonable” corner.
Franz Kafka stated “in man’s struggle against the world, bet on the world.” Clearly in the “stick with the big boys” camp. Or, is it?
For the past twenty years, the reasonable approach has been for physicians to become more tightly aligned with hospitals. That’s where the money was and that’s where the power was. So much so, that physicians were barred from expanded and new Medicare certified hospital ownership.
But then fast forward to today. The hospital-centric financial and power structures are weakening.
Yes, it’s true that not all hospitals are dead, but most are slowly dying. Over time, what we know as hospitals today will be few and far between. That’s the theme of my book, The Impending Death of Hospitals (get a complimentary copy digitally, or a hard copy, on Amazon), and it’s being played out in the popular press on a very regular basis.
Witness the recently announced merger of CVS and Anthem in a bid to grab power away from hospitals. Or, the recently announced merger talks between Ascension Health and Providence St. Joseph Health that would create the largest U.S. hospital chain — each fears it cannot continue to exist alone.
What many, if not most, think is the reasonable, the safe, the traditional, approach is to continue to bet on the large players. That’s the bet being taken by the huge percentage of physicians employed by hospitals. But hospitals have bloated infrastructures and are sitting ducks for government intervention, whether by way of tax policy or via the tangled web of the government-hospital complex in which one “partner” is more equal than the other.
What to do? Deer in headlights? Reasoned thought? Unreasonable thought?
What clues, what proof, what evidence can we use to find our way?
In addition to closed hospitals, shrunken hospitals, down-sized new facilities, and bedless hospitals, there are other trail markers to the future. Payors are pushing radiology procedures out of hospitals to freestanding imaging facilities. Payors are pushing surgical procedures to ASCs. Hospital employment is becoming dangerous because if (when?) the system fails there will be no supported practice left to salvage. Hospital contracts in a world in which hospitals have declining case volume becomes problematic at best, disastrous at most.
Yet another famous writer, F. Scott Fitzgerald, stated that “the test of a first rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.”
We’re smart, so let’s listen to Scott: Keep one foot in the hospital-centric world while taking affirmative steps toward one in which hospitals will be minor players. But it’s not enough just to hold ideas. Ideas must be implemented for them to be of much value.
For the past several years, I’ve been betting big on independent physician ventures. From surgery centers, to imaging facilities, to significant sized practice ventures. Yet, at the same time, I’ve been working with both large and small(ish) hospital based groups, and on physician-hospital joint ventures. That work will continue.
At the same time, in 2018, we’ll intensify a major push into expanded, physician-led ventures, with an emphasis on re-creating, on the physician-controlled level, integrated systems. As hospitals downsize and shift to the outpatient world to become more like ASCs, physician-owned ventures can become more like what hospital systems used to be, without the overhead, without the administrative bloat, and without the baggage.
Want to come along for the ride?
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
Naughty or Nice?
This year, Santa brought a lump of coal to Tenet’s Abrazo Maryvale hospital campus.
Rumored to be accompanied by the Grinch for extra muscle, he padlocked the 232-bed Phoenix area facility.
All kidding aside, the hospital fell victim to, in the words of its spokesman, “dwindling patient volumes.”
As a reader of my blog and of my book, The Impending Death of Hospitals (download here or purchase in hard copy), you know it’s more than that: it fell victim to a dwindling business model.
Tenet clearly understands it. They recently said goodbye to their former CEO, who probably had a better holiday than most with his $22.9 million severance package. But despite their foray into ASCs via their acquisition of United Surgical Partners International, their major line of business, hospitals, is an anchor around their neck.
Having lost $367 million in the 3rd quarter of 2017, compared with a $9 million loss for the 3rd quarter of 2016, the company reports that it’s looking for “strategic options.” That’s quite a euphemism.
Tenet’s slow demise isn’t unique. A significant part of the hospital industry is broken.
But you’re not Tenet.
For entrepreneurial physicians, Tenet’s troubles are your opportunity. Physician owned ASCs, non-Medicare hospitals, medical malls, and more.
The time has never been better for you. Payouts are pushing procedures out of hospitals. Why not be there to profit from them?
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
Ride along with Mark Weiss as he discusses how you as a physician can apply concepts from indoor farming to your development of ASCs and other independent healthcare facilities.
Physicians (and others) considering forming a Medicare certified ASC have to be very careful about not confusing the ASC entity’s purpose.
If they do, they may not only blow the federal Anti-Kickback Statute (“AKS”) safe harbor on which they likely rely, they may destroy all of their Medicare claims by turning them into false claims.
Here are two of the ways that ASC organizers and operators cause the fatal explosion of their business.
Running Physician Services Through The ASC Entity
Most organizers of an ASC attempt to fit the business structure into the AKS’s ASC safe harbor. The object is to protect the payment of distributions to the ASC’s physician owners from prosecution as kickbacks.
Although there are several categories of standards (e.g., single-speciality ASCs, multi-specialty ASCs) under the safe harbor, all depend on the fact that the investment entity actually is an ASC.
As defined for Medicare purposes, an ASC must be, among other things, “a distinct entity that operates exclusively for the purpose of providing surgical services.”
In turn, surgical services for Medicare purposes do not include physician services.
The problem is that there’s a trend among some ASC owners to use their ASC entity to employ physicians. A prime example would be the direct employment of anesthesiologists – this is one of the variants of the so-called “Company Model” of anesthesia services through which surgeon-owners of an ASC attempt to capture a portion of anesthesia fees. Note also, that some ASC owners attempt to directly employ other physicians, even surgeons, in similar fashion.
Rendering physician services of any kind through the ASC entity causes it to no longer qualify as an ASC for Medicare purposes. No ASC means no ASC safe harbor. Even worse, no ASC means that any ASC claims to Medicare weren’t actually ASC claims. They were worthless claims. Even worse, they were false claims.
Running Non-ASC Services Through An ASC Entity
In almost exactly the same manner, an ASC can blow its Medicare definition by expanding into a service line consisting of non-ASC services. For example, by performing diagnostic procedures other than those directly related to performance of a covered surgical procedure.
Once again, the facility is no longer an ASC either for safe harbor or for Medicare billing purposes.
Kaboom.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
