A few months ago, while waiting at the gate for a flight, I couldn’t help but notice a gate agent making some woman unpack and repack and unpack and repack her expandable carry-on suitcase because it was too wide to fit into the measuring “box” for carry-on luggage.
Category: The Business of Healthcare
Discussing the business side of all things healthcare.
Last week (November 20, 2018), I mentioned the increase in the physician dissatisfaction index, which now tops out at 3.95 out of a possible 5. See my Success in Motion video, Physician Misery Index Jumps Up Due To Dissatisfaction.
The survey, conducted annually by the data technology firm Geneia, found that 87% of surveyed physicians say that it’s increasingly harder to spend time in an honest, engaged patient encounter, and that they’re personally at risk of burnout.
Drilling down into the data reveals some particularly interesting details that appear to counter the sales pitch used by hospitals and by corporate/investor-owned healthcare vehicles alike when courting practice acquisitions: “You just practice medicine and we’ll do everything else. After all, you didn’t go into medicine to run a business.”
Close to all (91%) of hospital or corporate employed physicians responding to the survey reported diminished joy in their jobs due to increased demand for data reporting. That level of dissatisfaction far outpaces that of physicians working independently or with true physician-owned practices.
Practice sales make sense some of the time for some physicians. The rest of the time, they don’t.
It’s important that you vet any combination for far more than sales price unless you’re taking the money and running.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
I’m writing this on a Saturday, a couple of days before publication. I’m about to head off to meet with a futurist to brainstorm some ideas.
Speaking of the future, lots of people are talking about driverless cars.
Suppose those people who want to sell us driverless cars, or to force us into driverless cars, are right and that we’ll all be driving in them. What’s the impact on healthcare? What’s the impact on your practice?
Assuming, and yes, it is a very big assumption, that driverless (that is, people programmed) cars might actually be safer than people driven cars, will there be fewer accidents? According to Centers for Disease Control data, in 2006, 3.2 million people received non-fatal injuries from auto accidents. And, according to a 2013 report from the Agency for Healthcare Research and Quality, auto accidents resulted in approximately 2.8 million emergency department visits in 2010, which was around 15% of total emergency department visits for injury that year.
What happens if that business (no, I’m not coldhearted, but I’m writing this for healthcare providers) goes away? What’s the impact on the number of emergency department physicians needed? What’s the impact on the amount of nurses needed? What’s the impact on the number of hospital beds needed? What’s the impact on the number of specialist consults and surgeries and physical therapy and on and on? What’s the loss to the bottom line?
Yes, I’m warming up for the discussion with the futurist. This part of the warm up fits well with my own “futuristic” work, my book, The Impending Death of Hospitals.
But this self-driving car trend and many others and the way they intersect help lubricate the mind and lubricate the discussions among medical group and other healthcare leaders in exploring alternative futures, futures into which you must project your practice or business. That is, unless you want a driverless car to drive you to the poorhouse.
What are you doing to envision your future?
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
We still love you but, hey, we’re in love with someone else who spends less on clothes stipends.
When I was a kid growing up in Los Angeles, there was a television show that I loved to watch: the original Divorce Court. You see, at the time, California required grounds for divorce, and the show proffered up titillating tales of deceit. But just across the border in Nevada, one could quickly obtain “residency” and snip marital ties on a whim.
Just like a 1960’s Reno divorce, last month, Olean (N.Y.) General Hospital announced that it was terminating its 24 year marriage to Southern Tier Anesthesiologists. Apparently, it was the “for richer or for poorer” part of the marital vows that pushed the hospital over the edge.
Yes, after 24 years of marriage, it was time for a change. Will the successor group be a “trophy wife” or bring staffing strife? Only time will tell.
Money talks.
According to a letter obtained by the Olean Times Herald, the hospital stated that Southern Tier’s bid for the renewal contract would have cost it too much: “. . . It is simply not feasible for [Olean General Hospital] to pay millions of dollars more than necessary over the life of the . . . contract.”
Of course, none of us are privy to the inside terms. Southern Tier claims to have done its best to meet any offer. But the hospital says there was a great gap. And, it’s reported that the hospital lost $3 million the previous year. How and why they lost it is anyone’s guess, but it’s unlikely that it was significantly due to Southern Tier’s contract.
The lesson for you: If you hold any hospital contract that pays you anything, you must constantly assess how to increase the value proposition. This is easily seen in the context of a hospital-based medical group stipend. But hospital-employed physicians generally are blind to the fact that the exact same concept applies to them.
We love you, but what have you done for us lately?
Again, we don’t have any specific facts, but query whether it was only an issue of money that led the hospital to take “bids” for Souther Tier’s anesthesia contract after a 24 year relationship.
The lesson for you: Despite all of the rainbows and unicorns talk about “alignment” and “valued partners,” hospitals view physicians, especially (anti-kickback statute alert!!) those who do not refer patients to them, as vendors: Cafeteria – check! Laundry service – check! Hospital-based medical group – check! Or, in the case of Southern Tier, uncheck!
Don’t take for granted that you won’t be unchecked as well.
You’re running a business, not supporting a hospital.
As much as you may love the idea that you’re “supporting the hospital,” take a bit of advice from polygamists: Spread the love around.
You never know when you’re going to be dumped even if you’ve done everything you possibly can to keep the love alive.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
Let’s say you’re the leader of a medical group. It could be a small group of a handful of physicians. Or, you could be the President and CEO of a 600 or 6,000 provider group. It doesn’t make any difference.
Here’s the point: You negotiated for some arrangement. It could be an agreement with a payor. It could be an agreement with a facility. It could be an agreement with almost anyone. And then six months or a year later, someone, whether it’s your original deal partner or a third party, approaches you with another agreement.
This could be as simple as a request for an amendment to the original deal. Or it could be as seemingly disconnected as being approached by a third party who proposes some other deal to you.
You have to ask yourself how entering into a seemingly benign amendment or how entering into a seemingly benign other arrangement, even with a third party, will impact that first deal. Which, of course, begs the question of whether you know of, and can quickly access, all of your existing agreements.
Many times, especially with the complexities of healthcare dealings and the complexities of healthcare compliance, “other” deals have a tremendous impact on your initial arrangement. You can’t look at them as stand-alone.
If you’re not careful, you can screw up years of planning. You can screw up the terms of an agreement. You can find yourself bound to terms that you had no idea you were agreeing to be bound to.
Catalog all of your agreements. Consider each new deal or arrangement in light of your existing ones as a matter of standard operating procedure.
Remember, it’s not just the (new) deal that you’re making, it’s how that deal might change, or moot, or breach what’s already in place.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
Selling a healthcare facility or a medical practice isn’t like selling a gold coin. Gold has a fixed market value and it trades on its weight in troy ounces.
Instead, it’s more akin to selling a house. As anyone who’s sold one knows, any house can be groomed for sale. It can be positioned in the market. The effort returns a higher sales price and can speed up the time to sale.
The underlying story is the same whether we’re discussing your ASC, your imaging center, or any other outpatient facility. And, it’s the same whether we’re discussing your hospital-based physician group, such as an anesthesia or radiology group, or an office-based practice, such as an oncology, dermatology, or orthopedic surgery practice.
Although a house might be spiffed up in a matter of months, it takes longer to do that to your business. Depending on the starting point, it could take at least a year, and often from two to three. The main goal, of course, is to increase earnings which in turn will drive a higher sales price and more money in your pocket.
On the flip side, this means that someone who just one day decides that “we are for sale” has missed the opportunity to take advantage of the time to take steps, not just operationally, but internally as to structure, to increase the business’s or practice’s value.
Of course, even if you take the steps to increase the value of your facility, business, or practice, it doesn’t mean that you have to sell. Done properly, taking those actions will also increase your operational efficiencies, your cash flow, and your bottom line profits for your own ownership.
Either way, it’s too late to have started a year ago, but it’s not too late to start today.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
You may have seen their websites: Anesthesia “practice management companies” that advertise “no stipends!” to obtain facility contracts.
Or, you may have seen the RPFs, usually drafted by “consultants” or “management companies” (and others specializing in perhaps unknowingly committing federal crimes) who promise the surgeon-owners of ASCs that they’ll get anesthesia groups to provide a plethora of coverage and directorship services for free.
Oops. Nothing just became $3.2 million. Plus legal fees. Plus the continued risk of being criminally prosecuted.
Yes, the type of stupid compliance mistake underlying these idiots’ thinking just led to a $3.2 million civil settlement of a False Claims Act (i.e., whistleblower) suit brought against (among others) an orthopedic surgery practice, Georgia Bone & Joint (“GBJ”) and its related surgery center, Southern Bone & Joint a/k/a Summit Orthopaedic Surgery Center (“Summit Surgery Center”), as well as against CRNA David LaGuardia (“LaGuardia”) and anesthesia entities Southern Crescent Anesthesiology, PC (“SCA”) and Sentry Anesthesia Management, LLC (“Sentry”).
The suit was initially brought by Sharon Kopko, the former practice/facility administrator for both GBJ and Summit Surgery Center. Upon investigation by the U.S. Department of Health & Human Services Office of Inspector General, the FBI, and the U.S. Postal Service Office of Inspector General, the federal government took up the prosecution of the case.
From the settlement announcement of the U.S. Attorney for the Northern District of Georgia, the allegations against the defendants apparently grew from those originally contained in Ms. Kopko’s complaint to include that LaGuardia, Sentry, and SCA provided a free medical director to Summit Surgery Center in order to induce it to choose to perform more procedures at the surgery center rather than in the GBJ office.
In the words of the U.S. Attorney, “Kickbacks should never play a role in medical decision-making. It is critical to our health care system that patients seeking health care know that their providers’ recommendations are based on what is in the patient’s best interests and not influenced by illegal kickbacks or arrangements.”
Stay tuned. It’s yet to be seen who’ll now be criminally prosecuted.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
Special Announcement on AB 72 for California Physicians or Anyone Afraid This Crazy Idea Will Spread
Would any payor pay a physician or medical group more than Medicare plus 25% if they didn’t have to?
Would any payor with the ability to control what its “average” contract rate is, reduce its “average” if that’s all it has to pay to an out-of-network physician or medical group?
California’s law known as “AB 72,” purportedly passed to stop the “evils” of “surprise” medical bills in the nonemergency setting (that’s the situation a patient encounters when he or she gets treatment at an in-network facility from an out-of-network physician or other health care professional) will have an (intended?) disastrous impact on both out-of-network and in-network physicians and medical groups.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
How many times and for how long do you think a Broadway actor prepares for his first performance, or even for subsequent performances? How many months are they in rehearsal?
Actors and athletes, certainly professional athletes, use a similar practice-to-performance model.
For example, in baseball, there’s spring training, but there’s also practice, practice, and more practice in between, and prior to, games. How many thousands of hours of practice does a star batter devote to his handful of minutes at bat each game? It makes all the difference in his career.
Why do you think that negotiating a contract or putting together a healthcare business deal is any different? It’s not.
There are hours, days, weeks, and even months or years of preparation that go into negotiating a successful deal. There’s also the required exploration of the deal’s impact on other elements of your business.
Perhaps you don’t spend that time, but the chances are high that if there’s a true business operation on the other side of the deal, they will. So, how do you think things are going to work out for you?
Do you think you can just show up at bat, swing, and hit a home run? No one can.
Not even Babe Ruth was that lucky.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
You can’t build a bigger future for your medical group’s business if all you do is play is defense. You have to play offense, too: you must take affirmative steps to grow your business. But just the same, the failure to play defense can be fatal.
There’s a lesson in defense to be learned from the undercurrent of a lawsuit now playing out in Tennessee, in which the second largest hospital chain in the U.S., Community Health Systems (“CHS”) is suing Brian Bauer, the (fired) former CEO of its Fort Wayne, Indiana based Lutheran Health Network, seeking to prevent him from working with IU Health, a competitor in the Fort Wayne market. Following his firing by CHS, Bauer joined IU Health as CEO of its Fort Wayne unit.
Among the allegations are that Bauer, who apparently was not bound to any covenant not to compete, shared confidential and proprietary information with IU Health. CHS claims that sharing that information violates the terms of a CHS stock option agreement once in favor of Bauer. They also claim that Bauer violated the terms of that agreement’s non-disparagement clause.
Most interesting for our purposes is the fact that CHS is seeking an injunction preventing Bauer from engaging in any role with IU Health because Bauer inevitably could or would disclose or use CHS’ confidential or proprietary information.
According to an article in the Fort Wayne News-Sentinel, Bauer contends, among other things, that CHS’ lawsuit is “an attempt to sabotage that business relationship (between Bauer and IU Health) and curtail any potential competition.”
Last week, the trial court judge denied Bauer’s motion to dismiss the lawsuit. The case is now moving forward, with CHS’ motion for a temporary injunction to be heard soon. If granted, the temporary injunction could effectively be a knock-out blow to Bauer, as he’d be sidelined, unable to work for IU Health (and, potentially for any other competitor) for the months, if not years, until the final outcome of the case.
What you need to know for your own business purposes:
1. Covenants not to compete are creatures of state law. Some states favor their enforcement, others disfavor them, and still others don’t much like them but will still enforce reasonable restrictions.
2. In states that allow enforcement of covenants not compete, consider their use in your agreements with key players. Carefully draft them to increase the odds of enforcement. In some states, Texas for example, physician covenants not to compete are enforceable only if they comply with highly technical requirements.
3. In any state, even if it favors the enforcement of covenants not to compete and you use them in your agreements, consider the use of other key anti-competitive restrictions. There are many available strategies, both in terms of the way that agreements are structured within your entity, between your entity and its team members, and between your entity and third parties. For example, note that CHS’ alleged restrictions appear in a stock option agreement, not the typical place where they’d be found, and one in which, I’d assume, eyes get glassy with dancing dollar signs.
4. The use of litigation as a tool to project power is a fact of life. Don’t assume that trite sayings such as “speak truth to power” have much value other than as bumper stickers or motivational posters.
Comment or contact me if you’d like to discuss this post.
Mark F. Weiss
