The Business of Healthcare

Hospital Divorces Anesthesia Group After 24 Years of Marriage

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

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Medical Group Minute | Videocast

Do You Notice This Disconnect in Medical Services RFPs? – Medical Group Minute

Many requests for proposal (RFPs) for physician services completely miss the point by laying out what is expected and setting out strict performance standards, such as “the contractor will cover X sites from 7 am to 7 pm.”

By doing so, they assume that they know the best way to provide the service. By doing so, they force, or perhaps foolishly fool, potential medical groups to respond as if the requirements set forth in the RFP are actually optimal for the facility.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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