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| Dear Friend,
Pay close attention so this doesn't happen to you.
With the tip of the hat to T.S. Eliot, the world for Community Regional Anesthesia Medical Group (CRAMG) ended on June 16, 2021, not with a bang but a whimper.
That’s when the Fresno, California group of approximately 40 physicians and close to 40 CRNAs, filed Chapter 11 bankruptcy after more than 20 years of providing services to Community Medical Centers’ three hospital campuses.
The bankruptcy filing followed the loss of the group’s exclusive contract. Additionally, according to CRAMG, large legal expenses defending a wage and hour suit brought by CRNAs also contributed to the decision to file bankruptcy.
Among other debts, CRAMG’s bankruptcy Petition indicates that $5.1 million is owed by it to Community Medical Centers.
The Business Journal reports that CRAMG “anticipated that it would renew a contract with Community Medical Centers before [Community Medical Centers] allowed the agreement to lapse.”
Anticipated?
But oddly, the same newspaper also reports that Community Medical Centers issued a request for proposal in advance of the expiration of CRAMG’s exclusive contract and that CRAMG did not provide a response.
Whatever the actual facts, the sad story provides some valuable takeaways for every physician, especially those who’re medical group leaders:
1. Contractual relationships such as exclusive contracts come to an end, even those that have been renewed time and again over the course of many decades.
2. If that’s the only relationship you or your group has, then the reason for your business’s existence will be mooted.
3. A contract with a single system to provide services at multiple facilities does not spread your risk. In fact, it might increase your fragility.
4. Don’t believe that relationships between medical groups and hospitals are based on love. “What have you done for me lately?” is the pertinent question. Demonstrate that.
5. Although the basis of CRAMG’s $5.1 million debt to the hospital system is unclear, other groups have self-inflicted similar wounds, sometimes fatal, by making an error in structuring their hospital contracts: agreeing to a deal in which the hospital loans funds to the group as opposed to paying a coverage stipend or guarantying a unit value. Loans are not stipends. Surprise, they have to be paid back! (Or, you have to declare bankruptcy.)
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| | | Business Life in the Time of Coronavirus Mini-Series
The coronavirus crisis caused a short term economic crisis for many medical groups. Our mini-series shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
[If you haven't already seen them, follow this link to watch our entire series.] |
| | Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript:
In the latest skirmish in the ongoing battle between UnitedHealthcare and Envision Healthcare, Envision filed suit alleging some very interesting facts concerning exclusive contracting.
To put things in context, back in January 2021, Envision (which is a very large physician staffing company in emergency room medicine, anesthesia, radiology, etc.) left being in-network with UnitedHealthcare over a dispute concerning rates.
Envision has now filed suit alleging that UnitedHealthcare is requiring hospitals with which UnitedHealthcare contracts to in turn contract with hospital-based groups only if those hospital-based groups have contracts with UnitedHealthcare – in other words, not Envision.
Envision argues that this is all about money and pressure on the part of UnitedHealthcare. UnitedHealthcare agrees that it’s all about money and pressure, but pointing in the other direction.
The whole push to do something to "fix surprise medical billing” has turned into what it obviously was intended to be from the start: a very pro-insurance company measure designed to make being out of network a fool’s errand, a hell to which to be relegated.
By pushing highly reimbursed groups (like I’d assume Envision is, or was) out of network, it lowers average contracted rates, and makes the world much better for a payor such as UnitedHealthcare.
At the same time, putting pressure on hospitals to contract only with contracted groups, if that indeed is what UnitedHealthcare is doing, puts vice-grips onto Envision and other large physician groups.
It will be interesting to see how this turns out.
I have no idea who’s telling the truth, or who is right.
But whichever way, it’s worth watching.
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Others see a crisis and freeze in fear. Learn how to see the opportunities and obtain the tools to increase your odds of obtaining them.
The price to attend is $479. The cost of not attending is astronomical. |
| | | Wednesday – The Other Final Four: Hospital Executives Sentenced to Prison – Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Sorry college basketball fans, this post has nothing to do with basketball, unless former Continuum Healthcare, LLC executives, and now felons, Bobby Rouse, Steven Houseworth, Jeffery Parsons, and David Edison will be playing pickup games on the prison yard.
Rouse, Houseworth, Parsons, and Edison are the final four to be sentenced out of a total of 14 individuals charged and convicted in 2019 for their roles in a massive kickback scheme resulting in what prosecutors alleged resulted in $189 million in fraudulent billing to the Medicare program.
On April 22, 2021, Rouse, age 81, was sentenced to 10 years in prison, Edson, age 72, to 4 years in prison, Parsons, age 62, to 30 months in prison, and Houseworth, age 47, to 30 months in prison.
Continuum owned Westbury Community Hospital in Houston as well as community mental health centers, each of which operated a partial hospitalization program, also known as a “PHP”, an intensive, short-term treatment program for individuals with mental illness.
In addition to Rouse, Houseworth, Parsons, and Edson, the remaining 9 individuals charged and convicted in the scheme were either owners of personal care homes or “marketers” for Continuum’s mental health programs.
At the center of the allegations against the 14 was that the hospital executives, marketers and personal care home owners conspired, including concerning the payment and receipt of kickbacks, for the referral of patients from the personal care homes to the Continuum facilities. Additionally, the vast majority of the referred patients did not even qualify for the PHP program.
Although it’s unclear what triggered the investigation, the charges against the 14 resulted from a joint investigation on the part of the OIG, the Texas Attorney General’s Medicaid Fraud Control Unit, and the IRS.
In my experience, most kickback schemes are not as brazen as this. They involve fewer numbers of people and, sometimes, behavior that is more easily rationalized by the participants as “sort of legal”.
My usual admonition applies: Be extremely careful before becoming involved in any arrangement involving payment of any sort, whether in dollars or in kind, in connection with the referral of patients. Get advice from someone qualified to give it, someone who’s not simply earning a fee to tell you what you want to hear. As they say, talk’s cheap. Your freedom is dear.
You might come to the conclusion that the former hospital execs, Rouse, Houseworth, Parsons, and Edson, were crazy thinking they could get away with a scheme involving 14 individuals including fraud magnet “marketers”, especially when the program they ran was supposed to be treatment for individuals with mental illness.
Luckily, each of the four former Continuum executive team members will now qualify for free healthcare, including free mental health services, courtesy of the Federal Bureau of Prisons, your tax dollars at work.
If you think kickback schemes pay off in the end, well, you’re nuts, too.
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| | | Listen to the podcast here, or just keep reading for the transcript.
It was perhaps the funniest healthcare headline ever: “Zimmer Biomet to combine spine, dental businesses to form a company called NewCo”.
If you’re not laughing, a “NewCo” isn’t a business name and it’s certainly not Zimmer Biomet’s new corporate baby. It is a placeholder for a new entity in an organizational structure.
For example, actually, in Zimmer Biomet’s example, the press release issued by the company states their intention to spin off certain business lines into a new and independent publicly-traded company, a NewCo.
You and I might use the same term if we were drawing a chart of the structure of the deal between your entity and Company X that results in the creation of a new entity for which we don’t yet have a name, NewCo.
So how did a well-known healthcare publication, whose name I am withholding only because it seems unseemly to rub it in, run a headline, and an accompanying article, reporting that “NewCo” was to be the actual name of the spinoff entity?
My guess is that it’s a simple matter of copying. The press release says “NewCo”, so the name of the new company must be “NewCo”.
But as much as I’d like to end this post here and simply make it about stupid headlines, that would be shortchanging you. For the truth of the matter is that simply copying gets a lot of medical groups, as well as other business entities, into trouble.
Note that I am not saying that copying alone is the problem; rather, it’s the “simply” part of it.
This plays out in a number of ways.
On the more sophisticated end, if one can call it that, and something that I have written about before. It is when a medical group leader or group of leaders sees that someone else has structured some business model. The example I used in that earlier post was a CIN, a clinically integrated network, and decides they want one, too. But simply knowing, and copying, the acronym, or even the observed model’s exact structure, might not be what you actually want, and might not actually be something that works.
On the more unsophisticated end, it’s the simple coping of a document that you believe works for someone else into one that you believe works for you. For example, the copying of articles of incorporation into those for your medical corporation when later, even decades later, you realize that you formed a lay corporation, not one authorized to conduct the practice of medicine. Or, for example, the relabeling of cousin Bob’s employment agreement into an independent contractor agreement for your radiologists.
There may be nothing new under the sun, and good [artists/poets/composers/you-fill-in-the-blank] copy, but great [artists/poets/composers/you-fill-in-the-blank] steal. However, neither mean to copy or steal blindly, especially when doing so doesn’t advance your goals, doesn’t advance your interests.
Instead, focus on what it is, bottom line, that you want to achieve.
Then, and only then, should we ask the question of what tool or tools . . . the specific structure or even documents . . . can be applied to get you there.
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| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short-term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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