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| Dear Friend,
That tongue depressor reminds me that I need a box of Popsicles.
Last week at a fancy black-tie event, I ran into a nationally known educator with paradigm shifting ideas on the future of education. And, when this guy says “future”, he doesn't mean 20 years from now, he means within the next two or three. (Teachers union officials probably need to be thinking about new jobs, maybe back to doing what they're most suited for which is, well, nothing.)
And then, along comes another example of how what one believes is relatively fixed within categories, and I'm talking about health care, can be shaken up by a new player who sees things a bit differently.
Go and open the pages of some healthcare publication and you'll see announcements of a hospital chain acquiring a new facility or building one here or there. You might see stories about an orthopedic surgery group from Colorado expanding into another city.
But what about the notion of repurposing already existing nonhealthcare sites, perhaps more than 16,000 of them, to compete with physician practices?
In a somewhat related discussion with a physician friend last week, a guy who is a specialist’s specialist, he poo-poohed the impact of retail chains such as Walmart pushing more into primary care. Yet primary care is by far the most profitable route into the referral funnels of the sort that result in patients being sent to the specialists who refer to my friend, or, and here's the whole point, don't.
So, when I saw in an article that Dollar General is starting a push into healthcare, I paused and considered, which is more than probably a handful of physicians in the country have ever done when passing, if they've ever passed, let alone visited, a Dollar General, a blue collar variety store.
Well, things are about to change.
It turns out that Dollar General, a 16,000-plus location mostly rural variety store chain, has a store located within 50 miles of 75% of the country's population.
Already doing close to $28 billion a year in business, they’re positioned to take a bite out of primary care. Their initial foray, announced this month, is into services that rural customers don't have ready access to, such as eye care and telemedicine.
Who knows where things will go from there.
However, consider this: Unlike the highly touted but now defunct Haven, the alliance entered into among J.P. Morgan, Berkshire-Hathaway, and Amazon to change (so the writers gushed!) healthcare for the rest of us, which hired a pretty boy author with an M.D. to run it, Dollar General has recruited a physician executive who actually oversaw a rural health program that drove $2 billion to $5 billion in revenue.
Okay, okay, the guy probably can’t write a bestseller.
But if, like Haven, you think that writing a bestseller is important, then let’s close with a quote from someone who wrote books that sold in the millions, Mark Twain:
“The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him; he does the thing he ought not to do: and often it catches the expert out and ends him on the spot.”
Think about it. |
| | | 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:
I want to talk to you today about a concept that maybe you’ve never thought about.
Let’s picture a deal, the sale of a controlling interest in an ASC, for example. Everyone who owns an interest in a surgery center is familiar with the concept of the price that you would receive were you to sell all or a part of your interest. What about the price that you might pay, as the seller, in a deal?
What am I talking about? It's the buyers who pay the price – the seller collects the price!
Well, that’s a shorthanded way of looking at it. In any deal, the deal is more than simply about money. It's about other aspects of the deal as well.
For example, today, I read a story in The Wall Street Journal about farmers who normally sell grain to a local grain elevator. Traditionally, that’s how farmers would sell their crop.
Then a couple of years ago, someone came along with their great, high-tech thinking, and decided to create an online marketplace in which farmers can sell their grain to the highest bidder, not only to the local buyers.
However, for all the great-sounding talk, there were lots of problems. For example, trucks didn’t come to pick up the grain as scheduled. When trucks finally did come, it would be in the middle of the night. When it came time to pay for the grain, they were weeks, if not months late – as opposed to within hours of delivery.
The price the farmers paid was a bad and extremely troubling deal.
The same thing applies in connection with the sale of, in our example, an ASC. Not every buyer is going to be a good buyer which fosters the development of the center. Some are going to choke the ASC to death by cutting expenses to the bone.
In every deal, there's more than simply the money that changes hands; there's the price you’ll pay one way or the other for the deal.
Stop looking only at the monetary figure, the figurative "sticker price". Look at all the elements that come into play that contribute to your actual cost.
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| | How to Deploy the Secret Sauce of Opportunistic Strategy
Webinar On Demand
They say that COVID-19 has changed the world, creating the "new normal." Many of your colleagues and many hospital administrators are running scared.
Others, leaders like you, know that crisis means opportunity.
Let me provide you with the strategic tools and insights that you need in order to seize opportunities, whether they’re in the context of your current business relationships, the expansion of your business activities, or the creation of new ventures.
You will learn:
•Defense as a defective default: It’s necessary, but not sufficient.
•Exploiting weakness: Drop the guilt and identify opportunity.
•Flat line negotiation is fatal: Understand its myths and limitations.
•Negotiation reality: Learn to identify and deploy on multiple planes to affect the outcome.
•Maneuver: Harness the power of maneuver, both in overall strategy and in specific negotiation strategy.
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 - A Legal Alternative to Illegal Kickbacks to Physicians - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
You can see why it’s so tempting for unscrupulous hospital CEOs to offer kickbacks to physicians.
For example, take a look at my March 7, 2016 post, Physician Is 10th Person Found Guilty In Kickback Scheme, reporting on the conviction of Dr. Venkateswara Kuchipudi, the 10th person found guilty for accepting kickbacks in violation of the federal Anti-Kickback Statute (“AKS”) from the now-closed Sacred Heart Hospital in Chicago.
That’s because physicians generate huge amounts of referral business for hospitals. A recently released study by the recruitment firm, Merritt Hawkins, reports that a physician’s referrals are worth, on average, $1,560,688 a year in net revenue to a hospital.
Surgical specialists drive even more profit to a hospital. The Merritt Hawkins study reports that hospital net revenue per orthopedic surgeon is, on average, $2,746,605 a year, while that figure for invasive cardiologists is $2,448,136.
The physician who tries to monetize the value of those referrals by way of a kickback, whether in cash, free services or so on, will, sooner or later, be joining the Sacred Heart Hospital felons in the pokey.
The legal alternative enabling a physician to share in facility revenues is through development, usually in concert with other physicians and a development/management company, of an ambulatory surgery center (ASC).
Although ASC investment usually makes sense for surgeons with a significant volume of procedures that can be performed in an outpatient setting, there is, contrary to commonly held belief, no restriction on investment by non-surgeons. There are, of course, significant AKS concerns at play in the legal structure and operation of any ASC, but, again, there is no prohibition on, for example, primary care physician involvement.
As more and more cases move from the hospital setting to the ambulatory setting, there is a growing opportunity for physicians to participate in facility fees via investment in ASCs.
Making money is not (yet) a crime. Paying kickbacks is. Why not make money? |
| | | | | Listen to the podcast here, or just keep reading for the transcript.
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:
- 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.
- If that’s the only relationship you or your group has, then the reason for your business’s existence will be mooted.
- A contract with a single system to provide services at multiple facilities does not spread your risk. In fact, it might increase your fragility.
- 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.
- 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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| | | 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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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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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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