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| Dear Friend,
Who's your competition?
Let’s say that you’re a gastroenterologist. Things are looking great, right? But don’t you see who’s breathing down your neck?
You think that it’s just some other gastroenterologist across town?
Well, you’re right, but not right enough.
Or, let’s say that you’re a radiologist. Who’s your competition?
You think it’s a large, national group?
Well, you’re right, but not right enough.
Or, let’s say that you’re the CEO of a hospital with fifty or five hundred employed physicians. Who’s your competition? The hospital five miles down the road?
Well, you’re right, but not right enough.
Your real competition is an amateur, at least in your perception, someone who realizes that the pieces can be arranged another way, a way that cuts you off, a way that cuts you to the bone.
It’s the primary care physician who realizes that if she and her colleagues link up, they can employ their own gastroenterologist. It’s the large employer who realizes that they can link up with an anesthesia group to direct their employees to the most efficacious surgeons and hospitals for a certain procedure. It’s some guy and some hospital in India or on Grand Cayman.
Mark Twain wrote of this almost 120 years ago:
“But, don’t you know, there are some things that can beat smartness and foresight? Awkwardness and stupidity can. 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. Well, how could I, with all my gifts, make any valuable preparation against a near-sighted, cross-eyed, pudding-headed clown who would aim himself at the wrong tree and hit the right one?”
Smart readers will begin to think who their pudding-headed clown might be.
But wise readers will begin to think how they can become a pudding-headed clown.
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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:
Let's talk about covenants not to compete and thinking ahead.
Many physicians are hot to sell their practices these days. But they may not yet be done practicing, certainly not within the 3, 5 or 7 years of the employment agreement term that they get with the buyer.
You often find covenants not to compete in those types of deals in both the purchase agreement and the employment agreement. The length of those covenants may not match. Some may burn out over the payment period. Some may continue to run for many years after the employment period, which may run longer than the payment period.
You don’t want to find yourself in the position where, at the end of the practice sale covenant not to compete, your only practical choices, should you want to continue to work, are to move out of town or submit to a renewal employment agreement with the buyer at under market compensation.
These covenants aren’t just “footnotes” to an M&A deal. They have a life of their own. They need to be analyzed as a deal into and unto themselves.
So be careful. You don’t want to find out that you made a great deal on the sale, only to have made a terrible deal on the backend.
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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 - Fast Times and the Problem With Slow Medical Group Decision Making - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
We’re living in a time of fast-paced change. Sure. But, I think people have been saying that since the Enlightenment. Maybe it’s the one thing that’s remained constant. But maybe it’s not. Some things have certainly remained the same.
For example, more than nine years ago, in my blog post entitled Who’s Driving Your Practice’s Bus?, published in April 2012, I wrote that for many medical practices, it appears as if no one is driving the bus; that is, no one is in charge of the group’s business. Instead, the practice operates like a runaway bus — yes, the providers are seeing patients, but where is it headed? Instead of a map with a clearly marked final destination, it’s just rolling along.
Many groups have a related problem: There isn’t a bus driver, there’s a whole committee of them. In fact, for some groups, there is a whole Greyhound bus full of them.
There is no question that the healthcare market is changing rapidly. This means that groups must have the ability to make business decisions rapidly.
Drawing on the work of the late Col. John Boyd, considered by many to be the second greatest military strategist to have lived, success requires a faster cycling through what he termed the OODA loop. In simplified form, the loop consists of observing, orienting, deciding and acting. (The OODA loop is actually much more complex with various internal feedback mechanisms). The point, however, is that the competitor who can cycle faster through the loop gains a tremendous strategic advantage over its opponent.
Whether you take the time to study Boyd or not, it’s axiomatic that a group must be able to make decisions quickly. That requires that someone, not some committee, be in charge.
Note that I’m not saying that groups need dictators: far from it. However, group leaders must be empowered to lead – and they must actually lead.
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| | | | | Listen to the podcast here, or just keep reading for the transcript.
A CMS advisory opinion [Advisory Opinion No. CMS-AO-2021-01] issued in June 2021 provides guidance that a parent-subsidiary medical practice entity structure in which the subsidiaries themselves don’t qualify as “group practices” under Stark can, in total, qualify as a “group”.
Some Background
The Stark Law and the regulations under it prohibit a physician from making a referral for certain designated health services, such as clinical laboratory services, DME, and imaging services, payable by Medicare to an entity with which the physician (or an immediate family member of the physician) has a financial relationship unless all requirements of an applicable exception are satisfied.
The exception for in-office ancillary services is available to a physician practice consisting of two or more physicians only if the physician practice qualifies as group practice.
Under the regulations a group practice must consist of a single legal entity operating primarily for the purpose of being a physician group practice. However, a group practice that is otherwise a single legal entity may itself own subsidiary entities through which it provides services to the group practice.
The Requestor
The entity requesting the Advisory Opinion (“Requestor”) is a single-owner (“Owner”) professional limited liability company operating as a physician group practice furnishing, in addition to physician services, designated health services to Medicare beneficiaries.
In simplified form, Requestor sought CMS’s opinion as to whether Requestor would fail to qualify as a group practice if it furnishes designated health services through a wholly-owned subsidiary entity that is a physician practice but does not itself qualify as a group practice.
Owner, in addition to being the sole owner of Requestor, also was the sole owner of (i) “Subsidiary A”, a professional corporation operating as a physician practice, and (ii) “Subsidiary B”, a professional limited liability company operating as a physician practice.
The Owner planned on having the Requestor acquire the Owner’s interest in Subsidiary A and Subsidiary B but continue to operate them as separate legal entities providing both physician services and designated health services because many payors and health plans prohibit assignment of their payor contracts to a successor organization. All of the Requestor and the Subsidiaries would be managed by the same management entity (“Manager”). Subsidiaries A and B would continue to remain credentialed and contract directly with payors and health plans, and use billing numbers assigned to the Subsidiaries to bill payors and health plans for items and services furnished to their enrollees. The Subsidiaries would also remain enrolled in Medicare under tax identification numbers assigned to the Subsidiaries, and use billing numbers assigned to them as participating suppliers to bill Medicare for items and services, including designated health services, furnished to beneficiaries.
Requestor certified that, following the acquisition: (1) Requestor would be the sole owner of the Subsidiaries; (2) all clinical employees and contractors of the Subsidiaries would become employed or contracted by Requestor; (3) all material assets and business functions of the Subsidiaries would be transferred to Requestor or Manager; and (4) Manager would continue to provide management and other non-clinical services to Requestor and the Subsidiaries.
In addition, under the Requestor’s structure, patients to whom health care services are furnished by the Subsidiaries would be considered patients of the Group Practice. The health care services furnished to Group Practice patients would be furnished or supervised by clinical personnel that are employed or contracted by Requestor and designated to work at the three sites, that is, as the Requestor’s original group practice site, at Subsidiary A’s site, and at Subsidiary B’s site. Manager would provide all nonclinical support personnel to the Group Practice and to the Subsidiaries under the terms of the management agreement among the parties. All revenues of the Subsidiaries would be remitted to and be treated as revenues of the Group Practice.
The Opinion
CMS began its analysis by referencing the fact that although a group practice must consist of a single legal entity, the regulations permit a group practice to own subsidiaries, and the law does not dictate or limit the types of subsidiaries a group practice may own.
CMS was persuaded by the specific facts certified by the Requestor that the subsidiary structure does not preclude Requestor from qualifying as a single legal entity if Requestor furnishes designated health services through the Subsidiaries, provided that Requestor is the sole owner of the Subsidiaries.
As set out above, the particular certified facts were: - All clinical employees and contractors of the Subsidiaries would become employed or contracted by Requestor.
- Those personnel would be designated to work at either the initial Requestor office site or at a Subsidiary site.
- Although Subsidiary A and Subsidiary B would maintain their respective enrollments in Medicare, remain credentialed and contract directly with payors and health plans, and use billing numbers assigned to the Subsidiaries to bill Medicare and other payors and health plans for services furnished to their beneficiaries and enrollees, all revenues and expenses of the Subsidiaries would be treated as revenues and expenses of the group practice, that is, of Requestor.
Note that the opinion is limited to the question posed by the Requestor, which did not venture into issues related to the other “group practice” exception requirements.
Note also, extremely importantly, that CMS advisory opinions are binding only in regard to the particular Requestor. However, they provide insight into CMS’s analysis on the application of Stark. In the instance of Advisory Opinion No. CMS-AO-2021-01 we see regulatory flexibility in regard to parent-subsidiary structures in which the parent entity and the subsidiary entities are all physician practices. |
| | | 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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