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| Dear Friend,
You can't have one unless I control it.
For the few of you out there who don’t recognize the acronym “CON”, it stands for “certificate of need” which is itself a con.
The CON process is one in which bureaucrats get to exercise their power on behalf of someone who has something but doesn’t want anyone else to have one, too. OK, OK, I know there are contrary arguments, but they are fallacious.
Imagine if Ford and GM and Toyota had the ability to block Tesla from selling cars because it would take away some of their market share. So what. Well, so everything if a certificate of need were required.
Now, interestingly, Florida is not a certificate of need state in respect of the construction of ambulatory surgery centers.
So, in Mariana, the “City of Southern Charm”, about an hour outside of Tallahassee, officials of the town’s big healthcare player, Jackson Hospital have no CON bureaucrats to influence in order to block competition from Tallahassee Orthopedic Center (TOC) coming to town to open a new ASC.
Instead, they’re lobbying the city government to somehow block lower prices, lower infection rates, and better patient care unless . . . and you likely hear it coming . . . .TOC agrees to do a deal with Jackson Hospital for a joint venture ASC in which Jackson Hospital would be the majority owner.
Who knows how this is going to play out except that if the city attempts to use zoning laws to block competition and force a business deal favoring Jackson Hospital, I expect that TOC is going to file suit. They should win.
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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 certainty, and about how certain you are as to the degree of certainty in a deal and about how much certainty meets your requirements.
Now you probably don’t want to hear this, but certainty (like many concepts that end up having a legal overlay) isn’t that certain. Instead, it’s a matter of degree.
For example, if we have a contract that I’m going to sell you this slightly used iPhone for $200 and I’ll deliver it soon, what in heck does “soon” mean? In what shape is that iPhone? Is any money owing on it? You get the point.
Oftentimes it’s a question of how much you want to spend, not necessarily in money, but in time and effort, in documenting what that deal is.
Are we going to leave it up to custom as to when delivery occurs?
Are we going to leave it up to chance as to what “performance by the other side” means?
What happens if, even if we take many of the steps to nail down other factors, the other side simply breaches, doesn’t want to perform, and would rather simply pay damages . . . or takes the strategic position that you’re not going to be able to devote the funds required to enforce the agreement?
Any agreement in the healthcare context needs to have the amount of certainty that you’re comfortable with. If you’re comfortable with a handshake because you know the person on the other side and you have a long history of that person delivering as promised, then you might not need a formal contract at all, you may simply need that handshake or a few things jotted on a napkin.
On the other hand, if you’re dealing with a hospital that changes administrators as often as other people change underwear, or at least toothbrushes, then details have to be documented, well documented. So, too, does the process for what happens if there’s a dispute over whether what was delivered conforms with the agreement.
And, you can’t just stop there if you want a very high degree of certainty, because then you have to make sure that you’ve nailed down whatever the process is for resolving a dispute, and for paying attorney’s fees in the event of a dispute.
So just don’t assume that a deal is a deal. Think about how much you need to document a deal and think about the fact that even if a deal is documented, it’s still not certain if you're unable to afford to enforce it.
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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 - CMS Opines That Stark Isn’t That Stark – Advisory Opinion Guidance on a Parent-Subsidiary Practice Model That’s Still a Single Group Practice - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished 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. |
| | | Listen to the podcast here, or just keep reading for the transcript.
Perhaps you've carefully structured your medical group's relationships with hospitals, referral sources and other influencers. But did you pay attention to what's going on inside your practice's own house? Have you built a wonderful structure that's being eaten up from the inside out by the group member equivalents of termites and wood rot?
It's my experience, and it's becoming an increasingly regular experience, that medical groups fail more often from problems within the group as opposed to solely from competition or as a result of attacks from outside of the group itself.
These problems range from group members whose misfeasance or malfeasance bring disrepute, to group members who engage in malicious activity outside of the pure scope of medical practice, to group members who actively consort with the hospital or a competitor to destroy or co-opt your practice.
None of the protections that are normally built into relationships between groups and outside parties are aimed at protecting the group from these internal risks.
To do so requires a different series of approaches starting with screening potential group members, whether employees or owners, on personality and interpersonal attributes as well as on medical expertise. It requires carefully evaluating, and not just on an annual review type basis, the members of your group and disciplining, or if required, terminating the "termites" before they destroy your group. It requires an entirely different set of protections built into your group's internal documents, your shareholders or partnership agreements, employment agreements and subcontracts, in order to protect against more than what even those groups who are "benchmark to best practices" consider relevant. And it requires a coordination between those internal actions and the group's relationships with hospitals and other facilities.
One disgruntled or malicious physician can destroy your $50 million a year business. Preventing the problem presents one of the best returns on investment you'll ever receive. |
| | | 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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