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| Dear Friend,
The easy fix is destroying healthcare.
Frédéric Bastiat, the early 19th Century French political economist, is perhaps most known for his essay, That Which is Seen and That Which is Not Seen.
Bastiat’s point was that politicians legislate to correct a problem (and then bask in the glory of having taken action) but never truly consider what problems they create when they enacted the legislation to correct the initial problem. That is, they act based on what is seen (the initial “problem” and the easily seen “solution”) but do not pause to consider the unseen, potential damage that their action will later cause.
In part, we can blame this on the short lifespan of term of office. “I’ll be out of office and retired in the Bahamas before the shit hits the fan.” In part, we can blame this on the immunity from liability for negligence that we’ve given politicians and bureaucrats. I’ve heard, but can’t find any proof, that the Romans made bridge builders and their families live under their bridges for an extended period of time, the ultimate test of quality construction. We don’t impose any risk at all on politicians who impose harebrained schemes on us.
Here are two recent examples from the healthcare world, both of which are instructive.
The first, drawn from a Wall Street Journal Op Ed, points out that Hawaii’s extremely high state income taxes combined with certificate of need laws have resulted in the fewest hospital beds per capita of any state, the 10th longest emergency room wait times, and a severe doctor shortage.
You'd think that the politicians in Hawaii would have at least consulted with the politicians in California who could have told them (sotto voce, I am sure), that sucking the financial lifeblood out of productive people, even in a relative paradise, isn’t good for keeping them in the state or attracting them in the first place. CONs, too, are great in terms of political contributions, but not so hot in reducing the cost of healthcare and of, well, actually delivering care. The second, drawn from the bureaucrats at the Department of Justice with an assist from the bureaucrats at CMS (based on the work of the now deceased Congressman, Fortney “Pete” Stark, who later regretted his own Frankenstein monster, the so-called “Stark Law”) concerns the $18.2 million settlement of False Claims Act allegations that a partially physician-owned hospital, Flower Mound Hospital Partners, LLC d/b/a Texas Health Presbyterian Hospital Flower Mound, impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom shares [repurchased from other physicians] would be resold and (2) determined the number of shares each physician would receive.
Yes, it is true that taking into account the volume or value of referrals knocks an arrangement out of Stark’s mandatory safe harbor and supports kickback allegations under the federal Anti-Kickback Statute. I’m not in any way suggesting that you ignore this fact.
However, trying to recruit physicians into a deal without some reference to whether they will use the facility is a fool’s errand because at what point do you draw the line? Although Stark rarely applies in the ASC context (and then, only in relation to services that are not reimbursed under the ASC fee schedule), the same analysis (and the AKS) applies to selecting physician investors in those facilities as well.
Must the facility offer every investor the same percentage? But why even offer the interests to those docs–it could be seen by Agent Such N. Such or whistleblower Pete to be influenced by referrals–so why not require a lottery? And, why just among docs? Why not include massage therapists, because they (probably) won’t refer.
A broke and soon to be bankrupt hospital or ASC (as well as one that was never built), is compliant, it’s just not of much use to the patients who will soon find that it’s being converted into a Holiday Inn or a veterinary clinic. Think about it: not one cent was actually overpaid to the facility by the government. Not one actual bribe, as the term was used for hundreds of years, was involved.
Each week I speak with physicians and with healthcare investors who are no longer participating in any government reimbursement program. Some refuse to take even private payer reimbursement – it’s patient self-pay or no service. They’ve had it.
For those quick to write me hate email, I am, once again(!), not suggesting that you break the law. I am warning you that you need to be very careful in structuring deals that implicate, or even might implicate, Stark or the AKS. What I am suggesting is that the law is, in this context and to this extent, an ass.
Despite all the talk about, as in the FCA settlement, “protecting our warfighters” [not an issue in the case] (that’s the Department of Defense Office of Inspector General, Defense Criminal Investigative Service spokesperson) and of delivering and billing “for services based on their medical appropriateness and necessity, not their potential profitability” [not an issue in the case] (that’s the Department of Health and Human Services Office of Inspector General spokesperson), and the involvement of the DOJ’s Civil Division, and its Commercial Litigation Branch, and its Fraud Section, and the U.S. Attorney’s Office for the Northern District of Texas, no one offered a quote about protecting taxpayers from the cost of duplicative silos of investigative and prosecutorial bureaucracies, and of the cost in terms of morbidity and mortality from reducing the availability of third-party funded healthcare.
After all, that’s the unseen damage that they will cause. |
| | | 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:
It's fall and I’ve noticed some of the deciduous trees are beginning to lose their leaves. They’re starting to appear as if they're dead, but for the most part they're simply going dormant for the winter. Come spring, they’ll be lush again.
About a week ago, a hospital at which I've had many clients practice in the past filed for bankruptcy. It's the hospital’s fall, whether it's simply going dormant to later reopen, or if, unlike the trees, it's going to die. It's unclear right now which it will be.
That facility may be closed, but it presents opportunities.
A dormant tree, if it survives winter (and the chances are great that it will), will come back as the same tree, with nice new leaves and fresh blossoms -- but it's still going to be a tree.
The dormant hospital, on the other hand, if it comes back at all, might come back in a far different way. Sure, it might reopen as a hospital. But, it might come back in an even bigger way, say, as a multiplex healthcare facility. There's tremendous opportunity for those who are willing to take a chance with what can spring forth from the fall of its previous incarnation.
Think about that. Facilities are not on a track like a train. They’re not even like large ships which could take a long time to turn. Sometimes those facilities can be turned quickly into something new, better, more profitable, better run and far more entrepreneurial.
If you’re interested in going on that journey, let me know. There may be an existing deal for you or there may be one we can find.
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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 - Utilizing a Unit Concept to Drive Success - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Hospital-based medical groups shouldn't simply conceptualize their practice as one business.
If you're a medical group leader, you must view your practice as consisting of several independent, yet coordinated, units, each of which requires a separate focus.
So, for example:
- There is a group owner unit
- There is an employee/subcontractor unit
- There is a hospital unit
- There is a referral source unit
- There is a patient unit
Then within each of those units there are multiple elements of required activity.
Finally, each of those elements are valuable only if they are working in coordination and within the scope of the group's master business strategy. |
| | | Listen to the podcast here, or just keep reading for the transcript.
It's said that Henry Ford adopted the modern production line, with each worker focusing on a part instead of assembling a whole, from his observations of the way that Chicago slaughterhouses "dressed" pigs.
On October 1, 1908, the first Model T rolled off the production line. Available, famously, in any color you wanted as long as that color was black.
Ford focused on keeping things simple, building one model that (had to) suit all, using interchangeable parts that relatively unskilled workers could assemble.
How different is this from the model of healthcare envisioned by many today? "Best practices" replacing innovation. One model replacing high touch care. Delivery via relatively unskilled workers (paraprofessionals).
In the end, the public wanted more - and the Model T rode off into history.
History is sure to repeat itself. |
| | | 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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