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| Dear Friend,
Food, gas, and contract termination.
Over the weekend, I took a road trip out to the middle of nowhere. Once in a while, you’ll see a sign that says, “No Services Next 32 Miles,” and what do you know, there isn’t even an exit for 32 miles.
That’s not unlike the term of a contract. It runs for the three or five years, or whatever — that’s the stated term of the contract.
On the other hand, you’re driving on some road, and suddenly there’s a detour, forcing you to exit. That’s like a termination provision in a contract.
It might have been you who decided to detour because there’s a rest stop (you terminated the contract), or it might have been that the road ahead is actually blocked (the other party exercised the termination provision).
Exits of that sort, of the contractual sort, can be two kinds: either an exit as a result of a breach (which should be with the right to cure), or a “without cause” type of exit.
Of course, “without cause” exits cut two ways. One is that you want out of the contract early, so you exercise it. But, the other is that your contracting partner wants you out of the deal and they want you out quickly.
Just remember, the correct and complete way of analyzing the true term of any agreement isn’t simply to look at the 32 mile stretch, that is, the three or five year stated term.
Instead, it’s to take into account how quickly you could be forced to exit or how quickly you could force the other side to exit the deal.
You can brag all you want to your partners that you pulled one over on the hospital CEO when you talked her into that five-year exclusive contract. Just don’t mention the 60 days without cause termination provision, because that’s the true term of the deal.
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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 version:
Is your medical group governing away its future?
This car, like all cars, I assume, has a governor, a device that regulates the speed of an engine, and in the case of an automobile, a device which prevents the car from going over what the manufacturer thinks is a safe speed.
Many medical groups have governors on them as well. What I mean is that their own governance, their way of structuring their decision-making, is slowing them down. In fact, it may be retarding the group so much that its future is entirely foreclosed.
I’ll give you an example, a very common one. It's a group that has fifteen members, fifteen of whom are shareholders, fifteen of whom are on the board of directors, fifteen of whom vote on basically everything that the group is considering doing.
As a result, they can’t make a decision. Or, decisions take a very long time. A few of their members are away on vacation, so wait, they can't hold a meeting until they get back.
Today, as always, money likes speed, the ability to make a quick decision, even if that decision is the wrong one because then you can quickly make a decision to correct it.
No matter how your group is set up, whether it's a corporation, a professional association, a partnership, or a PLLC, it must have a governance structure that is corporate-like. In other words, a structure in which not everyone makes decisions, but in which representatives make decisions, like in the corporate setting in which shareholders elect a board of directors, which in turn elects officers.
If you don't have that sort of structure, you might make everyone in the group feel good that they're all involved in every decision, but you won't be feeling good for long, because it takes too long to arrive at those decisions. And, in the long run, your group, your economic future, is going to suffer. |
| | 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 - Three Strategic Lessons for Independent Medical Groups - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
As healthcare entities become larger they appear as formidable competitors in the marketplace.
So what's an independent group to do?
November 25, 1863. The Civil War. The Battle of Missionary Ridge outside of Chattanooga.
For several months, the Confederate Army held Union forces at bay within a tight semicircular defensive position. Then the Union Army under General Grant launched a coordinated attack against both sides of the Confederate line as well as at its center. The side attacks had little success. But at the middle, the Union troops breached the line and then . . . things seemingly fell apart for all. Both sides issued confusing orders to their troops: What were the objectives? What was to be defended? But the outcome was the collapse of the Confederate defense.
The first lesson: Seemingly strong competitors have a weak point and their large size makes them overly fragile. Find the point of weakness and exploit it. Grant sent his forces to attack at three points. Only one attack out of three hit a weak point, but that was enough.
The second lesson. A large competitor cannot deal with the confusion quickly enough to save itself. They are too organized, too centralized, too stiff. Although both the Union and the Confederate troops fighting at the center received confusing orders, the Union troops were better at observing the situation and at taking advantage of it. (An illustration of Boyd's OODA loop: Observe - Orient - Decide - Act.)
The third lesson? The first two are so important for you to consider that the third will only get in the way. |
| | | Listen to the podcast here, or just keep reading for the transcript.
"Value based billing" remains dominant in the medical industry news, chiefly from the MACRA angle. Mostly, though, it’s a lie because value is determined by the customer, not by some bean counter at CMS. Sure, CMS may be paying the bill for Medicare patients, but the patients are the actual customers and only they can assess whether value was truly delivered.
Yes, I know. I can hear you out there, the third guy from the left, wearing khakis and a white lab coat, muttering, “But, CMS is paying the bill." And, of course, that’s the problem. Once organized medicine (read that as the letters A, M and A) bought into the concept of Medicare in 1965, physicians opened the doors to government meddling. After all, if the government is going to pay, the government is going to demand something, and something more and more and more, as the price for payment. To quote President Reagan, "The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.’”
When you hear the words “value based” in connection with healthcare, just view them as a flare in the night warning you that within the next moment or so you’ll hear something that sounds socially useful but which has nothing, or very little, to do with anything other than figuring out how to pay you less or control you more. This is especially true if the comments are coming from an “economist,” because economics is the study of who gets what in the actual world, while today's so-called “economists” are those who’re preaching who should get what in their imagined world. Unfortunately, these folks are often paired with those who have guns, i.e., the government, to enforce their nonsensical theories.
If you don’t believe that value is determined by the patient, here’s an interesting story, as noticed on the web from the site of Florida TV station WPTV.
An expectant mother, Paula D’Amore, was in labor and on her way to Boca Raton Regional Hospital with her husband. They were just a wee bit late, as the baby popped on out in the D’Amore’s car in the hospital parking lot with help from Mr. D’Amore followed by some assistance from a few nurses who came on out to their car.
The value issue?
Well, the hospital decided to bill Ms. D’Amore the full charge of the use of its delivery room, over $7,000, even though neither Ms. D'Amore or her baby were ever in the delivery room. (Attention hospital CEOs: neither car nor parking lot equals delivery room.)
Another local news outlet, the Sun-Sentinal newspaper, reports that the hospital’s vice president for marketing said the hospital felt that the delivery room charge was a suitable bill. Perhaps the paper got the guy’s title wrong, because it seems more like “VP of sales prevention” than of marketing.
The point, of course, is that the value of the services received by Ms. D’Amore can only be assessed from her point of view, not the hospital’s. Even more ridiculously, is to assume that someone over a thousand miles away, as in Washington, DC, can determine value.
Yes, the payor can dictate the amount that they will pay. But at least let’s be honest about this and acknowledge that that amount has nothing to do with value. Of course, saying “screw you, this is what we’re paying and this is the data you have to give us before we’ll give you even that” isn’t politically correct, and these folks are if anything, politically correct. |
| | | 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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