| View this email online if it doesn't display correctly |
| |
|
|
| |
| Dear Friend,
Fighting against "fixed" hospital contacts.
An interesting case illustrates a potential new tool in the arsenal to fight against fixed hospital exclusive contracts and, potentially, against the consultants who helped put lipstick on the pig.
Many hospital-based groups have been there: the situation in which a longstanding relationship with a hospital, whether or not via exclusive contract, is disrupted, in favor of another group.
Absolutely keep reading if you think that you’re in an office-based specialty. As the case I’m about to describe illustrates, one side effect (not a bug, but a feature) of massive physician employment and “alignment” by hospitals has been to make nearly all medical specialties hospital-based, in that you stand to be bounced by the hospital in favor of a competitor.
In the classic fact pattern, something’s led to the hospital’s decision to enter into an, or change the existing, exclusive contract arrangement.
Perhaps our avatar group, let’s call it “Your Group”, has given pushback over quality issues. Perhaps some members of Your Group have complained about group leadership to the hospital’s COO in order to obtain the contract for themselves. Perhaps Your Group is also working at a competing facility across town and that’s pissed off the CEO.
As a result, the hospital’s issued an RFP, and perhaps it’s even hired a company that purports to manage the running of RFPs, one, even better, that’s developed a report to show why choosing another group (“Group X”) instead of Your Group is supported by evidence. Unfortunately, or there’d be no need for this article, Your Group loses the RFP in favor of Group X.
Historically, courts have been extremely deferential to hospital governing board decisions regarding awards of exclusive rights, and therefore, to changes in who holds exclusive rights. Claims of breach of contract and of torts such tortious interference generally fail. Which brings us to a recent very interesting New Jersey appellate decision in Comprehensive Neurosurgical, P.C., etc., at al. v. The Valley Hospital, et al. (“Comprehensive”).
First, it’s important to note that the Comprehensive case is an unpublished decision, meaning that it does not have precedential value. The decision is highly fact specific, which, perversely, makes it highly informative for you.
Because the facts are long and complicated, I’m not going to set them all out. But here, in limited fashion, is what you need to start off today’s discussion:
Comprehensive Neurosurgical, P.C. (“CompNeuro”) is a neurosurgical group that provided services at several hospitals, including at The Valley Hospital (“Valley Hospital”) and at Hackensack University Medical Center (“Hackensack”).
For over a decade, CompNeuro physicians provided on-call coverage in the emergency department (“ED”) at Valley Hospital and were instrumental in Valley Hospital acquiring specialized equipment, including biplane angiography and Gamma Knife equipment, that allowed stroke patients to receive treatment at Valley Hospital.
But then, in December 2015, Valley Hospital sent out a memo stating that after “almost a year of study” the Board of Trustees unanimously voted to have neuro coverage of the ED performed exclusively by another neurosurgery group providing services at the facility, the “Columbia Group”.
CompNeuro sued Valley Hospital, its Board of Trustees, its president, and Columbia Group asserting breach of contract claims and tort claims, including breach of the implied covenant of good faith and fair dealing and tortious interference with prospective economic advantage.
Among other things, CompNeuro alleged that Valley Hospital and its president had a longstanding contentious rivalry with Hackensack. They asserted that that was the motivation to terminate CompNeuro physicians’ long enjoyed clinical privileges at Valley Hospital: losing the ability to perform the services they had helped develop and create was punishment for their affiliation with Hackensack.
By the time the case reached appeal, Valley Hospital was the only remaining defendant – it appealed from the $24.3 Million trial judgment entered against it. The only remaining claim was one pertaining to the allegations of breach of the implied covenant of good faith and fair dealing.
The parties squared off along these two, simplified lines of argument:
Valley Hospital: The Medical Staff Bylaws provide that the on-call schedule is not a right or a privilege, but a responsibility. We have conducted a year-long study (the “White Paper”) including reviewing data from a quality score vendor and input from a large, nationally known consulting firm. The results were that Columbia Group, not CompNeuro, was the better choice in terms of quality and cost for an exclusive arrangement including participation in a major strategic initiative essential to advancing the goal of becoming a neuroscience center of excellence.
CompNeuro: Your argument sounds good, but you just put on a show to cover up for your lack of good faith and fair dealing. How do we know? Your own documents prove it!
What had CompNeuro found? Why did the court affirm the $24.3 Million judgment?
CompNeuro argued that discovered emails showed that the White Paper wasn’t an objective study but that its outcome was predetermined to favor Columbia Group. For example:
- A 2012 email from the head of Valley Hospital’s planning department (“Callandrillo”) attached an article from Hackensack that highlighted a clinical trial on vaccines that one of CompNeuro’s physicians was conducting there. The email stated that one of the physicians from the Columbia Group (“D’Ambrosio”) was very concerned about CompNeuro’s benefitting from Columbia Group’s intellectual capital.
- A 2013 email chain Included an e-mail forwarded from D’Ambrosio to a Valley Hospital vice president (“Bhavsar”) and to Callandrillo complaining about a scheduling problem in the operating room and that, if true, it was an example of potentially dangerous physician communication, temperament, and judgment. Bhavsar responded to Callandrillo that he spoke with D’Ambrosio who was very passionate on how the other group, i.e., CompNeuro, was hurting Valley Hospital’s reputation and that the Columbia Group is very available to be “THE Valley Neurosurgery group”. D’Ambrosio had told Bhavsar that he hoped the email “would be a catalyst in moving us towards” the direction of Columbia group “tak[ing] it all on.”
- Callandrillo replied to Bhavsar that she had spoken with Valley Hospital’s president (“Meyers”), who said that “moving to an exclusive contract really is the nuclear option,” to which Bhavsar responded, “Kaboom.” Callandrillo replied, “The day will come . . . believe me.”
- In another email chain with Callandrillo and Meyers, Callandrillo forwarded an email that showed one of CompNeuro’s physicians (“Roth”) was a guest speaker and the “Director of Neurosurgery” at Hackensack. Valley Hospital’s general counsel (“Goldfischer”) responded, “truly unbelievable. Unfortunately, the hospitalist strategy will not stop the out-migration of Roth’s cases, given his title and ties to Hackensack.”
- An analyst in the planning department emailed Callandrillo informing her that the quality and utilization analysis doesn’t show any glaring difference in costs or quality between the groups.
- An email chain discussing Roth as a guest speaker and the director of neurosurgery at Hackensack included a response from Goldfischer that it was “truly unbelievable” and that their strategy would not stop the outmigration of Roth’s cases given his title and ties to Hackensack.
- Emails showed that Meyers asked Goldfischer if Valley Hospital could work on getting an exclusive contract after they heard that a Gamma Knife patient who “clearly came through our ED” and was a patient at Valley Hospital, then went to Hackensack. Goldfischer responded that there was “nothing we can do if they have privileges,” and that “the only thing [they] could do is close the service” to [Columbia Group], and Goldfischer asked Meyers if Valley Hospital had “the appetite for this.” Goldfischer asked that if the answer was yes, she wanted clarification if they would be “closing the entire service or only the ER?” Meyers responded, “Only the ER for unassigned patients. Be prepared for a lawsuit, so we need to may [sic] a strong case ahead of time.” A later related email from Goldfischer notes that they would “need to paper this carefully.”
Here’s the real takeaway for you:
Don’t immediately think that if your group loses an exclusive contract, or if your group’s physicians are pushed out from exercising what are currently their medical staff and/or clinical privileges, that there’s not potentially something cooked up in advance that might, depending upon your applicable state’s laws, amount to a violation of the implied covenant of good faith and fair dealing.
That thinking netted CompNeuro $24.3 million.
Consider this another arrow in your quiver against potentially fraudulent and or impermissible hospital behavior that’s been papered over with a patina of “board decisions that are entitled to deference”, studies, consultants, and other rainbows and unicorns.
|
| | | 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:
So many of us in high paying professions were taught to play it safe. We were taught to do what everyone else does. We were taught not to stick our necks out too far.
In essence while most of us will probably deny it, this is a self-imposed form of the tall poppy syndrome. You know, the poppy that grows too high, that looks too beautiful, gets lopped off by someone that wants all the poppies to look the same.
In essence this "play it safe" was drilled into us by our parents who wanted us to be happy, who perhaps perversely thought it was the recipe for success. They were probably influenced by the fact that in their lifetime, getting a good education and getting a job meant getting a job for life. But things have changed.
I suppose these thoughts of playing it safe were also drilled into us in a way by our professors, especially professors in graduate programs, in professional schools, who by their very nature as academicians were the ultimate safe players.
Players on a football team, baseball team, or basketball team have to play defense. But they simply aren’t going to win playing defense only. They have to play offense, too.
The same rule applies to my career and your career, too. Stop benchmarking to best practices, stop doing what all your colleagues do. Go on the offense. It's for yourself.
|
| | 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 - Government Created Healthcare Shortages Courtesy Of Elected Morons And Bureaucrat Fools - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
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 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 healthcare.
After all, that’s the unseen damage that they will cause. |
| | | Listen to the podcast here, or just keep reading for the transcript.
This has to do with a really interesting whistleblower case that has some extremely important lessons for all sorts of providers.
It is a False Claims Act case rooted in violations of the federal anti-kickback statute and STARK. What is interesting is that in almost every whistleblower case I have read recently, the whistleblower has been somebody with inside information. Either a member of the group, a hospital employee, an administrator, or somebody from an outside billing service.
These people have access to copies of billing information and/or copies of inside documents. All of which taken together are enough to meet particular requirements of pleading in court, a whistleblower action, a False Claims Act action.
This case involves somebody who is a complete stranger. It involves a real estate appraiser, who basically conducted his own investigation in connection with a hospital project he saw being developed. He unearthed information, not about any particular claim, he does not have any information that Ms. Jones was charged for services billed for Medicare and there was an underlying kickback. Instead, he was able to show, at least to get past the motion to dismiss stage, which is going to set him up for settlement.
He was able to demonstrate a systemic kick-back. In other words, the relationship between, in this case, a medical office building developer and a hospital company provided benefits that were passed through, he argues, to physician tenants.
Even though he can not point to one (for example a Medicare or Medicaid claim) that systemic defect, the discounts involved in an underlying real estate transaction, were enough to pass the motion to dismiss.
So, this completely broadens the scope of who can bring a case. It completely broadens the scope of who can be a whistleblower.
Additionally, it shows that you do not need to have specific evidence of an underlying anti-kickback or STARK violation. Just that description of a systemic error. Something about the way the system, the relationship between the hospital, the medical group and the referring physician or physicians is set up, can trigger False Claims Act liability.
|
| | | 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.
|
| | 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?
|
| | | | 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.
|
|
|
| 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.
|
| | | | 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. |
|
|
