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| Dear Friend,
Some sellers pay a heavy price for a deal.
That's the subject of this Monday's blog post, But What Price Does The Seller Pay? You can follow the link to read the post online, or just keep reading for the rest of the story.
Imagine the sale of a healthcare entity in which you, as one of the sellers, will remain involved after the closing. Depending upon the deal, you might remain as a minority owner, or you might remain as an employee; the exact role isn’t important at this point.
The deal could involve the sale of your medical group or of a controlling interest in an ASC; again, it doesn’t matter, those are just two instances of the sort of transaction we’re talking about.
For now, though, let’s use the sale of a controlling interest in an ASC as our example.
Certainly, everyone who owns an interest in a surgery center is familiar with the concept of the price that you would receive were you to sell all or a part of your interest.
But have you ever considered the price that you might pay, as the seller, in a deal?
Huh? “Seller” paying a price? Is that a typo? After all, it's the buyer who pays the price – the seller collects the price! Right?
Well, that’s certainly true, but that’s a shortchanged way for you to look at it. That’s because in any deal, the deal is about more than the stated sales price.
This is the case for selling anesthesia groups to, well, wheat.
For example, I read a story in The Wall Street Journal about farmers who normally sell grain to a local grain elevator. Traditionally, that’s how farmers would sell their crop.
Then a couple of years ago, someone came along with their great, high-tech thinking, and decided to create an online marketplace in which farmers can sell their grain to the highest bidder, not only to the local buyers.
However, for all the great-sounding talk, there were lots of problems. For example, trucks didn’t come to pick up the grain as scheduled. When trucks finally did come, it would be in the middle of the night when no one was available to load them. When it came time to pay for the grain, the buyers were weeks, if not months, late – as opposed to the customary industry practice of payment within hours of delivery.
You see, the price the farmers received via the online marketplace was higher than the price of a local sale. But the price the farmers paid as a result of the sale was a bad and extremely troubling deal that, in the end, cost them far more than they thought they had gained.
The same thing applies in connection with the sale of, in our example, an ASC. Not every buyer is going to be a good buyer, a buyer that, post closing, fosters the growth of the ASC. Some are going to choke the ASC to death by cutting expenses to the bone. Some are going to make doing cases there hell.
In every deal, there's far more involved than simply the money that changes hands; there's the price that you, as the seller, will pay, one way or another, for the deal. Stop looking only at the monetary figure of a deal, the figurative "sticker price". Look at all the elements that come into play that contribute to your actual price of doing the deal, one that ranges from the price of an inconvenience to the price of your career.
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| | Tuesday - Conflicts of Interest - Do You Have One? - Success in Motion
Watch the video here, or just keep reading below for a slightly polished transcript:
Let’s talk about conflicts of interest. Do you have one?
First, what in the heck does “conflict of interest” mean?
I think for the most part “conflict of interest” is a term similar in a sense to "greed" and "fair share" (which, by the way are two sides of the same coin). They’re simply terms that are lobbed at someone in an attempt to gain the upper hand.
Life is filled with conflicts of interest.
My interests are different than yours, your interests are different than mine and both of our interests are different than a third person's.
So, we all have conflicts of interest and that doesn’t make it bad--it only makes it a fact that they exist.
On the other hand, I'm seeing more and more hospitals imposing “conflict of interest” policies (again, whatever that means) on members of the hospital’s medical staff.
What are those provisions?
Are they simply a disguised form of covenant not to compete, which may or may not be legal?
Are they restrictions on referrals outside of the hospital’s sphere, in violation of a number of federal laws?
Are they, in essence, backhanded ways of requiring physicians to refer to the hospital, creating, potentially, both federal anti-kickback statute and state law violations, and, depending on other terms involved, violations of Stark?
I don’t know exactly what a conflict of interest is, but beware if you’ve agreed not to have one.
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| | Wednesday - Do You Believe in the Myth of Efficiency? We Aimed for the Wrong Thing but we Scored a Bullseye! - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Efficiency. Hospital administrators and other bureaucrats say that they want it. Medical group leaders parrot it. But is efficiency really the goal? Is it really what’s important? Or is it simply something that (they think) can be measured? And, of course (not) what can be measured can be managed.
Let’s do a simple thought experiment. The efficiency measure is “turnaround time” in the cath lab. Turnaround time is the lag between which Patient A is wheeled out to recovery and Patient B is wheeled into the cath lab. That lag time is generally used as a measure of the anesthesiologist’s “efficiency.” After all, “we” don’t want the anesthesiologist delaying cases.
Assume for purposes of our thought experiment that the patient suffers a heart attack between pre-op and the cath lab. Should the anesthesiologist do what’s most “efficient” in terms of turnaround time and take the patient to the cath lab anyway?
So what we’re really after is efficacy, not efficiency. But that’s harder to measure. Like love, you know it when you feel it, but we can’t objectively measure it.
There’s nothing wrong with measurement as long as we’re measuring what’s important, and as long as we understand that some things can’t ever be measured.
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| | | Listen to the podcast here, or just keep reading for the transcript.
In many medical specialties, both hospital and office based, national groups have become significant competitors.
Although there are many points on which to distinguish national groups from local groups, two stand out:
1. The national groups are in business.
2. They are in business to make a profit.
Is your practice really a business? Is it designed to make a profit for you and your fellow owners in return for your efforts on behalf of the group and in return for your taking on risk?
Or is it simply a framework that permits a collection of individuals to profit from their individual activities?
Are you in business or are you just running a club?
As the medical marketplace continues to shift, what chance does a club have against a real business?
Note that this is not in any way the same question as what does a local group have to offer in competition with a national one - the answer to which is capable of being "very much." However, the local groups which will be successful in that competition will be actual businesses.
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| | | 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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