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| Dear Friend,
A $577 million dollar scam with a billion dollar lesson for you.
Just like in a heist movie, they inspected a few of the shipping containers expecting to find the half billion dollars’ worth of nickel, a metal vital to producing batteries for electric vehicles, that they were all to contain, only to find other metals of lesser or no real value.
That's the story reported on page 1 of the February 10, 2023, issue of The Wall Street Journal in connection with the commodity trader, Trafigura Group.
Not only is all that glitters not gold, shipping containers thought to contain nickel might just contain carbon steel.
So, what does this B-movie plot come to life have to do with you, assuming that you're not a metals trader? More than you might realize.
Here are some rather common examples:
- You enter into an agreement thinking you've obtained, for example, a seven year contract. Nine months later, you realize that it's terminable on 10 days’ notice under some circumstance that just occurred.
- You enter into an agreement to provide all services at a hospital system, only to find out that the system has the right to unilaterally grant carve outs to your exclusivity.
- You think you've solved your financial problems through obtaining stipend support only to realize that the support is actually structured as a loan that has to be paid back, with no hope of ever doing so.
- Just as in the most notorious of "you've got to be kidding me, isn't this a scam" sort of contracts, insurance policies, nearly any form of legal agreement is capable of giving you something on page 3 and taking it away on page 14.
Prepare for negotiations. Negotiate for your best deal. Make sure the agreement reflects that best deal. If the best deal isn't good enough, hopefully you've positioned your business so that you don't have to take it. And in any event, make sure that what you take is consistent with what you believe you've taken.
If a fake "gold" ring can turn your finger green, and if $577 million worth of nickel turns out to be scrap metal, there's no reason why your contract might turn out to be something other than what you expect. |
| | Wednesday - Weaponized RFPs - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
More and more hospitals are disrupting their longstanding hospital-based group relationships as they seek to cut stipends and get more for nothing. The favored tool? A "weaponized" form of the request for proposal, called a "Fulcrum RFP™, designed to get a group to grovel for the continuation of its contract.
Of course, the concept of an RFP is not new; it's been used for decades across many industries and by governmental agencies. But as opposed to its traditional use, identifying vendors for discrete supply orders or for a one time project, the Fulcrum RFP is increasingly being used as club to beat down the expectations of the present provider group.
You can classify RFPs into three distinct categories:
True RFPs™ -- These are actual searches for the best quality provider with a favorable quality/cost ratio. This type of RFP is the closest in relationship to the traditional form used in industry and government. It's commonly seen in situations in which the current, or sometimes very recently former, group has "blown up" and can no longer provide coverage, and in situations in which the current group has completely lost the facility's trust.
Fictitious RFPs™ – These RFPs belie the fact that hospital administration is not interested in the merits of any response; they have already decided to whom they will award the contract. Yet, for one political reason or another, they've decided to issue a phony RFP to project a patina of "fairness" to the medical staff, to the hospital's own Board, to some third party . . . or perhaps to you.
Fulcrum RFPs™ – This is the increasingly common type of weaponized RFP. As the name implies, Fulcrum RFPs are designed to create leverage. The facility intends on renewing with the present group but uses the RFP as a tool to dictate terms by fiat and to pressure the group into negotiating against its own best interests out of fear of replacement. Nonetheless, the facility is open to competing proposals.
It's essential to understand in any particular situation what type of RFP you are dealing with in order to calculate your group's response, or, in some cases, to determine whether or not you will respond at all.
Of course, the best defense is the development of a strong experience monopoly combined with expansion of your business to serve patients at multiple facilities.
As financial pressures on hospitals increase and as commoditization of hospital-based physician services continues, the trend toward RFPs will intensify. Develop and implement your strategy now, preferably years before you find yourself on the receiving end of an RFP designed to replace you, to force disadvantageous terms, or, even worse, to have you offer to cut your own economic throat in the mistaken belief that a slow bleed is better than a quick chop.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Thirty some years ago, my father told me that you paid less for $150 shoes than you did for a $49 pair.
Last week at the market, I heard a mother call out across the produce department to her son. "What costs more, the red leaf or romaine?"
Some things are consumed. Others bring a benefit that lasts for years and even decades.
Amateurs see their businesses as a consumer. Everything is a cost. Everything is purchased by the metaphorical pound.
Successful business people understand the need to invest in themselves. Without investment, their business would whither.
Hospitals and investment funds scooping up practices understand this. Most physician groups don't.
How's it working out for you?
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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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