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| Dear Friend,
Change Healthcare was right. We need to change healthcare.
I don’t need to restate more than the basics of the Change Healthcare debacle: On February 21, 2024, Change Healthcare, the giant HIPAA clearinghouse unit of insurance giant UnitedHealthcare, flatlined, the victim of a cyberattack. “Experts” are attempting to resuscitate it.
The financial impact was immediate and momentous: Neither new nor existing claims, nor payment for them, could be processed. As a result, medical practices from solo docs to medical groups of thousands of physicians, as well as hospitals and other healthcare delivery facilities were cast into a sea of cashflow uncertainty.
While the popular press carries stories about the purported $22 million in bitcoin demanded by, and perhaps paid, to the cyber terrorists, and the pittance of financial help being offered by Change Healthcare’s parent organization, UnitedHealthcare, to its customer physician practices and facilities (a Florida primary care group with revenue of hundreds of thousands of dollars a month, states that it was offered a $540.00 per week loan), I suggest that there are two major lessons for medical group and facility leaders, one a structural observation and the other practical and immediately actionable.
The Structural Observation
HIPAA, which brought us clearinghouses, was predicated on the notion of electronic personal health information what would follow patients and be accessible by their various unrelated healthcare providers. As anyone who moves from internist #1 to internist #2, let alone from #2 to a specialist or, God forbid, from a car crash to an ER, knows, that premise was mostly wishful thinking, perhaps sponsored by political contributions from the guys selling trillions in IT infrastructure and “consulting”.
Whether BS or best-thing-since-sliced-bread, what resulted was an infrastructure built upon behemoths like Change Healthcare. But bigger is not only not always better, it is often far worse in that it is fragile: a defect within it reverberates, impacting thousands of providers and millions of patients.
I have no idea what defect within Change Healthcare the cyber criminals exploited, but the point is that it doesn’t matter. It’s not Change Healthcare itself that’s particularly the problem, it’s the size and complexity of both its own system and of its role in the larger claims system that’s the problem. As long as both remain large, large failures, and large cyberattacks, will continue.
The Practical Lesson
Spoiler alert: The right cyber liability policy.
Medical group leaders often think that cyber liability coverage is limited to claims related to events impacting their own entity’s computer system. It’s not. A properly negotiated and structured policy can provide coverage for losses as a result of cyber events, from hacks to system failures, at the vendor level.
In other words, cyber liability coverage can make sense even if your medical group doesn’t own a single computer.
Although policies are purchased via insurance brokers, don’t rely on your broker alone to analyze and negotiate the best possible coverage. The specific language of the policy and negotiated endorsements is what coverage, or lack thereof, is all about. “Cost” is generally not the deciding factor, value is. Cost-based shopping leads an Obamacare equivalent: “coverage” that provides little “care” in the event of a loss.
If you have existing cyber liability coverage and are impacted by the Change Healthcare debacle, act quickly to analyze your policy’s coverage and then act pursuant to its reporting requirements. If you don’t have cyber coverage, let Change Healthcare serve as a clarion call for you to change. Contact me to discuss either scenario.
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| | Wednesday - Deal School: Contracts Needn't Always Be Contracted - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
There are many reasons why contracts are usually contracted -- made compact, that is -- by having them contained within one fully integrated document. The primary reason is that the "whole agreement" can be found in one place, leaving less ambiguity (one hopes!) about what the parties intended their deal to be. That way, it's easier to enforce that deal, or so the story goes.
But just because that's the general rule does not make that rule the best way to approach contracting in every instance.
In some cases, it makes more sense to accept more risk in terms of how a judge might see the "deal" in return for binding the other party to a set of terms that would never be possible, from a negotiating standpoint, if the entire arrangement were reflected in one document. In other cases, a multi-document agreement achieves what one document can never do: It becomes both stronger and more flexible.
In those instances, no matter how much more likely it would be that a single document would be enforced, it would not, by definition, contain the complete deal that you seek.
Breaking things up is sometimes the best way to make sure that they're whole.
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| | | Listen to the podcast here, or just keep reading for the transcript.
I’ve written about hospital closures, shrinking hospitals, and hospitals that became holes in the ground. I’ve even written an entire book on The Impending Death of Hospitals. But before today, I’ve never written about a hospital that turned to crowdfunding to stay afloat. According to a story on Medpage Today (see https://www.medpagetoday.com/special-reports/features/106291), 16-bed critical access hospital Bucktail Medical Center in Renovo, Pennsylvania is attempting to raise $1.5 million via GoFundMe to keep the lights on. It’s losing $150,000 each month. The Pennsylvania Department of Human Services wants repayment of $255,467 for care delivered four years ago. And, the hospital reports that a $381,941.00 Employee Retention Credit (ERC) payment is delayed indefinitely. Bucktail has been in business since 1909. It’s the sole hospital, and sole operator of an ambulance service, in the county. It also operates a nursing home. See it here: https://www.gofundme.com/f/your-community-your-hospital-your-choice-help) The hospital business is dying, one facility at a time. The story is another breadcrumb on the trail of The Impending Death of Hospitals. For physicians, it leads to the conclusion that: 1. There is no longer safety in hospital employment. 2. That contracted medical groups, especially hospital-based groups such as anesthesiologists and radiologists, can’t be dependent upon any single hospital or single hospital system relationship. 3. That there is huge opportunity in alternatives to hospitals, such as ASCs and MOCs™, physician-owned Massive Outpatient Clinics™. |
| | 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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