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| Dear Friend,
If people can't afford McDonald's, why would you think they'll pay their deductible?
No, I don’t have a crystal ball and I can’t predict the future. But that doesn’t mean that I’m blind and can’t see a cliff dropping off on the near horizon.
Last week, the Wall Street Journal quoted McDonald’s CFO Ian Borden’s comments at an investor conference; “lower-income consumers increasingly have spent their savings and are turning to grocery stores instead of restaurants.” “Some of those consumers are just choosing to eat at home more often.”
The same day, the same paper reported that “America’s penny-pinching is starting to hit dollar stores.”
It reported that Family Dollar, an operator of dollar stores catering to lower income shoppers, is set to close 1,000 stores. Its CEO stated that “Family Dollar is a victim of the macro environment out there.”
Perhaps more interestingly, when you think “lower income”, understand that Family Dollar, which operates under both that name and under the “Dollar Tree” banner, stated that its suburban locations are gaining customers earning over $125,000 a year. Lower income?
Many medical groups have come to expect that their businesses run like vending machines. Push the button and out comes collections. But the reality is far different, and the better analogy is to a slot machine. Sometimes you push the button, and nothing comes out. And, because this isn’t a real slot machine, you can never “win” more than your bet.
Consider what happens to your group’s business in an economy when an increasing number of people choose not to eat at McDonald’s because it’s too expensive. Consider what happens to your group’s business when people earning over $125,000 a year shop at dollar stores.
What happens to your ability to collect deductibles and co-pays?
What happens when that’s happening in an economy in which payers are cutting contractual rates or not agreeing to increases that keep pace with inflation?
For hospital-based physicians there’s at least one other funding source: hospitals. That means negotiating for stipend support, and we’re seeing an increasing demand for our services negotiating those agreements.
For office-based practitioners, it’s conceivable that we’ll see a return to the (dare I say ) kickback-challenged world of medical directorships of this and that. Or, an even quicker exodus into hospital employment which appears to be “safe”, but hardly is.
For all, it behooves you to stay on top of collecting co-pays and deductibles as early as possible.
Wimpy, from the Popeye comic strip, famously said, “I’ll gladly pay you Tuesday for a hamburger today.” At some point, patients who can hardly afford a hamburger today will buy one and then tell you that they’ll pay their co-pay on Tuesday.
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| | Tuesday - Fake Patients and Oxy Send Doc and Partner to Prison - Success in Motion
Watch the video here, or just keep reading below for a slightly polished transcript:
I’ve got a story for you, a story that’s a bit of a warning.
Dr. Jonathan Rosenfield and his partner, Elmer Taylor, who isn't a physician, were the co-owners and operators of two medical clinics doing business under the name Sunnyside Medical. To be certain, "medical clinic" is a loose term.
In November 2023, following their guilty pleas in connection with conspiracy to unlawfully distribute and dispense controlled substances, Rosenfield and Taylor were sentenced, respectively, to 10 years and 12 years in federal prison.
Their scheme involved prescribing, under Dr. Rosenfield’s name, controlled substances, mostly opioids, to "patients", many of whom were recruited by drug dealers. After the "patients" filled the prescriptions, the drug dealers would collect the drugs.
Per the U.S. Department of Justice, over the period from May 2018 to August 2019 the Sunnyside clinics collected almost $6 million in profits from the sale of those prescription drugs.
Previously, two pharmacists plead out in connection with charges related to the same scheme.
I don’t think I need to warn you not to hatch a scheme like these guys did at Sunnyside, but I do have to warn you not to get hooked into a scheme like this that gets hatched by someone else.
I’ve seen far too many physicians get caught up in schemes in which someone else claims that the program they’ve come up with is completely legal . . . "it’s been vetted by our legal team,” even "vetted by a large law firm”. Only later do the physicians find out that they’re all headed to jail because what they engaged in was not a wonderful business model, but a large criminal conspiracy.
So be careful out there. Don’t believe what anyone tells you. If something doesn’t smell right, follow your nose. It’s a pretty good warning sign.
To make it even worse, it’s not just that someone else will tell you a deal is legal when it’s not, but the chances are great that they’re later going to flip on you. They might not go to jail at all; they might just get probation while you’re the one doing the real time, walking around the prison yard while they’re walking free. |
| | Wednesday - Overexposed: A Kodak Moment - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
I remember, as a kid, walking around Disneyland, noticing yellow "no parking" size signs labeled Kodak Moment. They indicated a great vantage point for taking a photo.
When Kodak was challenged by Fuji for dominance in the sale of photographic film, Kodak succeeded by changing the value proposition. They were no longer in the photo business, they were in the memory business. And who better to protect your memories, the cheaper alternative, Fuji, or the company synonymous with photography, Kodak? The answer was obvious.
But by 2012, Kodak was in bankruptcy, its core film business gutted by the digital camera.
What's darkly funny about this is that Kodak invented digital photography, yet chose largely to ignore it. Perhaps Kodak was too large to truly innovate. Perhaps it was too focused on film to make the switch to digital. Perhaps its employees, from executives to those working in its manufacturing plants, were economically handcuffed to film photography.
The same phenomenon is common in healthcare.
Many medical groups, especially hospital-based medical groups, choose, sometimes intentionally and sometimes simply by default, to ignore the fact that unless they establish an identity separate and apart from hospitals, their businesses will soon be obsolete.
Of course, their medical specialty will likely continue – but it will be controlled by someone else, whether by hospitals or by other groups which disrupt their business relationships.
Start taking action now to avoid having your own Kodak Moment.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Hospitals that use RFPs and others fool’s tools in respect of physician relationships will surely suffer as fools in the end.
Patients, as they are increasingly empowered by technology, may not seek as many human service touch points. But when they do, they will expect high value experiences. And, they will not suffer fools gladly.
But, for the most part, hospitals are dead. They just don’t yet know it.
The problem lies in the mistaken belief that services are commodities that are fungible and that can be purchased based on the lowest price.
The problem isn’t unique to hospitals. In retail banking, traditionally a service business, it's led to the ATM replacing the teller inside the branch, long lines, and endless waits on automated phone systems (press 1 for a commercial about how much we value you; press 2 for accidental disconnection), and the death of real loyalty among customers.
Customers didn’t only want interest rates and safety for their money. It was more than that. They wanted personal interaction. They wanted to be treated courteously. They wanted the tellers and the manager to know them by name and not to treat them as thieves attempting to pull off identity theft. In exchange, customers gave their loyalty.
But now, there being little value inside the bank, most bank customers get their $300 from the ATM machine outside the bank’s walls and get out of there. They have little traditional loyalty to their banks. They are all the same.
Banks cut costs. They treated customers as commodities. And now customers have returned the favor.
You, Mr. or Ms. Hospital CEO, can shout at me until you’re blue, but no two physicians or other healthcare service providers are the same. Their professional degrees might be the same. But their professional skills and, even more importantly, the experience that they provide to their patients and other customers isn’t.
If you, Dr. Jones, believe that your medical group’s skills are the same as your competitors and that the practice of X-ology is a commodity, then you’ve imprisoned yourselves within the future that the fool running the hospital has imagined for you.
But if you understand that your services can never actually be a commodity, if you understand that by adding creativity and focusing on the customer’s experience, all customers’ experience, even the hospital’s, and you actually deliver on that, then you’ll occupy a unique position when valued through the customer’s eyes. The more transformative that experience for the customer, the more value.
Starbucks took a 50 cent cup of coffee and wrapped it into an experience selling for far over a dollar. And that was just to start. See what a dollar gets you at Starbucks today.
Fresh Express and ReadyPac took what may be in many minds the ultimate commodity, 70-cents per pound lettuce, and “servicized” it into $12 per pound bagged salads, some complete with croutons and packs of dressing.
Hospitals that believe that an anesthesia group can be selected by how low the stipend request is (like zero) and how many physicians and CRNAs will work as many ORs as possible starting at 7:00 a.m. even if some rooms run only until 8:00 a.m., will get the “commodity” level service that they seek. If you as a medical group leader want to do business with that hospital, believing it’s your only option, then your business model is broken. But soon, too, will be the hospital's.
Don’t agree about experience? Think all you want is the lowest price, quality and experience be damned?
Then please send me the price of a week’s stay at any U.S. Ritz-Carlton and I’ll swap you for the price of a week at the closest Motel 6. Both are clean. Both have beds. Just like a hospital.
Oh, now you get it.
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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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