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Dear Friend,
"Please buy us!" is not a strategy for successful negotiation.
Last fall, Milford Hospital, located in Milford, Connecticut, announced that it was exploring a merger with Bridgeport Hospital, part of Yale New Haven Health.
A week or so ago, Connecticut state legislators spoke in support of Milford’s request for required state approval of the merger, under the terms of which all of Milford’s employees would become Bridgeport employees.
After all, according to a report issued by the officials, “this partnership is necessary to save Milford Hospital….”
Reality Check!
“Merger.” “Partnership.” Both are nice words but, here, are simply nice euphemisms.
The deal between Milford and Bridgeport is structured as an asset purchase. Milford isn’t merging with anyone. Milford isn’t partnering with anyone. Milford, as an entity, is ceasing to exist. But yes, at least for now, the physical location will continue to be a hospital.
So what can you learn from this?
First, when you read about facility X or medical group Y “merging” or “partnering” with some other facility or group, don’t necessarily assume that they are breaking out the champagne. What appears to be a happy marriage may not be a marriage at all. What appears to be a date with destiny, rainbows, and unicorns may simply be staving off starvation.
Second, if you are ever in the position of needing, yes, truly needing to be acquired, you are not doing yourself any favor by letting the prospective acquirer know that closing the deal, or, euphemistically, “partnering up,” is necessary to save you. The more you need the deal, the less they need to pay you for it.
Think about it this way: If someone wants to marry you only for your money, would you jump into that relationship?
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| | Tuesday - Success in Motion Video: Using “Future You” As A Guide To Better Contracts And Business Relationships
Watch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| | I want to share with you a tool that you could use in connection with your medical group dealings, your individual structuring of practice relationships, and other business relationships. This tool could roughly be called “Considering the Future You.”
Many times, physicians and medical groups structure deals based on what is expedient in the current situation, whether it’s purely reactive or a deal that results from some true development of strategy.
But to get the most benefit out of a deal, you shouldn’t consider only your current situation, the “Present You,” if you will, but also its impact on the “Future You.”
For example, what will be the result of this partnership interest you’re acquiring in a surgery center in terms of its restrictive covenants, covenants not to compete – how will that impact you down the line?
Or, for example, what will agreeing to provide a certain level of coverage in an exclusive agreement do to you if you haven’t thought about a mechanism to adjust it for a future circumstance in which demand drops and you’re stuck providing the same level of scheduling and coverage?
Think about deals, not only in terms of how they are rational and make sense today, but also about how it might impact you later down the road. Then use that as a tool for "Future You's" success.
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| | | Wednesday - Medical Group Minute Video: Why Hospitals Don't Want Employed Physicians to (Really) Succeed - Rebroadcast
Watch the video here, or just keep reading below for a slightly polished transcript:
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| You’d think that after spending millions of dollars setting up a foundation model entity to employ physicians, or even going out, in those states without prohibitions on the practice of medicine, and employing physicians directly, that hospitals would want you to succeed.
Well, they do, sort of — but only to a point.
Historically, physician practice was entrepreneurial. For one reason or another, chiefly related to the complexity of running a practice in today’s economy, many physicians have chosen the hospital employment route.
But despite any assurance to the contrary, once within the hospital’s bureaucratic model the rules change: You are managed because that is what bureaucrats do.
You’ll be free to develop your expertise but not to the point that you will become a star. If you were allowed to become a star, you would obtain leverage and might leave.
There’s a tension to have scores of mediocre physicians on the team – entrepreneurial physicians and those striving for personal excellence are too much of a threat.
You’ll be paid fairly well, but not above what are actually mediocre levels such as the 75th percentile on employer-favorable surveys. At that level you will be paid more than most, if not all, of the bureaucrats in hospital administration and paying you more will be viewed as “unfair.”
Of course, over time, with more physicians being among the employed, the actual dollar amount of 75th percentile compensation will spiral downward. But not as low as that of physician assistants, specialty trained nurses armed with newly minted “doctor” degrees, and other physician extenders who will be used by your employer to muscle you out of a large part of your clinical role.
After all, to the bureaucrats in charge, even those bureaucrats in white coats, it will be done in the name of efficiency.
In a way, it’s like the classic Twilight Zone episode, To Serve Man: You might feel that you are participating in something greater, but the reality is that you’re on the menu.
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| | Thursday - Podcast: Do You Make This Mistake in Business? |
| 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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| | | | 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 here.
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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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