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Dear Friend,
Are you familiar with the concept of lifetime value? You should be.
What’s a relationship worth to your business, whether your business is a medical practice or a healthcare facility such as an ASC or an imaging center?
Originally limited to marketing (where it remains a very powerful idea), the concept of lifetime value involves looking at the worth of a customer not as the one-off value of a transaction, but as the worth of the stream of transactions over the lifespan of the relationship.
So instead of looking at a transaction, say the value of some medical procedure performed on Sally Smith, as $1,200 in profit to the group, look at it in terms of the relationship with the average “Sally Smith.” If that’s 2 procedures and 3 referrals, returning, for example $4,700 in profit, then that’s the lifetime value.
But that’s not where the original use of the tool ends. Rather, the next step is to ask yourself how much you can spend (in money, time, etc.) to bring in a $4,700-in-profit customer and to ask yourself how you should treat a $4,700-in-profit customer.
But wait, there’s more.
As it’s often said, there are many “customers” in healthcare: the patient, the referral source, and, depending on one’s medical specialty, the facility.
I suggest that it’s vital to apply the same “lifetime value” concept to each of those relationships. For example, apply the tool to the relationship between an ASC and a referring surgeon. Or to the value of an exclusive arrangement at some facility.
For those hypersensitized to kickback concerns, note that I’m not talking about offering any remuneration for that lifetime value. Instead, I’m telling you to use the concept as a thinking tool in nurturing relationships in order to reap their long term value to you.
But wait, there’s more.
The concept also plays out in connection with relationships within your medical group or other healthcare business. What’s the lifetime value of a great employee? And, even beyond that, what turnover costs are avoided by not losing that great employee?
We all know what it’s like to be placed on hold by some call center. We all know what it’s like to be greeted at the reception desk with an unsmiling glance and a cold “yes?” or, even worse, a “next.”
The people who run those operations have no clue of the concept I’m sharing with you. The bigger the organization, the more clueless they generally are. Why should they care if you walk, they ask themselves, when your business or mine is “worth” just a few cents to the bottom line.
They can’t see the dollars for the cents.
Have more sense.
Customers of all sorts aren’t transactions. They’re long term relationships with a lifetime value.
Competing for business that depends on a relationships gives smaller businesses, those without layers and layers of bureaucracy, the advantage. And, all business depends on relationships. Develop deep and lasting relationships with your customers.
If you’re the leader of a larger organization, be afraid of what you don’t consider to be your competition. There might be economies of scale in terms of purchasing and administration, but customer service is one at a time.
Make sure that your hiring focuses on the skills required for customer satisfaction, train for it, fire for lack of it, and reward those who deliver it, not just for how many billing units they generate.
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| | Tuesday - Success in Motion Video: How To Bridge the Demilitarized Zone: Group to C-Suite CommunicationWatch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| | I want to talk with you today about the Demilitarized Zone between North and South Korea, and how the technique of the pink phone can be used to rescue you or your medical group (especially if you’re a hospital-based medical group) from the real risk of an RFP being issued for your services.
I read a very interesting story about the pink phone that sits in the UN force's Headquarters at the Demilitarized Zone between North and South Korea. It’s a phone that links UN forces staffed by, as I recall, five or six US servicemen and one from Australia, or maybe it was New Zealand. Their task is to man the phone and keep up some small amount of communication between North and South Korea in order to reduce tension at the heavily fortified boarder zone.
In other words, if people are talking, at least they’re not fighting, or so the hope goes.
The phone (yes, it's an old rotary dial, pink telephone) has been in place for many years. At times, it was regularly used for calls between the sides. But then, every day from 2013 to 2018, the UN forces officer in charge, or one of his assistants, placed a "pink phone" call 125 feet across the border to the North Korean counterpart phone . . . but no one answered.
And then, all of a sudden, after five years of silence, in 2018 the pink phone rang.
And now, so the story recounted in the Wall Street Journal goes, every day there is some communication. Now maybe that communication is that there’s nothing to report, but as things have warmed up in the relationship between the soldiers on one side and the soldiers on the other side, they’ve begun talking about things like baseball and whiskey – actual person-to-person communication.
So what’s this have to do with you?
Well, in many cases, there’s probably only 125 feet or maybe a little bit more between the office of a contracted radiology group department, or a contracted anesthesia group department, or a contracted emergency group department, and the hospital's C-suite.
How much regular communication is there? In the pink phone story, it’s daily, or at least a daily attempt at communication. How much attempt at communication are you making? Is it simply when there’s a problem? Or is the communication only flowing one way? Is it that the phone is only ringing because administration is contacting you because there’s some problem?
What I’m getting at is this: One of the reasons that hospital-based groups lose their contracts is that there is no regular communication, no development of a one-on-one relationship between the contracted group and the C-suite, the administrator, the COO, whoever the primary contacts are.
What I’m suggesting is there should be regular communication, regularly scheduled communication. It might even be weekly, it might be every other week, but certainly it should be more often than simply monthly.
The purpose of this is to find out what the C-suite is looking for. What problems might exist? What things would they like you to do?
And the purpose is also for you to, in essence, blow your own horn, to remind the C-suite what you’re doing proactively, or even reactively, to improve services, to resolve problems, to create new programs, to bring new value to the relationship.
It’s not impossible for someone to terminate a relationship even when there's been daily communication, but it makes it harder. I’m suggest you remember the story of the pink phone. Pick it up, and make those calls. But also use it to make an appointment to meet face-to-face as often as you can.
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| | | Wednesday - Medical Group Minute Video: Why You Must Know This Negotiation Strategy: Think Like A Buyer Not A Seller
Watch the video here, or just keep reading below for a slightly polished transcript:
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| It sounds simple, but in reality, it’s very difficult.
Difficult, that is, to control what appears to be a built-in human nature: The impulse, when dealing with a potential deal partner, to have the mindset of a seller.
Let’s step back for a moment.
Note that I said “mindset” to distinguish the concept of inner talk and expectations from the fact of the matter that you will still engage in activities to, in essence, “sell” the deal, as you desire it, to the potential deal partner, whether we’re talking about a deal with a hospital, a hospital system, a referral source, or with anyone else.
It’s one thing to engage in activities to convince the opposite side to engage your services, or to acquire whatever it is that you’re selling or providing. However, and here’s the point, it is an entirely different thing to do so from the mindset that you are somehow less than, or will be lucky to be selected, or that you are some sort of a supplicant to the other side.
The best way to put this is that even when you are, in actuality, selling, your mindset should be that of a buyer. Would you buy what the other side is selling you?
Let’s put this into a very easy to understand context.
Even in the situation in which your entity is doing a deal, for example, with a hospital system, in which the system will be providing stipend support to you, don’t negotiate as if that stipend support is a gift or a handout or a “May we have more please?”. Instead, view the deal and evaluate it as if you are a buyer of that relationship, with something extremely valuable to offer.
Let your deal partner prove itself worthy of what you have to offer.
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| | Thursday - Podcast: No More Walk in the Park for Convicted Forest Park Defendants |
| Listen to the podcast here, or just keep reading for the transcript
One thing’s for certain, it will be no more walk in the park for the seven defendants convicted for their roles in a bribe and kickback scheme related to referring patients to Forest Park Hospital, a now defunct chain of Texas facilities.
Well, I suppose those defendants sentenced to time in federal prison will still get a walk in the yard, as in the prison yard, but that’s not even in the same universe.
The Story
Forest Park was a chain of beautifully constructed facilities. However, beneath the veneer of great architecture and beautiful interior design was, so federal prosecutors alleged, a decrepit scheme involving questionable marketing agreements and multiple types of fake arrangements from “consulting contracts” to “leases” and even fake companies.
The alleged aim? Referrals of well-insured patients to the out-of-network facility.
Last week, on April 9, 2019, the jury in the Forest Park bribery and kickback trial in federal court in Dallas found seven of the nine defendants guilty. At issue were multiple charges, from violation of the federal Anti-Kickback Statute to money laundering.
The government contended that Forest Park took in $200 million and paid out $40 million in kickbacks.
Among those indicted were physicians, hospital executives, and alleged intermediaries in the trail of funds.
The following physicians were convicted on April 9:
- Spine surgeon Shawn Henry, D.O.
- Spine surgeon Michael Rimlawi, D.O.
- Pain management physician Mike Shah, M.D.
- Spine surgeon Douglas Won, M.D.
So, too, were Forest Park’s co-administrator Mac Burt, Jackson Jacob, the owner of companies through which Forest Park channeled payments to physicians, and a nurse and workers’ compensation insurance consultant, Iris Forrest.
The Moral
The easiest (and most gratuitous) takeaway is that kickbacks are illegal. But, you already know that, at least in concept. So, in a sense, it’s not very helpful advice.
What’s far more important to note is the need for caution, extreme caution, whenever entering into any sort of financial relationship with someone or some entity with whom you share a referral relationship, no matter which way the referrals flow.
For example, some of the allegations in the Forest Park case centered around the payment of “marketing money” from the facility to physicians. Some naïvely believe that marketing money from a hospital to physicians is not something that should concern significant anti-kickback scrutiny. Wrong.
Additionally, Forest Park shows that even convoluted payments through “money drop” entities, even ones that look like a game of Chutes and Ladders, can be un-woven. And, as a double take away for you, they can be un-woven by other participants in a scheme such as the former Forest Park Chief Operating Officer and a physician/investor/founder who both previously pleaded out and cooperated with the authorities in convicting their fellow schemers.
One can assume that all or nearly all of the now convicted men and women had counsel advise them on the propriety of their arrangements. So, when someone tells you the deal is okay because their attorney vetted it, don’t be so sure. Make sure that the person advising you not only has knowledge, but also a good dose of common sense.
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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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