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Dear Friend,
Sure, you can buy a new 2019 Bentley Continental GTC for around $300,000. But you can pick up a gently used 2016 model for around half the price.
But did you know that the same bargain can be had on a slightly used ambulatory surgery center?
That's the subject of this past Monday's blog post, For Sale – Slightly Used ASC. Follow that link to the blog or just keep reading for the rest of the story:
Last month, two facilities owned 51% by Surgical Care Affiliates (SCA) the ASC behemoth owned by the even bigger healthcare behemoth UnitedHealth Group, Inc., became the equivalent of not simply a slightly used exotic car, but of a slightly used GMC Yukon.
Set up as a venture between majority-owner SCA and various physicians, Belleville Surgical Center, LTD, operated two ASCs, one the eponymously named Belleville Surgical Center and the other Physicians’ Surgical Center, both located in Belleville, Illinois.
From an Illinois state filing, many of the physicians who had previously referred their cases to the ASCs joined hospital affiliated medical groups. Their referrals to the ASCs dried up.
SCA, as the ASCs’ manager, sought a buyer for the facilities as ongoing operations, in other words, as operating businesses.
But operating businesses sell for more money than, well, the skeletons of closed businesses. No buyer stepped up and the facilities closed.
But just like the smart shopper for a slightly used Bentley, up stepped a smart shopper, Shakeel Ahmed, M.D., a gastroenterologist. Dr. Ahmed purchased Physicians’ Surgical Center’s operations, as well as Belleville Surgical Center’s land and building, for $50,000. Yes, just $50,000 – all of the zeros are accounted for.
Of course, there’s no way of knowing what equipment was included in the deal – much of it under SCA’s management may have been leased. But under almost any guess as to what’s going to be involved in bringing the facility back into operation, the deal was a tremendous bargain, perhaps up to 99% off.
I’m not saying that it’s every day that a bargain like this comes around. But there are more distressed sales and other creative opportunities around that one might think.
There are other lessons here, too.
Belleville’s state fling reveals that the physician investors didn’t, as individuals, have a significant amount of skin in the game, with none of them owning more than 5% of the deal. What exactly they lost when they gave up their independent practices and signed up with hospital employers is unknown. More skin in the game might have led to a different outcome.
Having a giant corporate partner in the deal didn’t help either. In fact, it might have made it more likely that the individual physicians would stop using ASC.
Just like each of the pennies on the dollar that Dr. Ahmed used to pick up the ASC, there are two sides to the ASC coin. Some facilities fail. But even when they do, they may be a tremendous opportunity for you.
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| | NEWS FLASH! Congress Moves to Repeal Prohibition on New Physician Owned Hospitals
Earlier this month, two members of Congress, one a Republican and one a Democrat, introduced legislation, H.R. 3062 to reverse the Obamacare prohibition on physician owned hospitals.
Similar legislation was introduced in prior congressional sessions, with little traction.
Although the bipartisan support at this very early stage is encouraging, one can expect tremendous lobbying by the American Hospital Association to kill the bill’s progress.
We'll be following HR 3062 as it moves forward and bring you updates. |
| | Tuesday - Success in Motion Video: How Certain is Certainty?
Watch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| | Let’s talk about certainty, and about how certain you are as to the degree of certainty in a deal and about how much certainty meets your requirements.
Now you probably don’t want to hear this, but certainty (like many concepts that end up having a legal overlay) isn’t that certain. Instead, it’s a matter of degree.
For example, if we have a contract that I’m going to sell you this slightly used iPhone for $200 and I’ll deliver it soon, what in heck does “soon” mean? In what shape is that iPhone? Is any money owing on it? You get the point.
Oftentimes it’s a question of how much you want to spend, not necessarily in money, but in time and effort, in documenting what that deal is.
Are we going to leave it up to custom as to when delivery occurs?
Are we going to leave it up to chance as to what “performance by the other side” means?
What happens if, even if we take many of the steps to nail down other factors, the other side simply breaches, doesn’t want to perform, and would rather simply pay damages . . . or takes the strategic position that you’re not going to be able to devote the funds required to enforce the agreement?
Any agreement in the healthcare context needs to have the amount of certainty that you’re comfortable with. If you’re comfortable with a handshake because you know the person on the other side and you have a long history of that person delivering as promised, then you might not need a formal contract at all, you may simply need that handshake or a few things jotted on a napkin.
On the other hand, if you’re dealing with a hospital that changes administrators as often as other people change underwear, or at least toothbrushes, then details have to be documented, well documented. So, too, does the process for what happens if there’s a dispute over whether what was delivered conforms with the agreement.
And, you can’t just stop there if you want a very high degree of certainty, because then you have to make sure that you’ve nailed down whatever the process is for resolving a dispute, and for paying an attorney’s fees in the event of a dispute.
So just don’t assume that a deal is a deal. Think about how much you need to document a deal and think about the fact that even if a deal is documented, it’s still not certain if you're unable to afford to enforce it.
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| | | Wednesday - Medical Group Minute Video: From CrossFit to Crossing Over from Pure Medical Practice to Lifestyle Business
Watch the video here, or just keep reading below for a slightly polished transcript:
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| Many people tend to think within professional silos. Barbers cut hair. Farmers farm. And, doctors practice medicine.
Why?
I read a Wall Street Journal article about a company in the gym business that’s expanding beyond the gym business into – yep, you got it – healthcare.
It’s just another one of those ventures. There’s a huge crossover between lifestyle and healthcare, between beauty and healthcare.
It’s the same trend expanded from what may have begun in the realm of the “medi-spa”, which was not the invention of physicians, such as plastic surgeons or dermatologists, expanding into a wider range of beauty, but was really unlicensed folks often making compliance mistakes, licensing mistakes, and corporate practice of medicine mistakes when they expanded into what was really medical practice.
But one of the beauties about starting from the perspective of a physician or of a medical group is that the ability to expand beyond a traditional medical practice into a lifestyle practice is far more open to you because of your license.
The “medical beauty” and “lifestyle health” fields are going to continue to exist, and they’re going to expand, whether they’re controlled by gym owners, aestheticians, chiropractors, or by physicians.
Over the past few decades, physicians gave up much of the control of traditional medicine and it’s resulted in a hospital-centric “healthcare” system. How’s that working out for you?
Now that technology is removing much of the need for hospitals – the theme of The Impending Death of Hospitals – physicians can gain back much of the lost autonomy. We usually see that in the context of physician-owned ASCs and other outpatient ventures and in physician-led clinically-integrated and financially-integrated ventures.
But at the same time, there are opportunities to push the envelope even further into broader notions of healthcare and lifestyle, whether alone or in collaboration with professionals from other disciplines, some of which traditionally have nothing or very little to do with what you consider “healthcare. ”
There’s a world of opportunity if you’re willing to think beyond the simple bounds of what medical practice is.
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| | Thursday - Podcast: Who’s Your Competition? |
| Listen to the podcast here, or just keep reading for the transcript
Let’s say that you’re a gastroenterologist. Things are looking great, right? But don’t you see who’s breathing down your neck?
You think that it’s just some other gastroenterologist across town?
Well, you’re right, but not right enough.
Or, let’s say that you’re a radiologist. Who’s your competition?
You think it’s a large, national group?
Well, you’re right, but not right enough.
Or, let’s say that you’re the CEO of a hospital with fifty or five hundred employed physicians. Who’s your competition? The hospital five miles down the road?
Well, you’re right, but not right enough.
Your real competition is an amateur, at least in your perception, someone who realizes that the pieces can be arranged another way, a way that cuts you off, a way that cuts you to the bone.
It’s the primary care physician who realizes that if she and her colleagues link up, they can employ their own gastoenterologist. It’s the large employer who realizes that they can link up with an anesthesia group to direct their employees to the most efficacious surgeons and hospitals for a certain procedure. It’s some guy and some hospital in India or on Grand Cayman.
Mark Twain wrote of this almost 120 years ago:
“But, don’t you know, there are some things that can beat smartness and foresight? Awkwardness and stupidity can. The best swordsman in the world doesn’t need to fear the second best swordsman in the world; no, the person for him to be afraid of is some ignorant antagonist who has never had a sword in his hand before; he doesn’t do the thing he ought to do, and so the expert isn’t prepared for him; he does the thing he ought not to do; and often it catches the expert out and ends him on the spot. Well, how could I, with all my gifts, make any valuable preparation against a near-sighted, cross-eyed, pudding-headed clown who would aim himself at the wrong tree and hit the right one?”
Smart readers will begin to think who their pudding-headed clown might be.
But wise readers will begin to think how they can become a pudding-headed clown.
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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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