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Dear Friend,
Politicians are rushing to solve the problem of "surprise medical bills." But are they looking at the right problem?
Both state and national level politicians certainly know what side the bread is buttered on, and who’s doing the buttering. There are far more patients than there are physicians, thus the rush to fix the problem they’ve defined as “surprise medical bills.”
Sure, just like I’m surprised when I pay good money for admission to a baseball game and then find out that the beer isn’t free! What? It’s completely unfair!
By framing the issue from the position of the average voter, politicians think the solution to the problem that they’ve defined as “surprise” is to force physicians to take contracted rates that they never bargained for or, and why not, simply go to arbitration.
But wait, will you be “surprised” when you find out that arbitration isn’t free or even discounted? What do you mean, why isn’t it free? Will there be legislation to remedy the surprise arbitration cost problem? Don’t hold your breath.
Physicians can’t change the fact that most politicians are simply second handers who create nothing, but crave power. But at least physicians can make an attempt to define the language used in the out of network situation to gain traction in framing what the issue really is: Insurance companies refuse to contract at reasonable rates. Insurance companies want to cut out the cost of contracting and still force “contracted” rates down physician’s throats. By narrowly contacting, insurance companies can then put their fingers on the scale of what contacted rates in “the community” (supposedly) are.
But, of course, if insurance companies don’t have a contract with someone to accept a lower, contracted rate, why should they be entitled to any rate other than full rates? The one-sided “right” to impose a discount is, in essence, imposing a form of slavery on the non-contracted physicians: it’s taking value from you without paying you an agreed upon value in return.
Perhaps physicians are afraid to talk this way.
So how about this frame: Why should anyone be forced to accept a contracted rate they didn’t contract for? If insurance companies are interested in contracting they should reach out and do it. If they’re not, then either they or the patient should be responsible for the full fee. It’s as simple as that. Just like my ticket to the game doesn’t get me free beer unless I bought some sort of package deal.
If you simply sit back and leave it up to political power, then the situation will become what is attributed to Benjamin Franklin (I know, I know, he probably didn’t actually say it), “democracy is two wolves and a lamb sitting down to the vote on what to have for lunch.”
Unless you frame the issue, you will continue to be on the menu.
Hungry anyone?
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| | Tuesday - Success in Motion Video: Why You Must Nurture A Relationship Agreement
Watch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| | I want to talk with you today about the distinction between relationship agreements and simply transactional ones, and how relationship agreements need to be nurtured, not just in their creation, but throughout their entire existence.
So what am I talking about?
Let’s start with a transactional agreement, a transactional contract. I think this is pretty straightforward: You want to buy a car. You go shopping around for one. You negotiate for the best price. You buy it. The deal is done and you drive the car away. You may never see the seller again. It’s one-and-done, just a transaction.
There are many such agreements in healthcare. They’re the basis for the sorts of connections that some specialists have with their patients. They’ll basically never see that patient again -- it’s just the nature of their practice. For example, if you’re an emergency room doc, the chances are that you probably don’t want to see the same patient again and again for multiple broken legs.
But many other agreements are of a very different sort, a relationship sort. In healthcare the poster child for this sort of deal is an exclusive contract. But, it doesn’t have to be an exclusive contract. It could be a long-term relationship between, say, a significant-sized orthopedic surgery group and a hospital, the hospital’s outpatient center, and other elements of the hospital's “world.”
When you’re creating a relationship contract, the way you negotiate isn't based simply on getting the best deal, damn everything else – as in, say, purchasing a car.
In a relationship agreement, you are negotiating not for a one-and-done, you are negotiating for a “one-and-continue.” Instead of the closing of the transaction being the end of the deal, as in a transactional contract, in a relationship contract, the closing of the transaction is when the relationship begins.
Accordingly, the way those deals are negotiated, and even more importantly the way they’re nurtured after the closing, is tremendously important.
So, for example, if you're the leader of a radiology group, and you’ve just finished negotiating and signed a three-year exclusive contract with a system to provide all the imaging services at their six facilities, well, your work isn’t over – your work vis-à-vis the relationship with the hospital has just begun.
That requires an overall strategy. It requires tactics to implement that strategy. And it requires actions to implement those tactics.
What are you going to do to keep that relationship alive? In essence, it’s just like a marriage, or any other similar sort of interpersonal relationship.
You need to devote significant time to that relationship, or it, like other interpersonal relationships, will simply wither on the vine.
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| | | Wednesday - Medical Group Minute Video: But Everyone’s Doing It!! Not A Great Defense To Compliance Violations
Watch the video here, or just keep reading below for a slightly polished transcript:
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| I’m dictating this blog post as I’m on my way to a meeting.
The speed limit’s 70 mph. I’m not going to tell you how fast I’m going, but I’m going with the flow of traffic, which is traveling at a lot more than the speed limit. (Some people refer to this stretch of the road as the Autobahn.)
For argument’s sake, let’s assume we’re all going faster than 85 mph. Let’s also assume that a policeman pulls over the driver in the silver Honda in front of me.
Is the driver’s defense going to be, “but everyone is speeding?” That’s not going to work with the cop.
Even if that argument eventually works with the judge, the driver’s going to end up spending a day in court trying to argue his way out of a fine. Or, to argue his way into a “traffic school” program to avoid a ding on his driving record. There’s a transaction cost, a heavy one at that.
If those arguments don’t work, he’ll have to pay a fine, and the ticket will be reported to his insurance company, which will likely raise his auto insurance premiums.
Those risks and transaction costs are all easy for us to understand.
But yet, so many people – physicians and business people – in structuring deals involving sophisticated federal and state anti-kickback issues and self-referral issues, often simply point to someone else who’s doing the activity, as if that makes it acceptable.
There’s a saying, “If you’ve seen one deal, you’ve seen one deal.” That’s so true. You don’t know if that deal was properly structured. You also don’t know if the pivotal reason the deal did work from a compliance standpoint applies in any way to your situation.
These days, unfortunately, physicians have targets painted on their backs in terms of prosecution. Prosecutors are using non-healthcare specific federal law in a way it’s never been used before to prosecute healthcare related crimes. And, they’re using federal law to funnel state law crimes into federal court.
There are tremendous opportunities in the market, opportunities that you can exploit. But in doing do, you must think twice, or even thrice, about the proper structuring of your deals.
If not, you’re inviting whistleblowers – enemies, jilted potential partners, former employees, and observers – to simply drop the dime on you or even to file a claim against you under the federal False Claims Act.
And, just like in traffic court, even if you’re found not guilty in the end, the cost of responding to an investigation and to a prosecution dwarfs the cost of up-front compliance planning.
Don’t skimp and save, trying to avoid an “expense,” when it might just be that the only place you have to spend your savings is in the federal prison commissary.
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| | Thursday - Podcast: Why Your Price Has Nothing to do With Cost |
| Listen to the podcast here, or just keep reading for the transcript
Oscar Wilde said that he was a man of simple tastes, only the best will do.
Sally doesn’t value flying first class but buys $450 jeans. Bob wears $50 Levi’s and always flies first class; he’d buy his own jet if he could afford it.
We all place a different value on what we receive and we’re willing to pay a comparable price. It has nothing to do with the cost to the producer or provider. Sally doesn’t care if the manufacturer of those $450 jeans is going bankrupt.
Therefore it’s the customer who is priced, not the product or service, based on his or her decision as to value.
Some sellers compete only for those at a single value point, whether it’s Walmart with low prices or Nordstom with high prices. Others, like a football team, segment their offerings at various price points from regular seats to club levels, from season tickets to million dollar sky boxes, to meet the value attached to them by their customers.
Unfortunately, in many parts of healthcare, pricing is completely misunderstood. It’s based on costs – the so-called “resources” involved. Even the current healthcare panacea du jour, “value based purchasing,” is simply a tool to reduce what are labeled waste and inefficient, i.e., underlying “costs.” But cheaper is not a synonym for value.
What’s your pricing strategy? What service or product can be provided to those who place a high value on it and are willing to pay a commensurately high price?
If you think that this is impossible, that your prices are dictated by payors and that “everybody” does business such and such a way, then you’re not thinking deep or wide enough.
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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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