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Dear Friend,
The exclusive contact relationship just fell apart.
At first I couldn’t believe my eyes.
It seemed like a plot from the old Divorce Court TV show. But no, it wasn’t a battle of the spouses over the failure of a marriage, it was a battle of a hospital and a medical group over what appears to be the failure of an exclusive anesthesia contract.
The Marriage
Trinity Health, a not for profit, Catholic healthcare system, operates more than 90 hospitals across more than 20 states.
Anesthesia Associates of Ann Arbor, also known as “A4,” is the largest anesthesia group in Michigan.
Trinity and A4 are parties to an exclusive anesthesia agreement that covers six of Trinity’s Michigan facilities. That contract apparently has provisions barring Trinity from soliciting the employment of A4’s anesthesiologists and CRNAs.
And, A4 apparently has covenants not to compete in its agreements with its anesthesiologists and CRNAs.
The Breakup
Earlier this year, A4 terminated its payer agreements with Blue Cross Blue Shield of Michigan and with Provider Health.
As a result, In July, Trinity sued A4 in federal court alleging that the terms of the exclusive anesthesia contract between them requires A4 to remain in network.
Additionally, Trinity’s lawsuit seeks to enjoin A4 from enforcing covenants not to compete with its anesthesia providers, whom, it appears, Trinity began courting so that it could employ them.
The other aggrieved spouse, I mean, party, A4, then filed suit in state court against Trinity alleging that the hospital system ignored the non-competes in the agreements between A4 and its anesthesiologists and CRNAs as well as non-solicitation provisions in Trinity’s agreement with A4.
Just as in divorce cases when spouses argue over child custody, this fight over who has “custody” of the anesthesiologists and CRNAs has an uncertain ending for the parties. (However, we can be sure that the divorce lawyers, I mean, trial lawyers, are going to come out okay.)
The Judgment
But no matter the ending, we can extract some valuable lessons from the overall dynamic for your benefit, no matter what medical specialty you’re in.
1. Covenants not to compete, in jurisdictions in which they are enforceable, remain powerful tools. However, they have their limits. They work best within an overall system of protection.
2, Non-solicitation provisions in agreements with hospitals also remain powerful tools. They, too, have their limits. And, they work best within an overall system of protection.
3. No contractual provision is perfect and will always be enforced. This is especially the case with restrictive provisions such as covenants not to compete. And, as medical groups grow larger and control more market share, it may be more difficult for them to effectively enforce restrictive covenants. This is either bad news or great news depending on whether you’re doing the restricting or the soliciting.
4. Lawsuits aimed at enforcing covenants not to compete are likely most effective when brought against the individuals who agreed to them, not a third party. That’s not to say that separate non-solicitation provisions don’t form the basis for other legal action.
5. In light of the Trinity/A4 dispute, agreements to remain in network should be redesigned from another angle. There are at least several others.
6. Unless considered during the exclusive contracting process, medical groups can become uncompensated recruitment agencies. There are strategies to prevent this.
7. Suing the hospital with which you hope to maintain a relationship will probably be as effective as filing a divorce action to save a marriage. Sure, it might be a wake-up call, but more likely it’s a permanent parting of the ways. The more valuable time for action is in the strategy and negotiation phases as well as in regular and purposeful ongoing communication to keep the love alive.
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| | Tuesday - Success in Motion Video: Exploiting the Hole in Big Data
Watch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| | I want to talk with you today about exploiting the hole in Big Data. There’s a lot of talk about how Big Data is going to revolutionize everything. Well, it might revolutionize a lot, but there are a lot of problems with the whole concept of Big Data.
First, and this is something I’m not really going to get into, is the problem of noise. You pick up a lot of data, you’ve got a lot of extraneous data. Believing that you’re seeing a pattern in noise is something that humans are very, very good at. That means that devices programmed by humans are going to be very, very good at that, too. But let’s not talk about that.
Let’s talk about something entirely different, and that’s the human side – the softer side, the psychological side – that will be completely missed because it can’t be represented in numbers. It can’t be collected and analyzed as say, the percentage of patients who develop some complication after getting a certain medication can. We’re talking about, in essence, issues that relate to value, which is subjective, to patient experience, which is subjective, to making referrals, which is subjective.
A lot of this relates to things I’ve addressed on the blog at advisorylawgroup.com and soon to be at weisspc.com, such as the fact that chiropractors, who don’t use stethoscopes at all in connection with their practice, receive a much higher patient satisfaction score when they have a stethoscope draped around their neck when they come in to meet the patient.
Similarly, physicians who don’t wear lab coats get lower satisfaction scores on average than physicians who do. White lab coats drive higher patient satisfaction than blue lab coats. And, the comfortableness of waiting rooms and the length of the wait drives patient satisfaction, too.
So if we know all these things, what things can you do within your practice, even if it’s a hospital-based practice?
To play off of these notions of satisfaction, of valuation, what drives a higher value ascribed to you? Look at this not just in terms of your relationship with patients, but as to your "score" in the eyes and the minds of hospital administration.
It’s not necessarily, for example, in the context of an anesthesia group, how much you've reduced turnaround time, it’s not necessarily how quickly you deliver reports back to a referring physician if you’re a radiologist. I’m not saying those are not factors, I’m saying that the issues are far more complex and that the communication, the signals you’re sending along the way are perhaps equally as important.
Don’t limit your thinking about your strategies, about your image, about your business behavior to those things that are purely rational, to those things that can be measured. Think about other ways that you can leverage off of perception, other ways that you can create magic for those with whom you interface, for those upon whom your livelihood is dependent.
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| | | Wednesday - Medical Group Minute Video: No More Walk In the Park For Convicted Forest Park Defendants
Watch the video here, or just keep reading below for a slightly polished transcript:
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| 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.
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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| | Thursday - Podcast: From Cross Fit to Crossing Over From Pure Medical Practice To Lifestyle Business |
| Listen to the podcast here, or just keep reading for the transcript
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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| | | | 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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