| View this email online if it doesn't display correctly |
|
|
|
| |
Dear Friend,
Want to blow a future sale of your practice?
It’s not quite when Harry Met Sally.
As you certainly know, there’s been a flood of investor money, notably private equity money, it into many medical specialties over the last decade.
Depending on what specialty you’re in, private equity investment is just beginning to ramp up.
For example, I’m seeing, both here at the law firm and at our M&A advisory firm affiliate, an uptick in deals in dermatology, ophthalmology, and orthopedic surgery. To use a sports analogy, in some medical specialties, the game is just getting started.
There many factors that make your practice an attractive candidate for private equity investment, but that’s not what this post focuses on.
Instead, it’s essential, whether or not you ever plan on doing a private equity deal, to know what makes a practice completely unattractive to any buyer: potential compliance problems, in particular, potential violations of the federal Anti-Kickback Statute or of Stark.
Too many physicians approach compliance problems from the “who’s going to know” perspective. As I’ve written many times in the past, you’d be surprised (as in one of your partners or even an employee in the billing office).
But here, in the mergers and acquisitions context, the “how” has an actual name. It’s called “due diligence,” the investigation of the quality of the to-be-acquired entity that includes a proctological look into potential compliance issues.
The presence of unresolved compliance issues can easily result in a dead deal. And, even if it doesn’t, the representations and warranties – the risk allocation provisions – of the acquisition deal will shift responsibility for undisclosed, pre-closing compliance issues back onto you, the seller. In other words, that planned trip to a faraway tourist district might be swapped for an unplanned trip to District Court.
Whether you’re interested in a potential sale of your practice now, in the future, or never, the first step is always the same and should be taken now: Commission a “red team,” a self-sponsored, deep dive into your group’s compliance risks today.
|
| | Tuesday - How Physician Alignment Destroyed Hospital-Physician Collaboration – Success In Motion
Watch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| | Over the last fifteen or so years, as hospitals have pushed to align physicians, hospitals have begun dying. Is alignment the cause of the death of hospitals?
It’s certainly not the sole cause. In fact, it’s probably only a small cause, but it is a cause nonetheless. Let’s think about why.
Hospital alignment is a very different concept from hospital-physician collaboration. The collaborative system is what enabled hospitals to become what they are today, to grow through an affiliated, not employed, medical staff, on which physicians were either completely independent or were independent within the context of groups, the groups being independent of the hospital.
As hospitals pushed for financial control over physicians under the guise of alignment, that alignment, that employment, that contracting, came packaged with something that never existed before: a term, and an end of the term, a 90-day termination, or maybe even without-cause termination.
What signal did that send?
Knowing that you’re in a relationship that can be terminated on rather short-notice from the hospital sends a very different signal: it’s a very different relationship than a relationship that was collaborative, that once it’s begun, other than by reason of perhaps a physician’s error, meaning a medical staff reason, continued as long as the physician wished it to continue.
Have hospitals simply sent physicians the message that "alignment" is a temporary relationship? And, if indeed it is a temporary relationship, who wants to "collaborate" under those circumstances?
So-called "alignment" is backfiring and that's helping lead to the impending death of hospitals.
|
| | | Wednesday - Medical Group Minute Video: Psst, Wanna Buy A Watch? The Myth Of Security In Hospital Employment – Rebroadcast
Watch the video here, or just keep reading below for a slightly polished transcript:
|
| Growing up in the 1960’s and early 1970’s, it was a common assumption that going to college and getting a job with a large company was the key to financial security. How did that work out for the millions of corporate employees who saw their jobs disappear when their companies failed, when they were laid off in a downsizing (oh, sorry, “right sizing”), or simply replaced by someone who’d work for less?
Today many so-called experts are telling physicians that the key to financial security is in close alignment with – read that as employment by – hospitals.
Do they really think you’re that blind?
Sorry, but there is no security, at least nothing absolute, nothing that can be assured you. Large organizations are not more stable than small ones. There are very few, if any economies of scale.
No matter what, you are bearing the risk. Wouldn’t you rather hedge your chances by having more control over your destiny?
Being free to practice medicine without the attendant worries of running a business is the recruiting poster for those who want to pay you at the median of last year’s salary survey, a continuously decreasing sum.
It’s a con, a long con, and you’re the mark.
|
| | Thursday - Podcast: But Everyone’s Doing It!! Not A Great Defense To Compliance Violations |
| Listen to the podcast here, or just keep reading for the transcript
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.
|
| | | | 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
|
|
|
| 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.
|
| | | | Stay tuned! Our new website is launching soon! |
| | | 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. |
| | | |
|
