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Dear Friend,
Satisficing. Herbert A. Simon won the Nobel Prize for the underlying work, and it applies to you.
In fact, it's the subject of this past Monday's blog post, Satisficing Your Way To Success. Follow that link to the blog or just keep reading for the rest of the story:
You’re driving with your family on an interstate highway. It’s past noon. There’s rumbling in your stomach and there’s grumbling over where to stop for lunch. You’re in the middle of freakin’ nowhere.
But then, up ahead, you spot one of those it-could-be-anywhere exits with a few gas stations a McDonald’s and two you’ve-never-heard-of-them-before fast food joints.
If you’re like most people, you’ll soon find yourself pulling into McDonald’s. In fact, the reason is the key to their success,
Why the McDonald’s? It’s not because the food is great, but because, of the choices available, you and your family know that at least McDonald’s doesn’t suck.
Herbert A. Simon, the eventual Nobel laureate, named that decision-making strategy “satisficing.” It’s the cognitive heuristic, the quick decision-making tool, that allows you to filter quickly through alternatives and then accept the one that is acceptable enough. [Satisficing is a portmanteau of “satisfy” and “suffice.”] It explains decision-making in the real world in which perfect information is unavailable and conditions are confusing and intertwined.
That’s one of the secrets of brands like McDonald’s, Brooks Brothers, and, perhaps, your medical group or facility.
The precondition, though, is, at a minimum, not to suck in the eyes, for example, of the hospital administrator or the community from which you draw.
Take the example of a hospital-based group, say a radiology or anesthesiology or emergency medicine group. The object is to become a brand at the facilities at which you provide service so that those consuming the brand, that is, those making the decisions to contract, and to continue to contract, with you, have a degree of familiarity with you. They know that even if you are not the best, you are acceptable. You may have warts, but you are their guy or their group with warts. With all due respect to Dr. Simon’s legacy, this concept, culturally, is hundreds if not thousands of years old. Think of the saying “better the devil you know than the devil you don’t”, which has been traced back to at least 1539.
Note that I am not speaking of cutting short your goal to provide the absolute best medical care. And I’m not telling you to cut corners.
What I am telling you is that what is key to the longevity of relationships and to being seen as someone or some entity with whom to initiate and continue a relationship, does not involve a need to optimize, which is impossible, but the need to satisfice. You have to focus on sufficiently satisfying, that is, satisficing, the needs and expectations of your customers and on reminding them of that fact.
You know this is true about McDonald’s. What’s hard to understand is that the same rule of behavioral economics applies to you.
Yes, right now, off the top of your head, you can name me 30 places where you could get a much better hamburger, but none of them sold billions and none of them is recognized around the world. Think about it. Actually, now much do you actually need to think about it? That’s the point.
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| | Tuesday - Success in Motion Video: Your Competitor’s Vision And Action Plan
Watch Tuesday's video here, or just keep reading below for a slightly polished transcript: |
| I want to talk to you today about vision.
Within the last week or so, Andrew Witty, the CEO of Optum, one of the big business units of UnitedHealth, the large insurance company, made a presentation at a Wells Fargo Securities Healthcare Conference, in which he talked about Optum's “vision” for the future.
Now, to set the stage a bit, Optum is UnitedHealth's technology and medical practice unit. It's investing heavily in its future.
Optum’s parent, UnitedHealth, also recently announced the acquisition of a company called Equian. On one level, Equian is a payment processing company. But what it really does is recover healthcare overpayments. It uses data, lots of data from lots of clients to spot what are essentially overpayments from healthcare insurance and worker’s comp insurance. Then it recovers those overpayments.
Optum's CEO commented that they are focusing on data relating to a number of chronic diseases and then selling into those disease service lines. That’s selling through their insurance products, selling services such as Equian's to other insurance companies, and selling directly to hospitals. In fact, they’ve already embedded themselves into some hospital systems, providing outsourced IT and other analytical services to the facilities.
But, interestingly, the CEO of the Optum unit, which also holds large medical groups such as DeVita, commented that they have 50,000 employed or aligned physicians, and that their vision is to be able to treat patients across platforms. In other words, across hospital systems and along disease-specific service lines.
What’s this mean for you?
Well certainly if you’re a medical group leader, UnitedHealth, originally "just" an insurance company, has become a very large competitor. With Optum now including Equian, UnitedHealth can sift and sort data to know when claims have been overpaid, and they can know what treatments are, what they should be, and what they should cost. And, they are using your data from claims to build that database.
But their vision doesn't stop at being a better data provider. Through Optum's 50,000+ physicians, they are becoming a direct competitor in the delivery of care.
If they’re embedding themselves into hospitals, there’s no reason why they won’t soon also be owning hospitals.
What’s your vision? And what are you doing to implement that vision? You can see how UnitedHealth through Optum is becoming vertically integrated. It’s an insurance company, plus analytics, plus 50,000+ physicians.
Now, vertical integration, finding synergies there, isn’t something that’s unknown to physicians. Look at a surgical group that has an interest in a surgery center. In essence that's vertical integration. So, too, would be an orthopedic group with imaging, physical therapy, a walk-in clinic, and an ASC.
Think how you can devise a similar or different strategy to integrate more of what your patients need into what you can do for them, into the way that you’re doing business.
Your competitors are doing it. You can do it, too.
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| | | Wednesday - Medical Group Minute Video: Conflicts of Interest: Do You Have One?
Watch the video here, or just keep reading below for a slightly polished transcript:
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| Conflicts of interest. Everyone’s talking about them. Do you have one? They’re apparently bad. Or are they?
But what in the heck does “conflict of interest” even mean?
When you think about it, “conflict of interest” is a term of a type similar to those other PC favorites, “greed” and “fair share” (which, by the way, are two sides of the same coin): terms that are simply lobbed at someone in an attempt to gain the upper hand. Oh, and conflicts of interest prohibitions are the basis for termination, lawsuits, and arbitration without the right to conduct discovery.
Reality check: Life is filled with conflicts of interest. My interests are different than yours, your interests are different than mine, and both of our interests are different from that of a third person’s. So, we all have conflicts of interest and that doesn’t make it bad, it only makes it a fact that they exist.
In my work representing medical groups in their dealings with hospitals and health systems, I’m seeing more and more facilities imposing prohibitions on “conflicts of interest” via contract. And some are even attempting to impose “conflict of interest policies” on all affiliated physicians via the medical staff’s bylaws or rules.
What are those provisions? Are they simply a disguised form of covenant not to compete, which may or may not be legal? Are they restrictions on referrals outside of the hospital’s sphere, in violation of a number of federal laws? Are they, in essence, backhanded ways of requiring physicians to refer to the hospital, creating potentially, both federal anti-kickback statute and state law violations, and, depending on other terms involved, violations of Stark?
I don’t know exactly what a conflict of interest is, but beware if you’ve agreed not to have one. Because even the threat of one can be used as leverage for getting you to stop doing whatever it is that you’re doing or to prevent you from doing whatever it is that you want to do.
I know that hospitals don’t see it this way. All they ask is that you stop being greedy and give up a fair share (i.e., all) of your interests. After all, they deserve it.
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| | Thursday - Podcast: Tastes Like Chicken. Smells Like Fraud. |
| Listen to the podcast here, or just keep reading for the transcript
When most people think of kickback schemes in the healthcare context, they immediately go to notions of payments to physicians for referrals.
Now, that’s not an unwarranted assumption because, unfortunately, much of the history of the application of the federal Anti-Kickback Statute involves physician-referral issues.
Within large medical groups, and similarly within physician-owned facilities such as ambulatory surgery centers, exactly what your employed, subcontracted and affiliated physicians are up to is a matter of concern, both directly, as in potentially tainting the entity itself, and indirectly, in terms of what can be horribly adverse publicity.
But there’s another twist entirely, one that’s, unfortunately, tremendously common in other industries and becoming prevalent in healthcare, too.
That’s the activity of non-physicians, specifically administrators and even rank-and-file administrative personnel, especially those in purchasing and accounting positions, who run scams within the confines of your practice or business.
What appears to the unknowing and unsuspecting to be a normal day-to-day business transaction is really something quite different.
Let’s start with a quick story from the non-healthcare context.
Sally, not her real name, was the bookkeeper at a significant-size manufacturing company. Highly efficient (but as it turns out, not highly efficacious) she paid all invoices on a timely basis keeping vendors happy to deliver quick, timely and even last-minute (no problem!) services and supplies.
The problem? Well, several of those quickly paid vendors never actually delivered anything to the company. They were shell entities controlled by Sally. Oops.
In similar fashion, earlier this year, John Davis, the former CEO of what became a defunct 21-office Tennessee pain clinic practice, Comprehensive Pain Specialists, was convicted of federal Anti-Kickback Statute violations in connection with a scam in which he encouraged practice employees to make DME referrals to an entity which kicked 60% of the profit back to him via a shell company.
Ferreting out, as well as preventing, fraud in businesses across the board involves a combination of enforcing business methods and regular compliance auditing.
Although many of the notions are similar, in healthcare, from medical practices to ASCs to labs and other facilities, the issues are far more complex.
A significant amount of the compliance auditing crosses over from “simple” business process and financial concerns to the way that impropriety results in civil and, potentially, criminal liability for the entity, both at the state and federal levels.
And, in healthcare, as was apparently the case in the Davis affair, medical practices and facilities have the additional concern that internal schemes might attract federal prosecutors.
What appears to be normal might not be. Unless you regularly engage in broad compliance audits within your practice or facility, you might not find out. That is, until it’s too late.
Be diligent.
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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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| | | | | | Stay tuned! Our new website is launching soon!
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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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