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| | Dear Friend,
At first, I thought it was a joke.
It's the subject of this past Monday's blog post, What! Merged Hospitals Don’t Deliver Higher Quality! Follow that link to the blog or just keep reading for the rest of the story:
The healthcare world was supposedly abuzz last week when the New England Journal of Medicine published (on Jan 2, 2020) the report of a study that shows that consolidation in the hospital industry doesn’t lead to higher patient satisfaction or to higher quality.
Gee, who woulda thunk it?
After all, we know that if we want a high quality meal, we don’t go to a 10 table Michelin starred restaurant, we go to a very large and efficient joint, like McDonald’s. Oh, we don’t do that?
Despite what hospitals argue when they’re looking for regulatory and political support, they don’t merge to create quality: They merge to reduce competition and to raise prices.
But mostly they merge because the hospital industry is in chaos.
The number of hospital closures and bankruptcies continues to climb. The percentage of cases flowing out of hospitals to physician-owned, freestanding facilities continues to grow.
As a result, hospitals cling together for survival like B-list actors in a low budget horror movie.
Here are the real lessons for you:
1. Don’t go into the hospital business.
2. Be very wary of allowing a hospital into any physician venture.
3. Don’t hire a hospital administrator to run your physician-owned ASC or other facility (which is another way of looking at point #2).
4. Focus on why the hospital business is in disarray: It no longer has a compelling business model.
And, then, with your free time, consider becoming my collaborator on a research grant request. We’ll study why anyone would perform a study to see if hospital mergers lead to higher quality. Apparently, there’s a lot of money available for this kind of stuff and there’s no reason why we shouldn’t try to get our fair share. |
| | Tuesday - Success in Motion Video: What a $12 Million Stuffed Shark Can Teach You About Increasing Value and Profits - Rebroadcast
Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript: |
| I’ve been reading a book called “The $12 Million Stuffed Shark.” The author is Don Thompson, and it is about the curious economics of the contemporary art world.
I like collecting art. Most of what I have is California plein air painting, some of it from the 1940s and some of it more recent. I know next to nothing about contemporary art. I didn’t even know what the definition of “contemporary art” is. I learned from the book that there’s no single definition of contemporary art, but a working definition would be “art produced by artists after 1970 up until the present.”
I’m only a few chapters in, but already I see the parallels between the art world, my practice, and your practice.
And that’s the question of how do you sell?
Damien Hirst, a famous British artist, was initially commissioned by Charles Saatchi, an ad guy who is fabulously wealthy, to produce the stuffed shark (which I’ll tell you about in a moment) for a price of 50,000 British pounds, which at the time was $75,000 to $85,000.
Hirst bought the shark from a fisherman off the coast of Australia, had it taxidermied and suspended in a large case so that it looks like it's swimming in water. The effect is that, in a gallery, one might think there is a very large shark with its mouth open cruising the gallery floor looking for its next meal. (The piece is titled “The Physical Impossibility of Death in the Mind of Someone Living.")
That piece was then sold several years later by Saatchi, reportedly for $12 million.
How can a shark that is stuffed by a taxidermist and held up by strings in formaldehyde solution become a work of art? And how can it sell for $12 million?
How can, in another example discussed in the book, a pile of blue and white candy sitting in the corner of a room, be "art" valued in the millions?
The answer is simple: Those who drive the contemporary art market consider those works to be art and they price it accordingly. Who are these drivers? They're chiefly a small handful of influential gallery owners and museums, which show "art" and thus give it the provenance and pedigree that means that it’s “art," and a small number of collectors who are willing to buy based on the provenance created by the galleries and museums. That provenance gives the collectors comfort that what they are buying is art and that it is valuable.
Those who are interested in purchasing at this level this don’t have the skill to judge what is art and what isn’t, so they look for other cues. They look for branding. The handful of influential galleries and museums provide that branding. By buying, the collectors themselves become branded: A work once owned by Charles Saatchi is more valuable because it was once owned by Charles Saatchi. For example, the $75,000 "shark" that re-sells for $12 million.
You find very wealthy branded collectors, branded galleries, and branded museums.
The same concept can be applied in a professional practice to the patient relationship, to the referral relationship, and, in some cases, to actual pricing.
What drives the assurance that you’re going to treat the patient right? What drives the assurance that you’ll treat your referral sources right? What drives the willingness of some to pay completely outside of the "usual" stream of government reimbursement and in-network coverage?
I’m not talking about quality, but, rather, the value as perceived by the customer, that is, by the patient or referral source or facility. You see the same thing in a supermarket, where Coca-Cola sells for a multiple of the price of store brand cola.
Think what you can do in your business or practice to mirror the lesson of that $12 million shark. What image, what assurance, what provenance can you create for your patients and other customers that cements their decision to do business with you and to refer to you?
I suggest you buy the book, “The $12 Million Stuffed Shark.” It will teach you something about contemporary art. And, it may teach you something about how you can use the same concepts that make a dead fish worth a fortune.
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| | Wednesday - Medical Group Minute Video: Yes, You Can Build A Health System Without A Hospital – Rebroadcast
Watch the video here, or just keep reading below for a slightly polished transcript:
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| Call them mental models, call them viewpoints, the point is the same: the box in which we conceive of what’s possible serves as an artificial barrier that confines our thinking.
I’ve written previously about physician owned ventures that are near replacements for hospitals. Take for example, the post Hospital Becomes Hole In Ground. ASC Takes Up The Slack in which I discuss my concept of the Massive Outpatient Center™: A combination of an ASC, a medical office building, and one or more of a menu of complementary patient care offerings.
If you haven’t read that post, read it now.
I realize though that for some, that description of the very accessible alternative to hospital servitude, and equally accessible route to increased profit, didn’t resonate because its viewpoint focused primarily on the facility as opposed to the function.
So let’s look at the solution from another viewpoint. One that’s equally valuable to those previously stymied as well as to those who already clearly see the implications for their own involvement and investment.
In common healthcare industry parlance, a healthcare system centers around the notion of hospitals, generally, but not always, many hospitals under common ownership, together with their affiliated physicians and other providers.
But with hospitals dying at an increased rate, with healthcare systems, even large systems, merging in an attempt to extend their remaining shelf life, and with technology, pricing advantage, and payer preference all pushing procedures to freestanding (e.g., outpatient) facilities, physicians can replicate the system model . . . without the hospital.
Let’s take a large orthopedic group as an example. [Note that the choice of that specialty is simply an example – the same prescription can potently play out in many practice areas.] Traditionally, the physicians in the group were closely aligned with a hospital. Perhaps the physicians had ownership interests in some ASC, maybe in more than one. Their office practice remained completely separate, certainly in a legal sense, but in a conceptual sense as well.
That model can now be flipped into what is essentially a “hospitalless” healthcare system: the group, whether alone or with investor partners [note that there is so much money available that it is not necessarily the case that outside investors are needed if they are not wanted] reorganizes the structure of their practice relationship and co-locates their office, their ASC, their physical therapy, their imaging facility, and so on.
The goal is to create what is essentially a self-contained center of excellence providing a continuum of orthopedic care for patients. The physicians manage that care from patient intake, through surgery, and through rehabilitation. All through a system of entities, facilities, functions, and processes they own and control.
This fits exactly into the concept of value-based care and this fits exactly into what many large employers seek (just look at what Walmart is doing) in terms of directing their self-insured plan beneficiaries, that is, their employees, to physicians and facilities that provide the most effective care even if it is not the cheapest care.
If you think that this doesn't apply to you, just remember that the box in which we conceive of what’s possible serves as an artificial barrier that confines our thinking.
Let’s talk.
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| | Thursday - Podcast: Efficiency vs. Efficacy |
| Listen to the podcast here, or just keep reading for the transcript.
I’ve been thinking about the issue of efficiency vs. efficacy.
Efficiency is simply doing the task the right way, but efficacy has a qualitative difference.
Efficacy is doing the right thing the right way.
Recently, I was in Charleston, SC. As I was leaving, I was at the airport a bit early. I heard the gate agent who was moving from gate to gate to assist with departing flights making a similar announcement each time. It went something like “Flight So-and-so to Such-and-such place is about to depart. The doors will be closing in five minutes and will not be re-opening.”
Now, years ago, if you got to a plane a little bit late, they reopened the door. After all, the plane was still sitting there. Sometimes it’s still sitting there for twenty minutes before backing away from the gate.
So why don’t they open them?
The reason they don’t open them is that airlines are now graded for their on-time departures based upon when the gate closes. They then pull the jetway back and magically the plane has “departed” even though it’s still sitting there.
It’s efficient for the airline to close the door and not let crying Mrs. Smith on, and I’ve seen lots of crying people who’ve now had their rest of their day of travel all screwed up.
It’s efficient because they got a wonderful score for having departed on time, when all they did was game the system.
Think about that next time, in the context of healthcare, you’re told that such-and-such is the measure by which you’ll be paid, the measure by which you’ll get the extra slice of money or some other higher form of reimbursement. Does it really make sense? Is that the right thing to be doing?
Consider if it’s simply efficient but not very efficacious.
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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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Come listen to Mark speak in sunny
Las Vegas on January 17, 2020, at the American Society of Anesthesiologists Conference on Practice Management.
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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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