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| Dear Friend,
Cured.
That's the subject of this past Monday's blog post, The Problem Is the Cure. Follow that link to the blog or just keep reading for the rest of the story.
Many medical group leaders come to me for help when they’ve got a “problem” and they’re looking for a solution.
Oftentimes, they think that the solution lies outside of the problem.
But I want you to think about things a different way: Most problems, maybe even all problems, are themselves the kernel of the solution.
Let’s take an example. Currently, many medical group leaders are looking for the cure for the “cure” for surprise medical billing. It’s a big issue for many hospital-based physician group clients.
They’re facing threats of being thrown out-of-network and relegated to new out-of-network payment schemes. Those schemes are, in essence, cram-down rules imposed by the bureaucratic “cures” for surprise medical billing.
They’re also being forced to feel the pressure of reduced “offers” of reimbursement from those payors still willing to contract. The implied, and sometimes vociferously stated, threat is that unless the group agrees to work for peanuts, their only other choice is to work out-of-network pursuant to a sham payment methodology in which they’ll be paid in metaphorical peanut shells.
It’s win-win for the payors. Higher reimbursed groups are either pressured to work for less or are tossed out-of-network. And, by reducing their average in-network rates, they’ll eventually lower what they are forced to pay the groups pushed out-of-network under the arbitration system mandated by surprise medical billing statutes or regulations.
Faced with those problems, many medical group leaders seek to know how to deal with that arbitration system.
But query whether the problem isn’t something different. Instead of seeing it as in-network versus out-of-network, perhaps the problem is the lack of control over patients and the ultimate means of funding patient care. With that mindset, perhaps there are other ways (there are!) to bypass carriers, or to turn the legislation and regulations inside out to make what was a problem for physicians, a problem for payors.
Think about problems a different way. Think about solutions from other industries to similar problems and how they’ve played out. Think about whether you want to “game the system.”
There are ways to accomplish far more than you think. But that means you’ve got to look at things differently and invest in yourself by obtaining help.
If you’re not willing to do those things, consider shutting down your business, it might be cheaper.
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| | | Business Life in the Time of Coronavirus Mini-Series
The coronavirus crisis caused a short term economic crisis for many medical groups. Our mini-series shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
[If you haven't already seen them, follow this link to watch our entire series.] |
| | Tuesday - Don't Let a Mind Virus Destroy Your Medical Group
Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript: |
| I want to talk with you, and warn you about a mind virus that infects, and in some cases kills medical groups.
No, it’s not Covid-19, it's the colleague disease. It's the mind virus in which medical group leaders cede their authority, sometimes even actual documented authority as in a shareholders agreement or in the corporate bylaws, in favor of allowing every group member to toss in their two (and three and four) cents' worth, even if they have very little sense.
This sort of “we’re doing it because everyone is a colleague” is, on the one hand, perhaps quaint. But it's highly destructive to the notion of how to run a medical group, or any business larger than a small handful of owners.
There are reasons why governance principles exist and reasons why large entities have sophisticated governance structures.
It’s not to impose an evil will upon those who are not part of the governance team. It's to be able to have a control group that is small enough (an individual, a small management committee) to be able to come to management decisions quickly and then implement them quickly. If it turns out that the implementation was in error, then small groups can change their course quickly.
If not, then, depending on the structure, the other "colleagues" can vote out the management group at the next election. That’s where true democracy (we’re all colleagues!) comes into play.
But don’t let that mind virus, “we’re all colleagues,” destroy your group or serve as internal negotiation against the group's own position before you even begin negotiating a position with the other side.
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| | Wednesday - Models, Predictions and Quickly Changing
Watch the video here, or just keep reading below for a slightly polished transcript:
Models, no not the skinny kind walking the runway or even the plaid wearing types in an L.L. Bean catalog.
But the guesses that are given gravitas. “Our guess is that blah blah blah” sounds like, well, a guess. “Our model reveals that blah blah blah” sounds far better educated. And, “our predictive model” — sheesh, it must be true; give the scientist a Nobel prize.
But as anyone still alive knows, models are just guesses. Make an error in design, put the wrong data in, or hold your metaphorical finger on the “algorithm” so that it gives you the desired outcome, and sooner or later, the "guess” is revealed, Wizard of Oz style, to be less than all-seeing, perhaps even as a prediction by a panderer with a publicist.
Are these the ramblings of an “anti-modelist”? No.
The reality is that we all construct and use models. Often, these are mental models, concepts or representations about how the world works. These concepts can be grand, as in the concept of human rights, or specific, such as in the concept of hospital-centric healthcare.
In fact, the more models we use to understand the world, the better. It’s like the difference between looking at a picture of someone only from the back, versus a series of shots from every angle, plus maybe even an MRI.
But here’s the thing: Models are fine as long as we don’t confuse them for reality. Take, for example, a map, which is a type of model. It’s an error to confuse the map with the actual terrain. It’s an even bigger error to blame the terrain for not matching the map.
Yet, we see modeling errors play out all the time in healthcare.
For example, many hospital CEOs bought whole hog into purest model of hospital-centric healthcare in which physicians would be “aligned” via direct or indirect employment. They ignored the input of other models. Billions were spent acquiring practices. And then, reality hit. These behemoth entities were almost universally unprofitable and were far more fragile due to their bloated overhead. Add a few months of coronavirus cancellation of both elective procedures and nearly all physician office visits, and, well, it’s either bankruptcy time or, how do they put it, oh, time to consider merging with a strategic partner. Sick hospital plus sick hospital equals Sears plus Kmart.
Or, consider a far more everyday modeling mistake; the physician group leader who believes that hospital contracting, say for an exclusive contract, follows a certain process and that all negotiation takes place within its “traditional” bounds. It’s certainly true that hospital CEOs want physician group leaders to completely buy into that mental model, but you're blind to possibility if you actually do so.
The takeaways for you involve understanding a few problems to avoid:
You need to understand that multiple models, not simply blind adherence to one, are useful to inform your analysis, decisions, and actions.
You need to develop the ability to cycle faster through the analysis of your model as it hits the windshield of reality, and then to cycle faster through the process of deciding on and taking your next action, that is, a faster cycling through the OODA loop.
Note that I said that those were needs. They may not be your wants. But not wanting to do something that needs to be done is simply an example of a model that has no utility in this real world domain.
P.S. We’re designing a small group program for medical group leaders like you who want to understand the secret sauce underlying opportunistic action. If you’d like to be on the invitation list, send a message to one of my assistants.
Act fast! |
| | Thursday - Physician Practice Consolidator Gets Owned
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| Listen to the podcast here, or just keep reading for the transcript.
It’s not quite rest in peace for physician practice consolidator Hygea Holdings Corp. It’s more like rest in pieces. Back in the salad days of June 2016, Hygea, described itself as: “ . . . a diversified healthcare holding company led by a team of nationally recognized industry leaders with backgrounds in insurance, finance, medicine, law and technology. The company owns physician practices, ancillary medical services, such as pharmacy, physical therapy, and diagnostics, as well as a 2,500-doctor independent physician association (IPA). Hygea prides itself as ‘the physician’s choice’ in group healthcare, as evidenced by the number of acquired physicians who then choose to invest in the firm.” But today, well, on February 19, 2020, to be exact, it’s pretty clear that the meal’s now over. That’s the date that Hygea put itself and more than 30 affiliates into bankruptcy. Bleeding out at the rate of around $327,000 a week, with assets of less than $10,000,000 and liabilities of, according to press reports, approximately $200,000,000, its Chapter 11 filing indicates that the company’s plan is to turn over all of the equity to its major secured lender. Yes, in bankruptcy, other investors, such as the “number of acquired physicians who then [chose] to invest in the firm” can get wiped out. If all goes according to plan, the secured lender will simply take the “keys” to Hygea, much like some “We Finance Anyone!” auto lender repossesses a 2016 Hyundai. Sure, hindsight is always 20/20 but sometimes the “smartest people in the room” can’t manage their way out of a paper bag. For example, here are some of the stupid business mistakes revealed in the declaration of Hygea’s President and CEO: - They purchased physician practices that had minimal net profit.
- They failed to integrate underperforming practices into their operation so as to make them profitable.
- As a result, they became burdened with supporting a number of losing operations, that even with performance improvements will never be profitable.
The Lessons For YouThe takeaways in the Hygea debacle lie on two sides of the same coin. If you’re a buyer of medical practices, or of any other business, don’t overpay. “Everyone else” may be paying 20 billion times EBITDA, but you don’t need to be that stupid. Buying lots of businesses with no profit just creates a big business with no profit that can't pay it's debts and that goes into bankruptcy. If you’re the seller, understand that your practice or business probably isn’t worth anywhere close to what you think it is. Pull out cash along the life of your operation and seek ways to profit from multiple transactions so that you’re not dependent on one sale to make a killing. Sure, someone may come along (the so-called “greater fool”) and actually pay you 20 billion times EBITDA. If that’s the case, take cash or at least as much of it as you can get, even if it’s over time. It might be exciting to fancy yourself a “player” holding a big chunk of stock in a company with plans to go national . . . no, go global . . . no, go galactic, that is, until your shares are wiped out in a debt for equity swap restructure. Perhaps, in Hygea’s case, the “smartest guys in the room” weren’t so smart. Or perhaps there was just no room, for error, that is. |
| | | Calibrate Your Compass
Read our exclusive RedPaper to guide you through this evolving situation.
The coronavirus crisis caused a short term economic crisis for many medical groups. Our RedPaper shows you the way out. Plus, many of the concepts discussed are applicable during both good times and bad.
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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this time? How can we focus on solutions to your most pressing strategic concerns?
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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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