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| Dear Friend,
Covid continues to wreak havoc on healthcare businesses.
Although infection rates (which may be meaningless) and Covid-19 related hospital censuses (which are highly relevant) vary throughout the country, two things are for certain.
First, there remains, and will likely remain for the next year or longer, despite the talk about vaccines, a very high likelihood of additional “nonessential” case shutdowns. Take, for example, the decision last week by New Mexico’s governor to place a new “temporary” ban on elective surgeries.
Second, unless you’re lucky enough to find a buyer with a short-term memory problem
(or one run by 30-something MBAs focusing on “getting deals done” to collect this year’s bonus), the value of most healthcare businesses is in the range of 50% less than it was a year ago. For some, that’s a low estimate of the drop in value.
And, here’s a third point for your long range consideration. That’s the fact that governors have become so emboldened to exercise dictatorial power, and the public has been so meek in bending to it, that future shutdowns for other “epidemics,” however defined, are likely. Bad flu season. Shut them down. You think I’m kidding. I’m not. Just wait and see.
So what’s the takeaway for you? Well, depending on just who you are, it means that unless you have developed a unicorn type practice or healthcare business, you need to adjust to
the new reality. You need to find ways of making your business far more profitable, far more malleable, and far more resilient, finding every edge in order to: (i) pull out current cash so
you are not dependent upon a later, large purchase price that might never come; and,
(ii) depending on how your business is structured (such as an ASC), to increase EBITDA in order claw your way back up to an acceptable, even if low, valuation. |
| | | 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.] |
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Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript:
Have you ever thought about why you've made somebody a shareholder?
Who have you chosen to be a shareholder or a fellow partner? What were the criteria?
In many medical groups, shareholder status is almost like a ladder. You start at the bottom as an associate, and, after some sort of lock-step period of time, if you pass the test, which in some groups means you're still breathing, you magically become an owner.
And, when you become an owner, you get owner protections. For example, the protection that non-owners are let go first if there's a shortage of work, that is, if the group has even thought that far in advance. There may be a higher pay scale. And there's voting.
But the question is, especially these days, when so much of medicine is controlled on the business side by business entities, and where true shareholder status or true partnership is few and far between, why anyone has to become an additional shareholder?
But let's assume that that's your group's philosophy. You've decided that there is going to be a track to ownership status.
OK, but who should you be making a shareholder and why?
Should you make someone a shareholder even though they've been difficult, even though they're hard to get along with, because others say, “oh, we have to be fair to Sally. It's time to make her an owner”.
Query this: If it's difficult to get rid of somebody who has caused trouble. If it's difficult to get to bring in somebody who hasn't contributed and will probably never truly contribute. How much harder is it going to be to get rid of that person when he or she is a fellow owner? How satisfied are you going to be with that person who hasn't contributed as a non-owner, when he or she doesn't contribute as an owner?
Don't view your career as a ladder, steps you have to take. And at the same time, don't view your entity as a ladder for someone else to climb, such that, if they just keep moving their feet, they, too, get to the top.
Question: Whom do you want to have at the top with you? Will they still be with you if things go sour and, now that you're all at the bottom, fighting your way back up?
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| | How to Deploy the Secret Sauce of Opportunistic Strategy
Webinar On Demand
They say that COVID-19 has changed the world, creating the "new normal." Many of your colleagues and many hospital administrators are running scared.
Others, leaders like you, know that crisis means opportunity.
Let me provide you with the strategic tools and insights that you need in order to seize opportunities, whether they’re in the context of your current business relationships, the expansion of your business activities, or the creation of new ventures.
You will learn:
•Defense as a defective default: It’s necessary, but not sufficient.
•Exploiting weakness: Drop the guilt and identify opportunity.
•Flat line negotiation is fatal: Understand its myths and limitations.
•Negotiation reality: Learn to identify and deploy on multiple planes to affect the outcome.
•Maneuver: Harness the power of maneuver, both in overall strategy and in specific negotiation strategy.
Others see a crisis and freeze in fear. Learn how to see the opportunities and obtain the tools to increase your odds of obtaining them.
The price to attend is $479. The cost of not attending is astronomical. |
| | | Wednesday - Get Sure That You’re Insured - Medical Group MinuteWatch the video here, or just keep reading below for a slightly polished transcript:
A few minutes ago I passed an old Corvette, it was a ’74 or ’75.
One of my college roommates had a ’74. It was an interesting car with an interesting shape, but the build quality was crap. There were gaps where the hood would close, gaps on one side of the body and not the other, and huge gaps in the interior panels — you could practically stick your finger into the dash panel next to the radio.
That reminds me of medical group insurance policies.
Your group has entity coverage for malpractice so that you’re covered for an act that one of your members is involved in. As in Dr. X, one of your employees, is sued for malpractice and the group is named as a defendant, too.
But what if you’re sued for an event that one of your own members didn’t cause? To your dismay, you find out that you’re not covered for that.
Fortunately, at least when considering these issues in advance, there are insurance products that close up the gaps in coverage.
But that means that you have to identify those gaps: What gaps exist within your entity’s coverage? In terms of malpractice coverage, general liability coverage, cyber liability coverage, D&O coverage, and so on? The only way to find out is to conduct a very thorough evaluation of what you have in place; an evaluation of the policies themselves, not just their names or descriptions.
In many cases, gap coverage can be negotiated with carriers, and what’s obtainable, and its premium, can vary widely. But, at a minimum, arm yourself with the understanding of what you have, what you might obtain, and it’s cost.
That’s because one thing is certain: After the event occurs, you can’t insure against it, at least without committing insurance fraud.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Evolutionary psychologists say that the reason we see a stick on the trail ahead of us as a snake is that it's far better for our survival to see sticks as snakes than snakes as sticks. This and other biases cause us to more readily focus on the relatively immediate threat as opposed to the long-term one. So, when earlier this month CMS released its various proposed 2021 payment schedules, physicians quickly focused on what's in it (or, rather, out of it) for them, that is, for their specialty. But at the same time, a focus outside one’s own immediate specialty reveals other trends, ones that may have a longer term but more significant impact on your career. As anyone who's been reading my posts and articles (and my book, The Impending Death of Hospitals, available here for download) over the past six or so years knows that the trend of shifting procedures from the hospital setting, including from the hospital outpatient department setting, to the ASC setting is of tsunamic proportions. In accordance with that trend, CMS’s August proposed payment pronouncements have hundreds of procedures moving to the ASC setting. For example, they propose moving more than 266 orthopedic procedures from the inpatient-only list, which means soon to be done in an ASC. Even more revealing is that CMS is proposing to eliminate the inpatient-only list in its entirety over the next 3 years. Shh . . . hang on for second. Can you hear that? Yes, it's the American Hospital Association screaming. In the long run, for those physicians performing facility-based services, such as anesthesiologists, these very strong continuing signals, in fact, stronger signals than in the past, are clear signs that unless your business model takes into account the fact that hospitals as we know them will soon no longer exist, your business might soon no longer exist.
And, on the flip side, those physicians who understand that competing with hospitals on the facility-side is becoming easier and easier, it's time to consider ASC development. |
| | | 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 Free.
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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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