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| Dear Friend,
What do speeding and kickbacks have in common? More than you think.
I am on my way to work. The speed limit on this road is 40. I am not going to tell you how fast I am going, but I will say that I am going with the flow of traffic.
For argument’s sake, let us assume what you already think: we are all going a lot faster than 40 mph. Let us also assume a policeman pulls over the guy in the silver Honda in front of me.
Do you think that Mr. Honda Driver will be successful in arguing his way out of a ticket by exclaiming, “But, officer, everyone is speeding!”
Nope, that is not going to work.
Even if that sort of argument were to work later in front of a judge, Mr. Honda Driver is still going to spend his day in court, and, depending on how far he is willing to fight until he settles or gives up, hire a “speeding ticket defense lawyer.” And, then there is the cost of increased car insurance when the ticket hits his driving record.
So, even if he wins, there is a transaction cost to speeding, potentially a heavy one.
Most people understand that.
But yet, so many people – physicians and business people – engaging in arrangements involving sophisticated federal and state anti-kickback issues and self-referral issues, often simply point to someone else who is doing what they claim is the same thing, as if that makes it acceptable.
“Everyone is giving up something for referrals.” “My friend from residency says that his group makes a fortune by doing it.” “No one is going to find out because people do it all the time.” “The hospital says we can do it, and they have a department full of lawyers.”
In other words, they point at all the other speeders.
Let’s, for the moment, give the others the benefit of the doubt: Even if it is true that they are doing the same thing, it is essential to remember this all-so-true adage in terms of healthcare compliance: “If you have seen one deal, you have seen one deal.”
You do not know if that deal was properly structured. And, if it were, you don’t know if the pivotal reason why the deal does work applies to your situation.
These days, unfortunately, physicians and other healthcare providers and their ventures have targets painted on their backs in terms of prosecution. There are federal, state, and even local law enforcement task forces aimed at healthcare fraud.
Prosecutors are using new tricks to turn state crimes into federal ones. And, the transaction cost of defending against charges related to a questionable deal can easily exceed $500,000 or even $1 million, plus the attendant months or years of limbo, and the damage to your practice, reputation, and business while the wheels of justice turn slowly.
At the same time, changes in healthcare, especially in terms of new ventures that take advantage of the The Impending Death of Hospitals, bring tremendous opportunity to those willing to pursue it.
In pursuing those opportunities, you must think twice, no, thrice, about how those new ventures and other relationships are structured. If not, you are 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 False Claims Act.
Do not skimp and save, trying to avoid an expense, when it might just be that the only place you have to spend it is in the federal prison commissary. |
| | | 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.] |
| | Watch Tuesday's video here, or just keep reading below for a revised, more polished transcript:
I want to talk with you about fellows, no, felons, of the American College of, well, whatever-ology.
I'm touching on the same topic as my March 22, 2021, blog post, Felonious Forest Park Physicians Freighted off to Federal Prison.
That post discusses the recent sentencing of almost the last tranche of convicted or guilty plea-making physicians in the Texas Forest Park scandal in which physicians were involved in a kickback arrangement centering on a series of co-marketing deal. Those were deals in which the hospital paid "marketing money" that, for those found guilty and for those who plead guilty, were actually disguised illegal kickbacks.
According to the Dallas Morning News, these arrangements were vetted by the defendants' health care lawyers. I mean, what could be wrong with marketing money?!! Well, the answer is that a lot could be wrong. As in years behind bars wrong.
Before you enter into one of these deals yourself, never believe what the facility tells you, which is probably something akin to, “we've checked it out with our lawyers; it's completely legal”.
Those lawyers are not going to do your time for you. (And the facility administrators will be doing their own time, not yours.)
You have to retain your own counsel. And, obviously, you need to retain your own competent counsel.
Take it as a lesson that someone else is, well, paying for.
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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 - Does More Financial Pressure on Hospitals Signal the Return of Questionable Medical Directorships? - Rebroadcast - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
In the Wild West days of the 1980s and 90s, it was not uncommon to see as many medical directors receiving stipends from a hospital as there are aspirins in a Costco-size bottle.
There were medical directors of this and medical directors of that. All designed, of course, to cement or bond or align (which, in 1990, was a word chiefly applied to automobile wheels) physicians who directly or indirectly referred significant numbers of patients to the hospital.
Sure, lots of those arrangements were legal. But lots were not.
Due largely to enforcement actions under criminal (the federal anti-kickback statute and state counterparts) and civil (the federal, i.e. Stark, and state prohibitions on self-referral) regulatory regimes, the occurrence of softball, fluff, and close-to-or-actually-completely-BS medical directorships waned considerably over the ensuing years.
But they did not go away.
Consider the warning shot fired by the Office of Inspector General of the U.S. Department of Health and Human Services (the “OIG”) in its June 2015 Fraud Alert: Physician Compensation Arrangements May Result in Significant Liability.
In the Fraud Alert, the OIG warned that physicians entering into medical directorships must ensure that they involve fair market value for bona fide services that the physicians actually provide. The OIG warned that a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business.
The Fraud Alert cited the OIG’s settlements with 12 individual physicians who were alleged to have received improper medical director compensation. The OIG alleged that the compensation violated the anti-kickback statute for a number of reasons, including that the payments took into account the physicians’ volume or value of referrals and did not reflect fair market value for the services to be performed, and because the physicians did not actually provide the services called for under the agreements.
Today, and tomorrow, as more and more surgical procedures leave the hospital setting for ASCs and other outpatient facilities, query whether hospital administrators will revisit medical directorships with renewed fervor as they seek ties that bind.
Certainly, many medical directorships can be structured to be in compliance with applicable law and regulation. Others are simply attractive traps: they are ties that bind.
Among the many factors that physicians must consider when vetting and negotiating medical directorships are: (1) the demonstrable establishment of fair market value; (2) the actual, provable, and documented performance of duties; and (3) the relevance of duties (e.g., tasks and responsibilities that are not duplicative of hospital administrative staff roles).
Of course, for maximum assurance, directorship deals should comply with the relevant federal anti-kickback statute safe harbor. And, if the physician is in a position to refer for designated health services under Stark, the deal must fit within one of that law's mandatory safe harbors.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Another week, another hospital closes. Well, at least one.
This is a popular topic for the blog, because each additional hospital closure underscores the risk for physicians and medical groups that do not spread risk. The lesson applies to both hospital-based and office-based physicians, although not necessarily equally.
February 11, 2018, was the final, lights out, closing day for Quorum Health’s Affinity Medical Center in Massillon, Ohio.
According to pre-closure filings, 692 employees were to be laid off, along with 116 people employed by the affiliated Doctors Hospital Physician Services.
The physician clinics operated by the hospital will remain open until early March in order to allow ownership to be transferred to the affected physicians or other local providers.
Not all is necessarily lost, because after the facility and related entities are completely shut down, the former Affinity’s physical plant will be turned over to the city of Massillon, which, it seems, will try to make another go of it.
Here are some of the bottom line lessons for you:
Office-based physicians located on, or even near, hospital campuses must take possible hospital closure into account when negotiating leases. Will closure trigger your right to terminate the lease? Sure, it is great to be able to walk from your office over to the hospital for rounds and for meetings, but I can tell you from the experience of representing physicians who had no such termination rights, that continuing to maintain an office next to a boarded-over facility with weeds sprouting up from cracks in the asphalt, in an office-building that’s half abandoned, is not great for business.
Physicians must consider the risk, not just the supposed relief, of hospital employment or even of tight affiliation. No more hospital, no more employment. Sure, you might have the ability to "re-start" an independent practice. But, without any of the support mechanism (office, staff, equipment, medical record system, accounting system, etc.) that you did not have to worry about when you (thought you were) letting someone else, the hospital, worry about it for you, so that you could "just practice medicine," that is, until they ran the business into the ground.
Unless the hospital-based groups practicing at Affinity have other practice locations, they are either out of business or on an extended vacation until, and if, the facility reopens and they regain their positions. If you are dependent upon one facility, then the absence of that facility moots the necessity for your existence.
The patients who would otherwise receive care at Affinity will go somewhere. Perhaps to competing hospitals in neighboring towns. Perhaps to ASCs and other outpatient facilities that you and other physicians can legally have ownership in. Affinity closed because it suffered huge financial losses. The next owner of the facility, if it ever actually re-opens, the city, will at least have some ability to tap into unwilling peoples' pockets (i.e., taxes) to subsidize the facility. It might or might not work. The hospital business model is broken. And, you can take advantage of that fact.
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| | | 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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| | | | 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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