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| Dear Friend,
Frédéric Bastiat, the 19th Century French political economist, saw it clearly in 1850. Today's politicians and so-called patient advocates, not so much.
In his famous essay, That Which is Seen, and That Which is Not Seen, Bastiat explained that governments legislate to correct a problem (and then bask in the glory of having taken action) but never truly consider what problems they create when they enact the legislation to correct the problem. In other words, politicians act based on what is seen (the initial “problem” and the easily seen “solution”) but do not pause to consider the potential damage that their actions will later cause, that which is not seen.
Over the past several years, so-called patients’ rights protestors, and, if anyone were looking, insurance companies, advocated against the claimed evils of “surprise medical billing” the situation in which, in its purest form, involves a patient's receipt of a full UCR bill from out-of-network hospital-based physicians in connection with surgery by an in-network surgeon at an in-network hospital.
The “solution”, which varies slightly state by state and is also the subject of federal legislation, is to impose a requirement on the out-of-network physicians to accept a purported “fair fee” arrived at by reference to average contracted rates.
But, of course, the devil is in the details.
As I pointed out years ago when legislation of this ilk first surfaced in California, there is nothing inherently fair in this notion of paying a purported “fair fee”. If there were, insurers would never have been in favor of it.
As I pointed out at the time, there are multiple reasons why a group might be out-of-network such as the fact that the carrier has narrowed their network and refuses to contract with them, or the rates that the carrier offers are so much lower than prior rates, that they are completely unacceptable. Additionally, as I have seen myself, in connection with contract renewal negotiations, carriers threaten groups to take significant cuts or they will be thrown out-of-network and forced them to accept “fair rates” which are even lower. Carrying though with that threat and generally narrowing networks seeds the data that will later be used to determine “fair rates”. In other words, if a carrier tosses every group with high rates out of its network, the geographic average rate becomes low, with a spiraling tail effect.
In fact, as I argued years ago and as I argue now, the entire point of surprise medical billing legislation, from the insurers’ point of view, likely unseen (but who knows) by the political class, was to force more physicians out-of-network, the very “wrong” that the legislation claims to cure.
Of course, life is even more complicated than this, as two lawsuits filed last week by U.S. Anesthesia Partners (“USAP”) against UnitedHealthcare (“UHC”) demonstrate.
Not only did UHC demand significant cuts from USAP in connection with contract renewal, UHC, through its various operating units, is itself in the anesthesia business.
USAP claims that UHC is squeezing them from all angles, “like a boa constrictor”. It claims that UHC is engaging in a group boycott and that it is using unlawful tactics and pressure campaigns, even “bribing” surgeons to steer patients away USAP, which is now out-of-network in Texas and Colorado.
As might be expected, UHC, in statements reported by the New York Times, maintains that the suits are “just the latest example of the group’s efforts to pressure us into agreeing to its rate demands and to distract from the real reason that it no longer participates in our network” and that private equity backed groups “expect to be paid double or even triple the median rate we pay other physicians providing the same services.”
Interestingly, both USAP and UHC appear to be leveling antitrust type claims against one another. UHC’s statements include allegations that USAP is using its market power to demand outsized reimbursement. And USAP appears to be alleging that UHC’s horizontal structure (an insurer, a facility owner, and a physician practice owner), allows it to exert improper power over rates paid. Last but by far not least, both USAP and UHC might be courting potential danger. The Biden administration has signaled a much tougher stance in connection with both horizontal (same market consolidation, such as USAP’s market growth in anesthesia) and vertical (different market consolidation, such as UHC’s growth in health coverage, facilities, and physician services) antitrust enforcement. Their highly public spat is likely to draw enforcement attention. And, either or both might entertain “dropping the dime” on the other, only to have the call ring back on themselves. |
| | | 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 read an article about a physician in Iowa who is finally surrendering his medical license after 15 women filed malpractice cases against him, alleging negligence in connection with botched surgeries.
I don't know who this doctor is or what he did or did not do. But it's surprising that 15 women alleged incompetence over the last 7 years.
Was the hospital protecting him? Who knows, but I would bet that's going to be a very large issue at trial.
This story is of the sort that comes up both in hospitals and in surgery centers. "Dr. X is bringing lots of cases here. We better give old Dr. X a little bit of slack." How much slack, though? That slack might just be the rope that hangs the facility, or the facility administrator, along with Dr. X.
Everyone makes mistakes. Physicians hate to hear that, patients hate to hear it, but it's part of life.
True negligence does happen, and from a situation that happened in the Dallas area several years ago, even bad, intentional actions, horrific intentional actions, have happened.
I am not saying that your role is as a set of "cop-eyes" for spying on colleagues. But if you witness true negligence or something that appears to be negligence, it should be reported.
If there is any doubt that someone is following up on your report, it pays to check it out. If not, it could lead to horrible consequences, potentially for other patients, as well as potentially for the facility itself.
If you are an investor in the facility, it may no longer exist. The facility, that is, and your investment.
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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 - Don't Step in Unintended Consequences - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Let’s say you are the leader of a medical group. It could be a small group of a handful of physicians. Or, you could be the President and CEO of a 600 or 6,000 provider group. It does not make any difference.
Here is the point: You negotiated for some arrangement. It could be an agreement with a payor. It could be an agreement with a facility. It could be an agreement with almost anyone. And then six months or a year later, someone, whether it is your original deal partner or a third party, approaches you with another agreement.
This could be as simple as a request for an amendment to the original deal. Or it could be as seemingly disconnected as being approached by a third party who proposes some other deal to you.
You have to ask yourself how entering into a seemingly benign amendment or how entering into a seemingly benign other arrangement, even with a third party, will impact that first deal. Which, of course, begs the question of whether you know of, and can quickly access, all of your existing agreements.
Many times, especially with the complexities of healthcare dealings and the complexities of healthcare compliance, “other” deals have a tremendous impact on your initial arrangement. You can not look at them as stand-alone.
If you are not careful, you can screw up years of planning. You can screw up the terms of an agreement. You can find yourself bound to terms that you had no idea you were agreeing to be bound to.
Catalog all of your agreements. Consider each new deal or arrangement in light of your existing ones, as a matter of standard operating procedure.
Remember, it is not just the (new) deal that you are making, it is how that deal might change, or moot, or breach what is already in place.
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| | | Listen to the podcast here, or just keep reading for the transcript.
We used to joke about the name of Midway Hospital, an acute care hospital in L.A., saying that it was midway between life and death.
An anesthesiologist, commenting on my theme that inpatient care is becoming outpatient care and that the center of outpatient care is not the hospital but the freestanding facility, in his case the ASC, told me that I was missing an element in the analysis.
Specifically, he argued that it is far more efficient and profitable to schedule coverage for a hospital, with its large number of operating rooms running for long hours each day, than it is to schedule for outlying surgery centers running a few rooms for part of a day. He is right. But only until the hospital loses so many cases that it does not pay to cover it. Or, until the hospital closes.
Let's get back to Midway. “Born” in 1040s, by the 1980s it was a part of Summit Health.
In the early 1990s, Summit sold the hospital to OrNda Healthcorp which, in turn, became part of Tenet Healthcare.
By the mid-2000's, Tenet sold the facility to a physician-led venture, Physicians of Midway. Perhaps seeing the irony in the Midway name, Midway became Olympia Medical Center.
On December 31, 2013, Alecto Healthcare purchased the hospital.
And then, 7 years later to the day, December 31, 2020, Alecto announced the hospital’s shutdown, to be effective March 31, 2021. Midway was no longer midway between life and death.
UCLA Health has announced that it purchased the property, which is still scheduled for closure at the end of March. If and and when it will reopen, and as what, is unknown.
I suppose that it is easier to schedule for zero rooms at what was once a hospital than it is for 5 or 10 ASCs located all over the place. But it is not very effective, at least if you are running a business.
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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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| | 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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