Hospitals Are Closing Faster Than New Ones Are Opening – Success in Motion

Ride along with Mark as he talks about re-purposing closed hospitals into other healthcare facilities.

 

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Mark F. Weiss

www.advisorylawgroup.com

 

Why You Must Know About A University’s Captive Medical Group Filing Bankruptcy

Last week, on November 7, 2018, the medical group affiliated with Michigan’s Wayne State University Medical School, University Physician Group, which does business as Wayne State University Physician Group (“WSUPG”), filed Chapter 11 bankruptcy.

How is that even possible, you ask? After all, you were told that there’s safety in what is essentially hospital employment.

Well, it’s not only possible, it’s likely the tip of the iceberg, not only for “stand alone” captive physician groups like WSUPG with its 873 employees, but for entire hospital hospital systems made more fragile, not stronger, by their size.

Hospital systems across the country suffer from bloated fixed costs, huge payrolls, layers and layers of bureaucracy, and management by managers, not by entrepreneurial thinkers.

Instead of bringing what the proponents of hospital-centricity promised would be stability, the actual result is becoming much different: The larger the hospital-centric system is, the more sensitive it is to declining payments from private payors, and the movement of procedures out of their facilities to freestanding, and often independent facilities, from clinical laboratories, to imaging facilities, to ASCs. And now, the federal government is getting increasingly into the act: It has cut reimbursement to hospital outpatient clinics, and has signaled its decreasing support for outpatient surgery performed in hospital outpatient departments (“HOPDs”)as opposed to in freestanding ambulatory surgery centers.

Hospital employment was hardly ever a good deal for any physician. The difficulty in holding a hospital together is tough enough. The difficulty in holding a hospital system together is even greater.

But both pale in comparison to the challenges of holding a hospital system plus its directly or indirectly employed physicians together. A shock that could have been absorbed by the pure hospital-side of the business can be fatal to the enormously expense-ridden hospital-plus-physician structure.

Why You Need to Know

1. Employment, directly or indirectly, with hospitals is far from “safe.” In fact, it may be far riskier for physicians.

2. In the event that a tightly aligned physician group fails, the employed physicians have no offices, no patient records, no staff, no “nothing” readily available to them to re-start independent medical practice.

3. For outside groups, the failure of a hospital-controlled medical group presents the ability to cherry pick physicians who may be desperate for quick reemployment. That is, unless those physicians are barred from accepting employment in the area due to ill negotiated covenants not to compete, assuming that they are enforceable.

4. The failure of a hospital-affiliated medical group will disrupt referral patterns, presenting opportunities on both the services-side and the facility-side for independent physician practices and their affiliated facilities.

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Mark F. Weiss

www.advisorylawgroup.com

Clueless and Dangerous: “Your Medical Records Are Safe Because They’re Entered into Our System” – Podcast

Yes, that’s what they told me. My PHI would be safe because they would be entered into their system. It that’s the case, then pigs can fly.

Listen in to the story of the “safety” of PHI at Holland Eye Surgery and Laser Center, which discovered that a hacker began accessing their electronic records in 2016 and, that over time, more than 42,000 patients’ PHI was exposed.

 

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Mark F. Weiss

www.advisorylawgroup.com

There’s an App for that HIPAA Violation – Medical Group Minute

Cyber criminals pay far more for health data than for credit card or banking information. Don’t inadvertently help them out while exposing yourself to, potentially, tens of thousands of HIPAA violations.

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Mark F. Weiss

www.advisorylawgroup.com

Hospitals Beg To Be Aligned By Physicians! – Success In Motion

For years, hospitals have pushed to “align” physicians. Take a ride with Mark as he talks about a reversal in the trend: As what were hospital cases now flow out to independent ASCs, hospitals are begging to be aligned with physicians. But why allow a hospital to be a partner in your ASC deal?

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Mark F. Weiss

www.advisorylawgroup.com

CMS Cuts Payments to Hospital Outpatient Clinics By 40% and Boosts Independent Physician Practice and Physician-Owned Facilities

In one fell swoop, CMS pulled the rug out from under hospital control of physician practice, rendering many, if not almost all, hospital outpatient clinics unprofitable.

But this isn’t a story about hospitals. It’s a story about the positive impact the change will make on opportunities for physicians, both in connection with independent medical practices and in respect of physician-owned facilities such as ASCs.

The Back Story

Spurred on in large part by Obamacare, hospitals “aligned” physicians by, in many cases, acquiring their practices and rolling the former independent physicians, together with many new-hires, into hospital-owned or hospital-controlled practices.

The key to this was the fact that those practices, in their guise as “hospital outpatient clinics,” were reimbursed by Medicare on a fee schedule (the Outpatient Prospective Payment System, “OPPS”) that was approximately 40% richer than the amount the exact same services were reimbursed to independent physician practices under Medicare’s Physician Fee Schedule.

Why, you might ask, would the government do that? Well, hospitals, through much better lobbying than physicians could muster, had fooled the government into believing that cost drives value. And everyone knows that hospitals have outrageous costs.

But, the reality is that cost has nothing to do with value. Do you care that the local market loses five cents on every pound of grapes that you buy? No, the thought never enters your mind. You just know that you’re willing to pay 88 cents a pound for grapes.

Finally, the government has realized the same thing. In the vernacular, “grapes is grapes.” The exact same service by the exact same physician on Tuesday, which becomes a hospital outpatient clinic by way of the hospital’s acquisition of the medical practice on Wednesday, will be reimbursed the same way on Thursday. This is the notion of “site neutrality” behind the 40% cut to hospital outpatient clinics under the just announced 2019 OPPS.

Of course, the American Hospital Association wants to sue to stop what some hospital folks have called a “roadblock to care.” Roadblock? Care? No, it’s simply the end of an entitlement, and the dawning of the realization that the emperor never actually had any clothes. It’s a start in dismantling a hospital-centric healthcare system. It’s a reduction in healthcare spending for both Medicare and for the patients whose co-pays shot up due to hospital slight of hand: slap up a sign, call it a hospital clinic, and jack up the amount due.

What This Means For You

If the just-announced final rule survives challenge, which is likely, it signals a major shift in favor of independent physician practice including in favor of physician-owned facilities such as ambulatory surgery centers.

With the economics of running outpatient clinics turned upside down, we can expect to see hospitals closing their clinics. Some hospitals will close completely. (See The Impending Death of Hospitals.) We can also expect to see them withdrawing from the role of physician employer, at least as to office-based physicians.

Jettisoned physician-employees will be seeking new opportunities, perhaps at a significant distance from where they currently call home.

The inability to control physicians through employment will have a significant impact on referral patterns both within surviving hospital system structures and without.

Community practice physicians will be particularly well-placed to gain referrals from which they were previously, in all practicality, shut out.

Additionally, I expect the change in referral patterns to be a major boost to physician-owned facilities, including ambulatory surgery centers and what I call a Massive Outpatient Clinic™: A combination of an ASC, a medical office building, and one or more of a menu of complementary offerings — essentially a “non-hospital hospital.”

There are additional reasons for my bullishness on physician-owned ASCs:

First, if the government’s eyes are open to the fact that cost doesn’t drive value, then payments to hospital outpatient departments (“HOPDs”) will soon be reduced to ASC fee schedule levels. That will moot most HOPDs.

Second, CMS is expanding the role of, and improving the economics for, freestanding (read that as physician-owned) ASCs. Among other things, the 2019 payment rules for ASCs provide for a 2% increase in payment to freestanding surgery centers, add almost 200 new codes to the list of procedures approved for ASC payment, and call for a number of “surgery-like” procedures to be added to the covered list.

What do you know, it’s win-win! Physicians win because independent practice is strengthened. Patients win because the co-pays will be lower, both for physician visits and in connection with surgeries at ASCs as opposed to at HOPDs. Sorry hospitals! There are only 2 wins to go around.

The time is now to begin considering how you are going to take advantage of the situation. Let’s start the conversation today.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.advisorylawgroup.com

Blowing Up Your ASC Because Of Confusion Of Purpose – Podcast

Considering forming a Medicare certified ASC?

Be careful not to destroy all of your Medicare claims by turning them into false claims.

Tune in this week as we go over different ways that ASC organizers and operators cause the fatal explosion of their businesses.

 

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Mark F. Weiss

www.advisorylawgroup.com

Dr. Drug Dealers Chill Legitimate Pain Medicine Practice – Success in Motion

Ride along with Mark as he discusses the recent indictment of a slew of doctors and pharmacists for pushing millions of oxycodone pills. But what’s great law enforcement has a chilling impact on the legitimate practice of pain medicine.

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Mark F. Weiss

www.advisorylawgroup.com

Do What You Say You’re Going to Do – Medical Group Minute

If you say that you’re going to do something, do it! We can all apply this lesson in our businesses.

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Mark F. Weiss

www.advisorylawgroup.com

Community Hospitals Must Change Or Die. Change Presents Opportunity For Entrepreneurial Physicians.

In a recent article in the North Bay Business Journal, Jan Emerson-Shea, vice president, external affairs at the California Hospital Association, was quoted, when speaking of community hospitals, as saying that, “there’s a host of challenges that all hospitals face but particularly these small, independent hospitals. Some of these hospitals file bankruptcy, some shut altogether, some are able to go to local voters, and some affiliate with larger health care systems that have the ability to keep them open and provide them access to capital.”

The Impending Death of Hospitals is hitting community hospitals particularly hard.

That, of course, is a peal of the bell that tolls for thee, if your medical group is dependent on the survival of the local hospital.

But, at the same time, it’s an opportunity for entrepreneurial physicians to participate in the repurposing of mooted hospital facilities.

Ventures we’re currently looking at include repurposing community hospital facilities as medical malls, surgery centers, “condo-ized” surgery center units, and “non-hospital hospitals.”

As the economist Joseph Schumpeter wrote in Capitalism, Socialism and Democracy, capitalism “is by nature a form or method of economic change and not only never is but never can be stationary. And this evolutionary character … incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.”

Creating destruction is taking aim directly at community hospitals. You can fight to save them. But if they’ve failed, you can, á la Shumpeter (and Weiss), take part in creating, phoenix-like, far more appropriate healthcare solutions for your community and for your profit.

Let’s talk to get started.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.advisorylawgroup.com