Jul 02 2010

Physician (non)Ownership of Hospitals

ObamaCare has made it harder than it was before for physicians to own hospitals participating in federal healthcare programs.

One option of course, open for as long as there is still private health insurance coverage, is for physicians interested in hospital ownership to own facilities that exclude federally funded patients.

The other, and perhaps superior option is to consider that controlling a hospital may be better than owing it.  Hospitals, even money losing ones, are expensive to own and operate.  If physicians are blocked from investing in hospitals accepting, for example, Medicare patients, why not focus on non-profits and on district hospitals by gaining control of their boards of directors. 

Sure, you wouldn’t be able to declare a dividend, but the fact is that as hospitals begin to play a larger and larger role on both sides of the healthcare market (facility and provider), for example via Accountable Care Organizations, why not seek to control the controller?

An uphill fight, for sure.  But one that just might be worth it.

Mark F. Weiss

www.advisorylawgroup.com

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May 25 2010

Lies, Damned Lies, Statistics and Acronyms

Disraeli commented that there are lies, damned lies and statistics.  It’s time to add acronyms to the list.

A new acronym to save healthcare has arrived, the ACO, an “accountable care organization.”

But accountability to whom?  And for what care, exactly?  Lastly, and most importantly, who runs the organization?

An ACO, is about power and control over physician services rendered and, importantly, power and control over physicians’ incomes.  ACOs are the intended funnel of payor funds – they serve as a mechanism to distribute those funds and, as such, invoke the Golden Rule:  He who has the gold makes the rules.

Hospitals and their associations are scrambling to build ACO networks.  Don’t for a minute think they have your interest at heart.

The opportunity exists to seek physician control of ACOs:  There is no rule that requires that control run one way, from the hospital to the physicians.  Difficult, yes.  But what’s the real alternative?

Mark F. Weiss

www.advisorylawgroup.com

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Mar 26 2010

Obamacare – Clarion Call For Stipend Strategy

So, Obamacare passed.

While there’s a time and a place to discuss political reactions, this is neither. 

Instead, my take is that we might as well see it, in true lemonade from lemons fashion, as a clarion call for hospital based physician groups to refocus (assuming you’ve ever focused at all) your stipend strategy.

In all likelihood, Obamacare will bring more patients to the hospital, patients with poorer, not richer, reimbursement attached. 

Unless you’re prepared to work more, for less, you’d better start envisioning a better future than Washington has planned (and I do mean planned) for you.  And you’d better develop a strategy to reach it. 

Hospitals may be crying broke, but it’s impossible to run their facilities without you.   Either you engage in this strategy or engage in the race to the bottom. 

See, there is “choice” in Obamacare after all.

Mark F. Weiss

www.advisorylawgroup.com

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Mar 05 2010

Hospital-Based Services, Not Hot Dogs

You own the hot dog concession at the local major league ballpark.  Because 50,000 plus potential customers come to the facility several days a week during baseball season, sales, and profits, are good, so good that you pay a hefty fee for the right to operate the hot dog stands.

Later, stadium management wants to increase their ticket sales, so they get you to agree to honor coupons distributed in the community — in varying amounts, they give the holder a discount of up to 70% off.   Sales, in terms of volume, is up, way up.  But, for each of the many hot dogs eaten by the coupon holders, a large bite is taken out of your profits.  So much so that after a few years of operating at a near or actual loss, there’s no way that you can afford to continue operating the stands. 

The stadium, realizing that baseball without hot dogs isn’t baseball, decides to incentivize you to keep operating the stands.  They pay you a fee to assure that you will make enough profit, as measured by an “expert” as of that day, to keep the stands running.  But you’ve got to keep honoring the coupons — and the stadium managers keep printing more and more coupons.

Would you keep running your hot dog stand if business slips back into the red (after all, the public needs hot dogs) or would you either negotiate additional funding from the stadium or find a new venue for your products and your services?

Of course, the stadium is a hospital and your concession stand doesn’t sell hot dogs, it renders hospital-based medical group services.  But, the analysis is much the same.  Instead of food, you sell anesthesiology, radiology, pathology or emergency medicine services.   You hold an exclusive contract, not a concession-stand agreement.   But what is it that hot dog vendors know about strategy and tactics that you don’t?

If you’re selling medical services but collecting only peanuts (or even hot dogs) let me know.  You need a better agent.

Mark F. Weiss

www.advisorylawgroup.com

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Feb 05 2010

A Factory of a Different Kind

It was a little after 4:00 a.m. as I left my driveway.  Pitch black and raining.

But from the moment I merged onto U.S. 101 heading south into Los Angeles to give a grand rounds presentation, there were other cars on the road.  By 5:30 a.m., as I approached the major arteries of the L.A. freeway system, the road was crowded.

I began to play the imagination game:  Where was everyone going?

Many, I suppose, were headed to factory jobs that started at 6:00 or even 7:00.  The same drive in, day after day.  The same start, middle and end of work.  The same drive home.

That morning, as I gave my lecture, I commented on the experience to the audience, medical residents and attending staff. I questioned them as as a group, as I question you now:

It could be that you provide emergency medicine, or anesthesiology, or pathology, or radiology services, or that you are an office practice physician in a group.  But how many of you are going to a factory, too, just a factory of a different kind?  How may of you have the same factory worker mentality?  The mentality of “I’ll work for what they give me” — sure the “reward” is quantitatively different but the situation is qualitatively the same.  The mentality of the same old same old, of plus ça change, plus c’est la même chose.

To break free requires a change in mentality.  As they say, a mind is a terrible thing to waste.

Mark F. Weiss

www.advisorylawgroup.com

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Feb 02 2010

Group Therapy Needed To Protect Hospital-Based Physician Income?

Whether you are an anesthesiologist, radiologist, pathologist or emergency medicine physician, picture a meeting of your national specialty association.  Chances are great that you’d hear voluminous hallway chatter bemoaning more work and lower collections, what I call an increasing Workload-Reimbursement Gap™.

Chances are also great that you would hear next to nothing in the symposium presentations of any practical value in terms of bettering your economic circumstances.

There are two tragedies at play here,  both of which scream the need for, at least on a metaphorical level if not actually, some type of group therapy:   

First,  the situation is symptomatic of incredibly low self-esteem:  “They are doing it to us and we have no power to change.”

Second, the complaining is a self reinforcing loop:  everyone is complaining to everyone else who then complains to everyone else.  Everyone being equally miserable means that it must be all right that we ourselves are miserable. 

It would be far healthier and more profitable to question the basis of the system itself:  Why are physicians working much harder for less money?  Why is it proper  that there are so many regulatory burdens interfering with physicians’ abilities to own and refer to  facilities?  Why is it improper to benefit from the provision of care (e.g., self referral) but not from the denial of care (e.g., leading to insurance company profits)?

Why, simply because you are in a so-called personal service business do you believe that service — actually, the expropriation of your services — takes precedence over your business?  Why should the fact that you practice at a not-for-profit hospital mean that you are required to provide charity care?   I’m not saying that you can’t choose to donate your services, but we’re talking about being required to make the “donation.” 

Take back control of your destiny.  It starts with adopting a different mindset.

Mark F. Weiss 

www.advisorylawgroup.com

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Jan 27 2010

Exclusive Anesthesia Contracts Under Attack

Fear of rising healthcare costs is being used to attack exclusive anesthesia agreements.  Similar arguments can be used to attack other service department agreements:  exclusive radiology agreements, exclusive pathology agreements and exclusive emergency medicine agreements.

The argument goes as follows:  Hospital exclusive contracts are anticompetitive and therefore allow one group to control pricing.  Hospital coverage stipends paid to groups under exclusive anesthesia agreements, exclusive radiology agreements, exclusive pathology agreements and exclusive emergency medicine agreements contribute to the high cost of healthcare.

Of course, this ignores the fact that exclusive contracts with provider groups are necessary to obtain 24/7/365 coverage, that contracts are required to provide care for all patients on a face-sheet neutral basis, and that a market for services exists such that unless a coverage stipend (which is within FMV bounds) is received, the group will not be able to recruit and retain qualified providers.  It also ignores that payment for physician services is almost always dictated by the payor, not the group, and that hospital stipend payments have little to no impact on the scope of reimbursement received by the facility for the technical components of anesthesia, radiology, pathology and emergency medicine services.

But playing to fears makes for good sound bites.  And, hospital administrators might attempt to take advantage of them to gain leverage in their negotiations with you.  Good groups will be prepared to address them.   Strategic groups will be proactively engaged in countering these mistaken assumptions well before the face to face stage of negotiations begin — this takes time and effort.  (See Hospital Based Groups Must Get Aggressive, It’s All Related, Group Message Requires Consistent Language, and many of the articles here.)

Mark F. Weiss 

www.advisorylawgroup.com

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Jan 19 2010

Tearing Up Your Exclusive Contract For Profit

If a hospital’s demands on your group have markedly changed but the compensation for your services has not kept pace with the market, it’s not only unfair, it’s immoral, that you continue to eat the burden.

Proper planning at the time of exclusive contracting includes developing a strategy to terminate and addresses the issue of what might trigger stipend renegotiation.

Even with that planning, making the most effective renegotiation move and taking the steps required to set it in motion require considerable lead time.

Even if your group didn’t engage in advance planning to build specific contractual language into its hospital exclusive, all is not lost; it might still be possible to achieve a similar result with a well thought out and implemented strategy.  

There’s nothing glorious in financial failure, especially when the hospital is reaping a benefit from causing your loss.

Mark F. Weiss 

www.advisorylawgroup.com

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Jan 12 2010

Human Pack Behavior

Taken individually, a few dogs with mildly aggressive personalities is one thing; let them form a pack and the level of aggressiveness rises astronomically.

We’re all familiar with pack behavior among animals, but are largely unaware of pack behavior among humans even though we encounter it regularly.

The social psychology concept of “group polarization” describes the fact that when people form into a group, they tend to make decisions that are more extreme than its individual members would make alone.  For example, there are studies in connection with how juries make punitive damage awards in which the group renders a decision which outstrips even the most fervent individual member’s pre-deliberation number.

Interestingly, this phenomenon presents an opportunity to be taken advantage of.  Suppose, for instance, that you’re negotiating for a stipend for your group’s provision of a new service.  How should your strategies and tactics differ if you were told that you’d be negotiating with a committee of three administrators as opposed to with one counterpart?

Mark F. Weiss 

www.advisorylawgroup.com

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Dec 28 2009

The First Step

“Hi, my name is Dr. X and I’m a workaholic.” 

Actually, it’s usually much worse:  Dr. X spends devotes his or her life to working in the production side of the practice (that is, on aspects related to patient care), which means that there’s no time left to devote to working on it. 

As a result, the Dr. X’s of the world aren’t aware of the problems with their practice.  Dr. X’s might brag, “Collections increased 5%” but they don’t have any understanding of the fact that collections might have increased 12% or even 18%.

Resolve to make 2010 different:  Set aside time each week to strategize your long term goals.   And then devote time each day to the proactive steps that must be taken to achieve them.

Mark F. Weiss 

www.advisorylawgroup.com

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