The Healthcare Con-Vergence – Podcast

How will physicians fit within the bureaucratically envisioned healthcare system of the future?

Complimentary Teleseminar – Protect Your Practice

THE ALG TELESEMINAR SERIES
*COMPLIMENTARY*

The Five Critical Steps To Protect Your Practice And Your Profits

Hospitals and so-called national groups are ready to poach your practice and your profits.  Unless you develop and implement a strategy to protect what you have created, let alone to expand from that base, your future will likely be as an employee of a commodity level practice.

Learn the five critical steps you must take now to control your own future, to protect your practice and to preserve your profits.

When:  September 27, 2011
Time:    4:00 P.M. Pacific Time
Length: 45 minutes
Investment:  $279 Complimentary to blog readers

Click here to register today!

 

 

Managing Risk: Required For Success – Podcast

Medical Groups and entrepreneurial physicians must learn to manage business risk as a part of their overall strategy.

The Next Frontier: The Battle Over Hospital-Centric Healthcare

When I have a question about my health, about the last thing I think of is calling the hospital; I call my doctor.

But in the world of the future being designed in hospital board rooms and faculty lounges, healthcare relationships are seen as hospital-centric.  On the payment side, this agenda manifests as bundled payments and the ACO initiative.  On the delivery side the agenda includes employment of physicians by hospitals and their related foundations.  Of course, a key precursor to this situation was the targeted breakdown of the physician-patient relationship by managed care.

People are pushing back hard against Obamacare.  Physicians can tie into this anger by making their patients aware of the same loss of choice inherent in a system in which the hospital is the hub for their care.

Mark F. Weiss

www.advisorylawgroup.com

 

 

© 2011 Mark F. Weiss

 

 

 

 

Is Cheap The New Loyal?

Until recently, hospitals granting exclusivity to a group demanded exclusivity, or a close approximation, from the group in return. Their position was based on the fact that they perceived the group to be of such high value that they did not want to share it with another facility.

So, for example, it was rather common for a hospital to argue during the negotiation of an exclusive contract for, say, radiology services, that the group should not provide services at any other facility. As hinted at above (and as many readers know from their own affairs), the exclusivity demanded by the hospital was often negotiated down by way of a geographic restriction or by conditioning the provision of outside services on the fact that it does materially interfere with the delivery of services to the contracting hospital.

Fast forward just a few years to the present, and many of those same hospitals are more than happy to contract with so-called national groups, many simply being staffing services masquerading as true groups, which have as a central element of their group “DNA” the fact that they are not in any means exclusive.

While national groups are not loyal, they are cheap.

So is cheap the new loyal?  Or is it that no one cares if a low value group is or isn’t loyal?

The opportunity, of course, for entrepreneurial physicians is to take advantage of the market segmentation that “cheap” is leading to:  One class of hospitals (consisting of the great majority of hospitals) that deliver cheap but competent services, and a second, smaller class delivering high quality service at, perhaps, a higher price.

On the one hand, this means seeking arrangements with facilities that value quality, not simply pay lip service to it. On the other hand, it signals that there may be an even greater demand for physician-owned specialty hospitals (yes, excluding Medicare patients) that provide better care.

Mark F. Weiss

www.advisorylawgroup.com

 

 

© 2011 Mark F. Weiss

 

 

The Sole Restaurant Syndrome and Medical Practice Failure

If you owned the only restaurant in town, chances are that even in a recession, business would be pretty good. People would be flocking to you and you wouldn’t have to do much, if anything, to drive business.

It appears as if many physician practices, from hospital-based groups with exclusive contracts to prominent office-based practices with significant market share, believe that their situation is locked in in the same manner.  Patients will come.

In fact, they often make the same mistake as the restaurant owner with a supposed exclusive on his market:  They believe that they can slacken in terms of services provided and marketing outreach and still thrive in their competitor free market.

No matter whether you hold an exclusive contract or simply a commanding position, your contract and your position can always be terminated or challenged. New competitors come to town – sometimes they are even recruited.

So, just like the smart owner of the only restaurant in town, you should continuously be marketing to your customers and improving upon the experience they receive, whether you view them as patients, referral sources, the hospital, managed-care plans, or even better yet, as all of the foregoing.

Just like the smart restaurant owner, even if you are the only game in town, market, and treat your customers, as if you have a competitor across the street.

Call it karma or call it consequences, failing to do so seems to act as a magnet to attract the competition that you believed would never come.

Mark F. Weiss

www.advisorylawgroup.com

 

 

© 2011 Mark F. Weiss

 

 

 

More On Compensation Plans – Align Rewards With Required Efforts

Physicians may trust their colleagues in the sense of their professional relationships, but when it comes to business relationships within a medical group, especially those relating to money, trust is a rare commodity.

In fact, in connection with money matters, most group members tend to have an “eat what I kill” mentality, seeking to maximize their own compensation.

Groups can harness their physicians’ drive to self-maximize through a production-based compensation model, but those efforts generally fall short in the greater scope of advancing the group’s overall business success.

That’s because focusing solely on incentivizing personal productivity serves to disincentivize participation in efforts requiring teamwork and interferes with the group’s ability to direct its physicians to address issues beyond the ones that generate immediate income for that individual.

For example, paying $X per unit incentivizes the generation of units; it does nothing to incentivize (and therefore disincentivizes) cooperating with other members of the team on initiatives directed towards referring physicians.

A more effective approach is to design a compensation plan that contains both individual incentives and rewards for group efforts, such as leadership, overall group or practice section profits, or the group’s achievement of specific business targets. And, to engender trust, the rules governing how the compensation formula works must be clearly understood so that the resulting compensation can be proven.

Note that I do not mean that there cannot be subjective factors – in fact, there must be subjective factors. However, the way in which those subjective factors are applied must be contained within overall group beliefs (for example, measured consistent with an overriding principle that the group always responds to hospital needs) or within specific parameters (for example, measured by participation on group committees or in mentoring new group members).

If your group truly is a group (see my post The Four Circles™ for the answer to that question) then you must align your compensation plan to best assure your group’s success.

Mark F. Weiss

www.advisorylawgroup.com

 

 

 

Don’t Hinder the Ability of Group Leaders to Lead

There’s little question that most, if not all, medical groups should be led by practicing physicians.  The problem is that too many groups create policies, either formal or informal, that actually dissuade and hinder the ability of physician leaders to lead.

Specifically, I’m talking about the fact that groups tend to put far too much emphasis on the need of physician leaders to practice medicine as opposed to spending the time required to actually lead the group.

For example, let’s imagine a group of 12 physicians generating, say, $8 million a year in gross collections.  Let’s also assume that they generate that equally; in other words, they each generate $666,666.

If the group leader cut back his or her production by 20% in order to devote time to leadership, most groups would focus on the $133,333 “lost.”  However, there’s a very good chance that that work would be spread over the other members of the group.  Far more importantly, freeing up the ability of the leader to actually devote time to leading might make the difference in preserving the group’s relationship with the facility that if lost, would destroy the group and its $8 million a year of cash flow.

Group leaders should be given the ability to lead and they should be compensated for it.  That effort is in many cases far more valuable to the group’s overall success than any direct patient care income that would otherwise result.

Don’t be penny wise and thousands-of-dollars stupid.

Mark F. Weiss

www.advisorylawgroup.com

 

Are You Headed to the Healthcare Factory? – Podcast

Are physicians going each day to a factory . . . a factory of a different kind?

Will All Physicians Be Hospital-Based?

If you think that exclusive contracts are just for the hospital-based specialties, anesthesiology, emergency medicine, pathology, and radiology, you’re wrong. There is a growing trend of hospitals entering into exclusive contracts for a range of what have traditionally been office-based specialties. 

Related to hospitals’ drive to create accountable care organizations and to, in general, create a hospital-centric system of healthcare delivery, hospitals are becoming more brazen about designating office practice physicians as the exclusive group with privileges within their specialty at the facility.

For example, hospitals are entering into exclusive contracts for specialties as diverse as cardiac surgery and gastroenterology.

On the one hand, this signals danger for groups of physicians who are not “blessed” with the hospital’s seal of approval.  This underscores the need to utilize scenario tools such as The Scenario Survey ProcessTM as an active part of strategy development to prepare for your future.

On the other hand, it creates an opportunity for a new stream of income – hospital stipend support — for those groups that are awarded exclusive contracts.  Those groups are urged to heed the experience developed over the three plus decades of traditional hospital-based exclusive contracting in designing and implementing their relationships with facilities.

After all, if hospitals get their way, all physicians will be hospital-based.

 

Mark F. Weiss

 

www.advisorylawgroup.com