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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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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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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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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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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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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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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Ignoring the Perceived Bounds of Weakness

Wildebeest, travelling in a herd of 1.5 million animals, migrate annually across the Serengeti. Predators lurk. Their targets are not the strong or even the multitudes of animals pulling together with the pack. Rather, it’s the stragglers, the unfocused and the tired who become the easy pickings.

We’re animals, too, and this same relationship of predator and prey plays out daily between your hospital based group, on the one hand, and hospital administration and physicians with adverse interests, on the other.

Signal weakness or disorientation or lack of focus on business or political matters (even though you remain incredibly focused on patient care) and you become perceived as the weak link.

Strategize for your future, deploy tactics in order to achieve your goals and forcefully attack your opponents and you are perceived as too strong to mess with.

Certainly, there are limits to the acceptable bounds of aggression, but in the real world fewer groups have problems resulting from misunderstanding those limits compared with the larger number of groups that lack any understanding of the opposite limits — the bounds of weakness and the far more likely, and more devastating, result.

Mark F. Weiss

www.advisorylawgroup.com

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In the Bureaucratic World

Just because your hospital based group operates within the bureaucratic world of the hospital does not mean that it must be bureaucratic itself.

The trick is to operate an entrepreneurial entity partly within those bureaucratic bounds.   I say “partly within” because the most successful groups move outward from there.

It’s sometimes difficult for group leaders to see that it’s much safer outside the bureaucratic web. 

In working with clients in the course of The Strategic Group Process™, clients sometimes needs new goggles, so to speak, in order to perceive that that hospital’s bureaucratic web is not a safety net, it’s a spider’s web.  If you’re not the spider, that’s a dangerous place to be.

Mark F. Weiss 

www.advisorylawgroup.com

 

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“When Negotiations Begin”

Saying that you’ll consider the issues (or do the planning, or consider the options, or…) “when negotiation with the hospital begins” misses the point entirely.  The negotiation has already begun, you just don’t know it.

It’s exactly on point with the observation about being at a poker table:  “If you don’t know who the patsy is, you’re the patsy.” 

Mark F. Weiss 

www.advisorylawgroup.com

 

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