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September 19, 2019

Counterattack

Well, well, well.  Isn’t this an interesting turn of events?

As you know, Congress is pretty bent on passing some form of serious legislation this term regarding surprise medical bills.  While the issue has thorny complications for physicians, hospitals and payers on the ground, both sides of the aisle like the ‘easy-to-tell’ story for the voting public…

Ms. Jones needs to go to the ER, the hospital is in-network for her health insurance but the myriad of physicians who see her are not and she receives exorbitant bills from each of them.  Patients are put in the middle of this fight and that is wrong (serious look straight at the TV camera here) and something must be done about it!  We have pitchforks and torches and are coming to save the day.

Unsurprisingly, there has been strong lobbying campaign on behalf of providers to defeat these bills.  One of the most visible PR efforts to date is from an organization called Doctor Patient Unity, which has reportedly spent $30M to date on attack ads.

So far, so normal, right?

Well, last week the NY Times reported that the dark money behind Doctor Patient Unity came from a couple of large private-equity firms: Blackstone and KKR.

Are the PE firms just investing their capital to help educate the American people on the virtues of allowing the market to solve these problems?

Really? A public service announcement?

You see, Blackstone (Team Health) and KKR (Envision Health) happen to own two of the largest physician staffing companies in the country.  And a lot of their physicians provide services to ER patients, either directly as ER physicians or indirectly as radiologists, anesthesiologists or the like.

Which means their investments have a large stake in this surprise billing issue.

Which means it is worth passing the hat among the gang to fund a lobbying effort.

Now, the counterpunch.

Congress just opened an investigation into whether these PE-backed staffing companies are driving up costs to pad their bottom lines, first through using their leverage to negotiate higher in-network rates with the payers, and then by staying out-of-network where they can and charging even more.  Letters went to the CEOs of these two firms, as well as Welsh, Carson, Anderson & Stowe, another major player in this arena, asking lots of questions.

Besides wanting to know about revenue breakdowns and all that (PE firms are notoriously guarded on all things financial), they want to know what role the PE firms are playing in negotiating with payers.  This is sneaky angle because the equity funds generally don’t own the practice, but the management service organization that operates the practice (and were all the profits end up).  Here’s betting that the real squeeze comes if Congress can open some doubt that the investors inappropriately crossed over the ‘corporate practice of medicine’ laws (if you don’t know these, it is complex and a big deal).

This could get very interesting.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
September 13, 2019

In Defense of Saying ‘No’

Reading a free-market economist extol the virtues of commercial health insurers is a bit like listening to a trusted old football coach explain why Tom Brady is the best QB ever.  Talk about your cognitive dissonance – I argue with the author, then I argue with myself, then I concede his point, but with a caveat.

Chris Pope, a senior fellow at The Manhattan Institute, a think tank that pushes for idea built on markets and personal choice, had an editorial in the Wall Street Journal yesterday making the case that the very thing that makes insurers unpopular with both their members and their providers – when they say ‘no’ – is a key feature that makes them valuable.

Here is a link to the piece on the MI website, but you hit the WSJ paywall if you want to read the whole thing.  Can we really can’t be disappointed when the leading bastion for capitalism charges for their content?

Pope argues that payers do a lot of things of value – they vet and organize provider networks, they experiment with new benefit plan designs to figure out a better system – but one of the most valuable things they do is say ‘no,’ as in, ‘No, we are not paying for that.’ They deny authorization, they deny claims.

Now, let’s point out the obvious source of my inner turmoil:  ALN is a physician revenue cycle management company…we fight the payers on behalf of our physician clients when this happens!  Sure, we do a lot of other things to get their claims processed and paid, but a huge part of our work is what we call ‘denials management.’  More important, for most of our clients this is the single most critical thing we do for them to earn our keep.

So, a free-market thinker (if you are new here, I am decidedly free-market and working on the ‘thinker’ part) is making the case that payers denying coverage is a good thing?

Directly, his case is that in the denial process payers reduce fraud, ferret out dubious or overly expensive care, thus allowing resources to instead flow to higher efficacy utilization.  Set aside for a moment your opinion of his thesis (or do as I did and have you own argument with him) and let’s get to his bigger point, which is why I ended up liking his piece.

He is making a case against the single-payer ideas percolating from the Democratic candidates.  He dispels the myth that there is a ton of savings to be had by taking the profits of health insurers.  He shows that commercial payers better perform the fraud and abuse function than does Medicare, and that all without the power of guns and badges.  He points to Medicare Advantage vs. traditional Medicare is a classic test/control group experiment that obliterates the fantasy assumptions of the crowd that believes the government can run one-fifth of the economy better than those greedy capitalists at UnitedHealth.

If you can get to the piece, you should.  Even if you disagree with him, it is thought provoking as we continue to ramp up this debate.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
September 5, 2019

The Big Yellow Asterisk

Your humble scribe played hooky for couple of weeks because there was just a lot going on and the blog fell through the cracks.  No lame excuses.

Part of the agenda was taking our youngest to college, which took me to Oklahoma, which took me back to my roots, which took me back to Walmart country, which took me to today’s post.

Stay with me here because several seemingly unrelated streams of thought are colliding in my mind.  But at least all are related to Walmart.  We’ll try to tie them together at the end.

First, living in a metropolitan area in the west makes it easy to forget just how dominate Walmart is in many parts of the country.  They are everywhere in many places.

Then we were talking with some friends from a decent sized city in the south and the subject turned to grocery store options.  We have several chains in Denver, but they had just two choices – one regional player and Walmart.  Period.

Speaking of which, I read a fascinating article about a consultant who is the dude trying to save local grocery stores from Walmart and Amazon. It is a long piece, but as you’ll see below, I think it’s worth your time.

Finally, we get this news this week that the retail behemoth from Bentonville whose logo looks like an asterisk (guessing you now know who that is) is about to open a pilot clinic in Dallas, Georgia that is part of their bigger push into care delivery.  Besides adding behavioral health visits, the other interesting thing to note here is that the clinic is in a stand-alone building in the Walmart parking lot…which makes it feel more like a doctor’s office.

We’ve commented before on Walmart’s close and logical relationship with Humana (Humana is a big player in the Medicare Advantage space; lower income seniors select an MA option more frequently; Walmart owns the heart and mindshare of Americans who are below median income levels) and the executive leading their clinic efforts was recruited from Humana.  We’ll continue to bet $1 on a future acquisition here.

OK, Tim collected a bunch of Walmart anecdotes over two weeks.  What’s the point?

The article referenced above describes an industry being disrupted by two big players – Walmart and Amazon – who are mowing through slow-to-change grocery store chains. Make no mistake: competing against them is hard.  But the big point from those who are succeeding is that you can’t ‘out Walmart Walmart.’  The only option is to create something that Walmart and Amazon cannot.  In the grocery world, that is about creating a great experience for the shopper that showcases unique and local foods.

If we’ve been effective in getting our message across, you’ll see the connection to what we believe is the advantage held by independent physician practices.   Keep an eye on Walmart but read the article and see what thoughts it prompts for your practice.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
August 13, 2019

The West is Different

This post would be a lot easier to write if I could just say ‘California’ instead of the ‘west’ as I think it really is mostly about California, but I must be faithful to the truth and not take liberties.  But if you want to think ‘California’ as you read this, you would probably be mostly right.

An obtuse preamble, you are thinking.  Sorry about that. Let’s get to the story.

Mercer, the employer benefits firm, released an interesting note from their annual survey of employer-sponsored health plans. Historically, and this may surprise people not in ‘the west’ (wink), the premium on HMO plans has been higher than for PPO plans.

This makes sense when you think about a couple of things.  Coverage is generally a bit richer for the HMO plans and the employee cost sharing (co-pay, deductible) usually ranges from nothing to not much.  Both of these factor into higher premiums.

But, in 2017, for the first time the HMO cost dipped a smidge below the average PPO cost.  Then in 2018, it dropped more and was almost $1,000 per employee less.  The Mercer folks were curious as to what was going on and so was I.  In fairness, they were curious first and mine just came from reading their brief.

Initial thoughts were that HMOs draw younger, healthier populations, which they do – when you don’t use a lot of healthcare, the HMO restrictions are less bothersome.  But that has always been the case, so that does not explain the recent move in relative price.

Another thought was the loss of market share.  In 1996 33% of the covered employees were in an HMO.  In 2018, that was down to 14%.  Though not the answer, it pointed to it.

That contraction in market share was not equally distributed.  In the west, HMO coverage has actually grown with 38% of employees now covered by this type of plan, but everywhere else is down to about 10%, plus or minus a point or two.  Talk to anyone in the west, especially the far west, and they act like most patients are in an HMO.  Everywhere else, say ‘HMO’ and you may get asked, ‘Didn’t those get outlawed or something?’

OK, so HMOs are concentrated in the west.  How has that brought down the national average premium so much?  See, you are now curious as well, aren’t you?

The simple answer is out west, they do the HMO thing differently.  They more often use a ‘staff model’ with a capitation payment system (providers take risk and keep the upside savings), where the rest of the country treats HMOs like one more health plan, paying providers via a traditional fee-for-service arrangement.  Since the west is so much of the market, they bring down the entire average.

The take-aways?  Reimbursement models matter; size and scale and experience and accumulated competence in a given model matters; culture and consumer expectations matter.

And ‘the west’ is different than the rest of us.  But you knew that.

 

Quick reminder: Join me on Thursday, August 15 at 11:30 Eastern for my webinar, ‘Top 2 Ways to Control Your Destiny – How Medical Practices Grow Fiercely Independent in 2020.’ 

Click here to register.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
August 12, 2019

Special Invitation

Friends, I wanted to drop you a note to invite you to a webinar that I will be giving later this week.  We’ll be talking about the two fundamental strategic paths available for physician practices that want to remain independent.  Because of my role at ALN, I am fortunate to get to interact with independent practices in many clinical specialties.  The webinar will distill down what we are seeing happening on the ground in markets across the country.

Here are the particulars:

Top 2 Ways to Control Your Destiny – How Medical Practices Grow Fiercely Independent in 2020

Tim Coan, CEO – ALN

Aug 15, 2019 at 11:30 AM (Eastern)

Click here to register. After registering, you will receive a confirmation email containing information about joining the webinar.

If you are unable to attend, know that it will be recorded and we’ll have it available on the ALN website.

I hope you can join me.

Thanks.

Tim

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
August 1, 2019

The Juice and the Squeeze

The reading pile this week kept turning up digital topics, which is fitting since the ‘pile’ is not really a pile, but a folder on my laptop.  Today we’ll reflect on a few random and totally unrelated things tied to the technology side of your practice.  This post either reflects an attention deficit problem or the beauty of potpourri, depending on your point of view.

Talking about data breaches reminds me of my mom stripping us boys down to look for ticks after a day spent playing in the Arkansas woods – you don’t want to find one, but then again if they are starting to dig into you, you’d rather know sooner than later.  Healthcare continues to be a high value target for the bad guys and a recent study put the cost of a breach at $408 per patient record, and that does not even include the loss of business, the disruption to productivity, or the impact on your reputation.  Do the math.  Ouch.

The OIG continues to be more and more active here, with a record enforcement and settlement year in 2018. The cops are watching and expect you to do the same.  There is no such thing as ‘perfect security,’ so you will be held to the wonderfully amorphous ‘reasonable efforts’ standard.

Here’s a data point for you: hospitals spend 4-7% of their IT budget on cybersecurity. For the financial services industry, that number is 15%.  And yours is…?

CMS announced a new pilot program that will let providers hit a button and pull down all the claims your Medicare patients have with other providers.  This is a cool idea as you won’t have to rely on your patients remembering whether they have had an MRI or a flu shot or what other doctors they have seen (the average Medicare patient sees seven different physicians a year).

Now, is that a cool idea or not?  If you have the capability to parse the data and get the physician what they need, when they need it, this will be great.  But if this is nothing more than a big, fat data dump…well, I am guessing you will pass.

We applaud CMS for the step and it will lead to good stuff because someone will solve the data dump problem.  They are pushing commercial payers do to the same.  Sema Verma seems to be a one-woman healthcare reform machine.

Speaking of your favorite government department, another study found that a whole bunch of independent physicians are bailing on the whole ‘meaningful use’ thing.  Of the physicians who ‘attested’ for their EMR in the 2011-2013 timeframe, back when the payments for the use were meaningful, only 50% of them attested in 2015.  By comparison, that rate was 70% for physicians employed by the hospital.  Even with payment penalties for no attestation, it seems the compliance juice is not worth the squeeze.  I am sure Ms. Verma would like to remind you that she inherited that idea.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.