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March 23, 2020

What Matters Is…

What matters is that you take care of your people, that you keep your practice afloat, that you continue to care for your patients.

The last thing you need is to have your inbox clogged up with my musings, so we’ll hit the pause button for a bit and stay out of your hair.

In the meantime, if you are bored or nervous or just curious, I’d love to hear from you.  Drop me a note and we’ll use this time to catch up.

Know we’re still here, fighting the good fight for our clients.

Talk to you soon when things…whatever it is things are going to do.

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.
March 5, 2020

Fragility and Resilience

Well, the new sport taking the nation by storm is ‘Corona Upping,’ the game in which you try to find something new and novel to say about the virus to whoever happens to be around, be they friend or stranger.

Serious players constantly scan news sites and Twitter in search of the latest tidbit or anecdote that would give them points for being on the leading edge of the news.  Scoring is subjective, of course, but citing either the CDC, WHO, or a guy you know who works for an international firm whose buddy recently returned from Vietnam, which is not China but is close enough, gets you bonus points.

It is not my intent to make light of the situation, though the very idea of my flirting with it probably tips me off as being a ‘viro-optimist’ instead of a ‘viro-pessimist.’  Heck, I am writing this post from the petri dish known as an airplane cabin as I fly to a national conference that has not (yet) been canceled.  Yes, spit in the face of danger.  Though, just in case my wife happens to read this post, yes, I washed my hands six times this morning just traveling through the airport to my gate.  The line at the sink is now as long as getting through security.

Like most of us, I have no idea which way this thing will break.  Even experts will tell us that the plausible scenarios vary wildly, enough so that regardless of your position on the ‘panic – just chill’ continuum, you can find evidence to support your decisions.

However, in spite of my personal optimism and decision to run headlong into a hotel ballroom with hundreds of walking epidemiological risk pools wearing name tags, the accelerating news of cancellations and closures and voluntary self-quarantines did get me thinking about the fragility of businesses, small ones in particular, a broad category that encompasses most physician practices.

A food industry consultant recently noted that most restaurant operators run on such thin cash flow that being closed for three weeks in a row would bankrupt them.  That might be dire, but it is probably not a total fabrication and I am sure similar prognostications could be made about small businesses across many industries.

Times like this can send us into a tailspin, but they can also prompt some valuable reflection and long-term insights.  Small businesses, including your practice, are fragile even when healthy.   Things like a global pandemic are, by definition, hard to predict, but some risks have a high enough probability of occurring to merit some preventative action.  Be diligent.

On the other hand, I am an optimist and am armed with hand sanitizer.  Time and again organizations have absorbed unexpected blows and managed through them.  Fight on.

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.
February 28, 2020

Hip to Be Asset-Lite

As regular readers know, sometimes the blog post functions a bit like a therapy session, a time for me to sit back and process all that has been happening of late.  I appreciate you, like a good counselor, listening and nodding in that gentle, affirming manner as I prattle on.  Fortunately, this takes you only two minutes, not 55.

It has been a whirlwind of late, with seemingly random and disconnected conversations all over the place – late dinners with practice executives; conferences where the healthcare money people gather; coffees to network (translation: I just got laid off, you have a blog so I guess that means you can introduce me to people); strategy sessions with clients making some big decisions; a dip into the dreamy world of healthcare start-ups who all believe they are sitting on the next big, big thing.

It is one of the best aspects of my job.  You rightfully gather that asking me to do that same thing two days in a row would make my he…hey, squirrel!  Easily distracted is an accurate label; able to see weird connections is another.

So, you ask, ‘What is the big take away from all of this?’  That is the kind of thing the therapist asks.

Well, I have good news, good for you, my physician practice friends.

You did not even know it, but you are ‘asset-lite’ and that is a good thing.  It is making you the belle of the ball.

Asset-lite is the new way of saying you don’t have burdensome fixed overhead and operating costs.  And that just means you are not a hospital or health system.  And that is increasingly a good thing.

You may be primary care oriented, and I mean that in the broadest possible terms, and pursuing risk in value-based care contracts. Here, an asset-lite delivery network comprised of physician practices, urgent care centers, retail locations and post-acute providers like home care and PT is attractive because it can better act to really manage care and costs, not just fill beds.

Conversely, you may be procedurally oriented and working to move care to the most cost-effective settings.  Here, asset-lite means surgeries and procedures are moved from hospitals and HOPDs (hospital outpatient departments) to ASCs and the office setting.  This is just simple math – over here that cost $1, over there it cost $2.  OK, let’s do it here instead of there.

Successful physician practices are increasingly following one of these two fundamental strategies and all the people with money – the government, payers, employers, investors, bankers – are taking notice in a good way.  In either case, if you can do it well and do it at scale, being asset-lite is a good thing.

Embrace your ‘asset-liteness.’  It is now hip.

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.
February 20, 2020

While You Were Working

Back in the 90s, I had a client in the software development business.  Being smart guys, they decided the consulting game of trading hours for dollars to build something for someone else was not, well, smart.  They looked around and found an industry where the software solutions were pitiful.

‘We’ll build a better mousetrap,’ they said. ‘We’ll dominate and then sell for a wheelbarrow full of money.’

Their ideas on the better mousetrap were, indeed, much better than the junk being sold to the industry at the time. They locked themselves in the room and went to work, writing and testing and revising code.

Things being the way they are, the project was harder than they imagined.  They were, after all, taking on a rewrite of the software that ran an entire industry (think the equivalent of replacing your EMR as well as your systems for billing, accounting, payroll and inventory management).  What was to take 18 months took four years.

Finally, they emerged from the cave with their gleaming new software, ready to take over that little corner of the world.  Unfortunately, while they had their heads down working, the market moved.  What was innovative in their design four years ago was now a standard feature for the incumbent vendors.  Their ‘wow’ was now a baseline expectation.

Since it was the 90s, everyone wanted stock in the next big thing.  Instead of taking cash for my services, I, too, took stock options.  There was no wheelbarrow of money, but that is another story.

Here’s the point…

Last week I was with one of my favorite groups of physicians. Fourteen years ago, a group of small practices came together to form a larger entity.  Part of the conversation that night was a reflection on their journey.  What they did at the time was really bold and innovative; what they have built since is impressive and has them in a much better place.  In fact, without what they did they’d all be hospital employees right now.

But one of the people there at the beginning made an interesting observation.  If the practice had then been the size it is now, they would have been one of the largest provider organizations in that region.  But now, they are nowhere close to being large enough to matter as they would like to in the market.  Hospitals have consolidated; payers have as well; new entrants, many with a lot of financial backing, have entered the space.

While they were working, the market kept moving.

It can be discouraging when you have busted your tail to make progress and you just want to pause for a bit and catch your breath.  But the market does not pause.

An old quote from an entrepreneur best summarizes it for me…

‘Running my business seems a lot like one of my kid’s video games.  You fight like crazy to survive, just to find out the next level is even harder.’

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.
February 7, 2020

Dusting off Dick Woodson

A winter storm is currently falling on Denver.  How do we keep warm?  Turn on the fire, grab some hot tea, and then enter the following into the search bar:

‘When do pitchers and catchers report?’

NEXT WEEK.

Baseball fan or not, this is one of the official early signs of spring.

Baseball is also in the healthcare news as the House Ways and Means Committee announced they are releasing the committee’s bill on surprise medical billing in anticipation of the targeted February 12 mark-up date.

What, you ask, does that have to do with baseball, and where, you ask, does this Dick Woodson fella come into play?

We are glad you asked.

The ‘benchmark payment mechanism’ provision favored by payers is not included and this is a win for most physician groups. This idea, though clouded in as much obfuscation as possible, would essentially have defaulted any surprise billing disputes to the contracted in-network rate.  Of course, payers liked this idea.  They would never really have to have a fair negotiation with any physician group as the resolution process would always land on the number they wanted.

Instead, the proposed solution, which appears to have both bi-partisan and bicameral support (shocking after this week), relies on negotiation and then arbitration.

In short, if there is a dispute over a surprise medical bill, patients get protected while the provider and payer enter a period of negotiation.  If they cannot agree, then they enter into binding, third-party, baseball-style arbitration (submitted your ‘best and final’ offer and arbiter picks one…no compromise). Loser also pays the administrative cost.

Here are the proposed guidelines for the arbitrator:

  • No required ceiling on the provider payments, but no floor, either.
  • Billed charges are irrelevant to your evaluation (those of you with a 10x Medicare charge master…whatever), but then again so is the payer’s ‘usual and customary’ rate.
  • You do have to consider the median in-network rate, but it is only an input to your evaluation, not part of a formula.

A good compromise…everyone loses a little. In fact, Kevin Brady (R-Texas), ranking member on the committee, said the goal is to develop an arbitration process that neither side wants to use.

‘You kids sit down and figure it out.’

So, who is Dick Woodson?

In 1968, Marvin Miller brokered baseball’s first collective bargaining agreement that had an arbitration provision for player salaries.  Woodson, a Minnesota Twins pitcher coming off a middling 10-8 season in 1973, was selected by Miller as the first player to enter the process.  He had made $15,000 that year.  The Twins offered him $23,000 for the next season.  Representing himself, he asked for $30,000 and won.

Interesting and instructive footnote: Comparable pitchers, in terms of stats, were already making $25,000 – $30,000 a year more than his $30,000 request.  The arbiter’s final question to him at the end of the hearing – ‘Why did you ask for so little?’

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.
January 30, 2020

Lost in the Alternatives

On a recent road trip, my wife and I stopped to fill up, both the gas tank and my belly.  Walking into the convenience store was like turning a dog loose in butcher shop.  This place was huge and bright and upscale.  If the developer who just opened the 3,000,000 square foot American Dream Meadowland mall in New Jersey built roadside convenience stores, this is what they would build.

I wandered around aimlessly for too long trying to decide on a drink and a snack.  Too many alternatives gave me a serious case of decidiphobia.  My wife told me to get some almonds (regular, smoky, bold, sriracha, habanero or wasabi?) and iced tea (sweet, unsweet, a little sweet, with cranberry, with motor oil?) and get to the car.

I have written before about product proliferation being one of the large mega-trends of the past 30-50 years, a clear marker of the march toward consumerism.  We’ve flipped from Henry Ford’s ‘sure you can pick your color…and hey, you want black!) to the customer being in charge.  Just walk the beverage aisle of your supermarket if you need evidence.

Yes, that is coming to healthcare, big time.  We’ve discussed that frequently as well, so today is not about rehashing that, though we absolutely reserve the right to recycle old ideas when we don’t have a new thought to share.  Blogger laziness.

What has me intrigued today is how this trend is backing upstream into the nature and structure of physician practices.  It makes sense.  If you have a lot of different types of beverages, you must have a lot of different types of production facilities to produce those different products.

If we are going to deliver a lot of different types of healthcare, we’re going to have a lot of different types of physician practices that can produce that variety.

We have practices closely tied to a hospital and other practices that never darken the door of the place.

We have practices that live and die on value-based reimbursement and some that can’t even spell that.

We have practices that exist to feed their downstream ancillary services and those that are just about the exam room.

We have practices geared to ride the Medicaid growth wave and practices whose payer mix is Visa, Mastercard and American Express.

We have practices getting small and focused and practices that are trying to gobble up everything in sight.

Never before has the idea of ‘the physician practice’ as a generic thing had less meaning.  It will mean even less tomorrow.

You are now fighting for shelf space in the big convenience store.  You better be a really good version of who you are trying to be because there are a million other options.

Just ‘being a good doctor’ is as anachronistic as just being a good potato chip.

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.