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January 13, 2023 Finally, It is Time

January 13, 2023

Finally, It is Time

I went back to see what was going on in 2014…sure, why not?

Ukraine and Russia were having a tiff.

Taylor Swift was taking the world by storm.

Inspired by social media, people everywhere were doing stupid things – then with ice buckets.

The World Cup went to South America.

Mid-term elections were annoying everyone.

A sports owner had to sell his team because he was – well, he was a bad human.

I sent you a blog post. The first one.

See? On all the big, really important matters nothing has changed much, has it?

But some things do change, eventually. And today it is time for one.

I am thrilled to share that last week we closed the deal to sell ALN to Health Prime International. After a long process and flirting with several suitors, we finally found the right home for this thing called ‘ALN’ that has meant so much to me for over two decades. I could not be happier.

Oh, I am not going anywhere.

Anyway, what would I do? My playing days are over (Ok, my coach said they never really started).

Along with the rest of my colleagues on the ALN leadership team, we’ll be getting new T-shirts and joining Health Prime. We’re excited about what more we can do for our clients (and future clients…my new role is as Chief Revenue Officer, which means if you are not yet a client, we should talk) as we put Health Prime and ALN together.

For the first time in over 30 years, I have to learn how to be an employee again. You might send my new boss a word of warning…or note of condolence.

Part of that, in all seriousness, starts with this thing – the blog.

The almost 900 posts and nearly 400,000 words (yep, equivalent of four novels, 500 words at a time) I have written since 2014 have been a blast for me. It forced me to process all my various inputs about our industry and try to find something insightful to share with you, and hopefully do so in a way that did not bore you to tears.

But it has been highly personal and without adult supervision – obviously. Owners have the freedom to blur the lines between themselves and their company. The blog was ALN and me all at the same time.

Who knows what might come in the future, but it is time for this iteration to come to an end.

The past few months have been grueling, but also emotional as I have reflected back on the countless number of wonderful people who have been part of the ALN story. And those of you willing to take a couple minutes from your week to read my ramblings are a very special part of that.

After 400,000 words, just two more…

THANK YOU

December 21, 2022 The Non-Oxymoron of Normal Weirdness

December 21, 2022

The Non-Oxymoron of Normal Weirdness

2022 has been a weird year.

Granted, not the ‘elbow bump your neighbor…wait…get back in your house and don’t talk to you neighbor, much less get close enough for any bumping of body parts’ of the past couple of years, so not the ‘weird weirdness’ of the pandemic.

Just the normal weirdness of…war? Let’s hope that is not normal, though we do seem to do that more frequently than the pandemic thing.

Inflation? Is that normal weirdness? Not to anyone under 40. They thought inflation only applied to school grades and job titles, an inalienable right to which they are entitled. But maybe it will be more normal, at least for a bit.

OK, so still a good amount of weird weirdness.

But aren’t we a little happy that this year brought back a lot of normal weirdness?

Employees goofing off and not doing their job….

Deals that seemed sure things but went sideways for no apparent reason…

Computer gremlins that ate the long email or the spreadsheet…

The regular old flu…

Some of those aforementioned body parts that ache a little more than they used to…

As we wind things up for the year, there is much for which we can all be thankful and the return of normal weirdness is a weird thing to be thankful for, but thankful we are.

And I am thankful for you, including those of you who are part of my normal weirdness (If you have to ask, yeah, you are probably on the list), thankful that you continue to have at least a little interest in my weird musings on our weird industry.

(Secretly, I am trying to blow up a Google algorithm by using ‘weird’ too many times.)

We wish you and yours all the best this holiday season and look forward to picking up with you again in early 2023.

December 15, 2022 Big Holiday Questions

December 15, 2022

Big Holiday Questions

As Nat King Cole told us, this is the time of year when kids everywhere become little Stephen Hawkings, theoretical physicists wondering about the aerodynamic thrusting capabilities of the Rangifer tarandus species clacking up on the roof.

Modern children, still spying at Christmas, have updated the question and now are trying to figure out, ‘Did Santa outsource his supply chain to Amazon?’

Kids aren’t the only ones asking big questions. The coming end of another year seems to cause most of us to ponder a bit more than normal. Maybe it is because things slow down a bit in the final weeks and we have the time. Maybe food comas make us contemplative. Maybe ‘thinking deep thoughts’ is just something old people say when they really just want to nap.

Though not as lyrical as wondering about flying caribou, a big question has been rolling around in the back of my mind, gathering momentum throughout 2022…

What happens if this all breaks? Then what?

What? Sudden heavy turn there, dude.

Relax, I am not talking about Christmas breaking (I deep faith in the power of American consumerism), but I am starting to wonder if a couple of the big megatrends in healthcare that seem unstoppable might actually come apart at the seams.

In the little corner of this industry where I spend my time – with physician practices – we’ve seen two parallel forces dramatically alter the landscape. Large health systems on one hand; private (and now public) equity on the other; have gobbled up most of the market. Over 70% of physicians now work for some big corporate entity.

We’ve been told, even with the problems of these two models, they are inevitable. Private practice is a quaint idea, and we’ll keep a few around for nostalgic amusement, but they can’t make it (and many can’t) and this is our new reality.

Maybe.

But what if the warts of these two dominant models are not just inconvenient, but fatal flaws? What if the issues are not benign and these models – both of them – fall apart?

Anyone want to bet long on the financial viability of these gargantuan health systems? Have you looked at the numbers lately? And losing money on a lot of employed physicians doesn’t help. Thus, the drastically lower second contract offered to the docs.

How about the PE roll-up model? Unless there is a viable way to create a (legal, sustainable) new pile of money, the math just doesn’t work. If the only ‘profit’ is to pay physicians below market…well…uh…no, not for long.

Look, there will be plenty of health systems and equity-backed deals that work. But there will be many –of both – that won’t.

A bunch are going to break, sooner than later. Then what?

Big question.

Big implications.

Pass me some eggnog and I’m going to go sit in this comfy chair in the corner. You kids be quiet while I close my eyes and think big thoughts.

December 8, 2022 Santa’s Naughty List

December 8, 2022

Santa’s Naughty List

Ok parents, fess up.

During that period of time when your kids were old enough to understand the concept of a threat but still young enough to believe in Santa, did you ever bring up that he is keeping a naughty list, give a little shrug, and then suggest that someone better stop being a brat or Christmas morning might bring nothing but some nasty fossil fuels.

Sure, we felt a little chagrined playing that card, but with the hype and sugar overdoses pushing against us, using a little guilt-induced behavior modification was not all bad.

Maybe I am experiencing an unusual collection of data points of late, but over the past month of so I sure have had a lot of conversations that involve physicians behaving badly.

I began to take note of this about a month ago when I sat down with an old friend who had been a whistleblower, exposing a whole raft of fraudulent schemes at a practice and their affiliated hospital. Lots of big checks got written to the government. Bad actors.

Talked to another practice yesterday about to fire a doc for fraud.

Another had to let a couple physicians go for just being toxic waste dumps inside the organization, harassing staff and being general poot-heads with everyone.

My banker, of all people, told me a tale last night about a practice that can’t, or won’t, fulfill its debt obligations because one of the owners keeps raiding the kitty to fund his latest toys.

Maybe it is random, maybe I need to hang around better people.

Then I think about the various healthcare news sources I read each week and you can’t get through those without seeing headlines about another physician being charged, or settling a claim, or even going to jail.

It had me a little depressed, but then I got my perspective reset.

These folks are very small percentage of the whole and having done this type of stuff for over 30 years now I have been blessed to know many good physicians who are also great humans.

However, we sometimes want to believe that the high threshold of getting into, and then making your way through, med school somehow should give us a better sampling of people. We do get a positive skew when it comes to smarts and hard work, but that has no correlation to morals, ethics, and general niceness. It turns out that on that measure the physician population has about the same distribution curve as the rest of us knuckleheads.

There are a lot of challenges facing physician practices in the coming years. They will be hard enough on as is. If you have one of these folks in your practice out on the deviant end of the curve on this measure, you need to take them out back and shoot them. Now.

Don’t let the white lab coat trick you.

December 1, 2022 When Your Goose Dies

December 1, 2022

When Your Goose Dies

One of the hardest things about the field of economics is getting the whole ‘macro’ vs. ‘micro’ thing straight in your head. Which is the big one and which the small?

Oh yeah, microscopes look at tiny germs…got it.

You laugh, but for first-year business students taking econ, this is sort of like having to say ‘LMNOP’ to yourself when working through the alphabet.

Here, we frequently talk about the macroeconomics of healthcare – how much the nation spends, how Medicare reimbursement has been flat for 30 years, things like that. Macro likes charts and graphs, I like charts and graphs, I like macro.

Microeconomics is often better conveyed in stories, and I like stories, too.

Here’s a healthcare microeconomic story. I’ll be vague on the details to protect…well, to protect me. I don’t want them mad at me for a little inconvenient truth telling. Though it is a localized story, I think the application is broader than we might imagine.

A big practice was built on the foundation of their getting to charge, and get paid, ridiculously high rates (20x Medicare) for a particular service to a particular payer.

[Pause for fits of moral outrage.]

You know where this is going.

The market, and eventually the state government, stepped in and said, ‘Huh, no.’

Denial is a powerful force, and though this was in black and white and had plenty of lead time, no one wants to admit their layer of golden eggs had a date with the chopping block.

Now comes reality.

Fat, dumb and happy, practice expenses are way too high because, who cared? ‘Discipline’ is such a party-pooper idea. FTX, anyone?

The rest of the top line of the practice was not nurtured because, well, that sounds like hard work, doesn’t it?

Leadership? Who needs it? Just pass out more money.

Fixing and improving practice operations? Boring. Can we shop for a new boat instead?

Unlike FTX, there probably won’t be regulators sending subpoenas, but there will be pain.

While this story is a bit extreme, it is not unique. There are many physician practices who have managed through the downward macro trends by finding and taking advantage of (‘exploiting’ sounds so dirty) a market niche or inefficiency.

I am not passing judgment. In fact, hats off to them. The line between smart and immoral on these types of things is only bright and clear out on the extremes, or to crusaders who’ve never run a business.

But I am passing along a warning.

If your practice is propped up by a particularly profitable niche, even if it is not as extreme as this example, know that both market and government forces want to ‘seek and destroy’ those types of inefficiencies. Do what you can to protect it, but make sure your entire business is not in danger if it were to end up ending.

‘Discipline,’ by definition, means choosing a little pain now in order to make things better for later.

November 22, 2022 The High Cost of Dinner

November 22, 2022

The High Cost of Dinner

According to a survey just released by the American Farm Bureau Federation, your Thanksgiving dinner will cost 20% more this year than last year. However, that is offset by all that you will save by not having to buy masks or hand sanitizer.

Fortunately, we are not announcing a price increase to your blog subscription.

Or maybe we should increase it by 20% as well. Or 50%. Or infinity.

Seriously, we’ve been doing this little deal for several years now and whether you have been here since the beginning or are new to the distribution list, I do appreciate your interest in my thoughts about our ‘interesting’ industry. That you would occasionally give two minutes to read along means a lot. That some of you sometimes ‘clap back’ at me (whatever that means) means the world.

As we all head into our various festivities, know that the team at ALN wishes you and yours the very best Thanksgiving.

And if you have one of those families where people sometimes get a little out of hand, a little obnoxious, just keep one of my old blog posts handy and read that to them aloud. That will make them sleepy and calmer for sure.