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March 13, 2019

Purse in the Road

Growing up in a small town – the ‘no stoplight, one doctor, Sonic Drive-In was the only national brand around’ kind of small – meant you had to make your own fun.  I am not sure of the statute of limitations on these things, so I have no comment on any questions related to Mrs. McConnell’s cat.

One of the best games involved some fishing line and a women’s purse.  You know how this goes…tie the line to the purse, leave the handbag in the middle of the road, and when someone tries to pick it up, give the purse a good yank.

Earl, the school janitor famous for mangling the English language, got out of his car and bent over in the sharp glare of his head lights.  As he reached to pick up the purse, it scooted about three feet. Earl about wet his pants shouted something you couldn’t say in church.  He threatened to beat us, whoever the ‘us’ was hiding in the bushes.  Then he burst out laughing.

We’re all tempted by the purse in the road, which gets us to a couple of general warnings about potential ancillary revenue streams as you move from being just a practice to the broader idea of a platform.

First, many of these are just sleezy.  Beware of hucksters pitching you easy money because the compliance cops eventually catch up.  I continue to be shocked by the number of physicians looking to make a quick buck who end up in the news because they had to write a really large check to payback Uncle Sam.

Second, some are too cheesy for a legit medical practice.  If the rack of creams and incense candles in the waiting room reminds someone from a late night HGTV infomercial, that might not be the image you want as you discuss a life-threatening disease with your patients.

Finally, remember, we’re trying to lower the cost of care.  If your new line of business has no value other than to increase your personal income, it will be short-lived, I promise. 

It should go without saying that you want to build service lines and revenue streams that help the patient, improve care and lower overall costs (there, the healthcare pledge of allegiance) while improving the top line for your practice. 

The good news is that opportunities abound because in the overall value chain of healthcare, physicians sit adjacent to the very expensive hospital segment.  And the technology to allow care to be moved to lower acuity settings is working in your favor.  There is plenty of opportunity to capture revenue that currently belongs to someone else and move it into your boundaries in a way that benefits everyone (except who you took it from, obviously). Don’t feel bad…they are actively trying to steal yours. It is called ‘competition’ and it makes the system better.

Build your revenue streams, but don’t get caught looking for the ‘too-good-to-be-true’ purse just lying in the middle of the road. Do the work.

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 6, 2019

Evolving Etymology

I’ve always found the history of words to be fascinating, particularly the evolution of meaning over time.  Since our son is a junior in college, we get to witness the emergence of new words into the language in real time.  I have come to learn that ‘dope’ is a good thing, as in ‘that is dope.’  He does go to school in Boulder, so it is comforting that dope is just an adjective.

No one does more to advance new words entering the lexicon than business consultants.  Often, these are just exercises in self-aggrandizement, 25-cent words that add no value.  I’m sorry, but if you have mop up vomit, calling you a ‘custodial engineer’ doesn’t make your job less smelly.

However, sometimes new words are required because the thing that was is now different enough, even though it looks familiar, for there to be a real distinction.  When we talk about the need for independent physician practices to become a ‘platform’ is that just some faddish marketing spin, or is it really something different? 

Fair enough. We’ll explore it in the coming weeks and you be the judge.

A central tenet of the platform concept is the ability to leverage the flow of patients capture new and multiple sources of revenue.  Think about the big health system…they want to make money off patients in every conceivable way possible.  

For a long time now, we’ve talked about the importance of ancillary revenue streams to a physician practice.  Those who can and do develop revenue sources that compliment the traditional professional service fees of the practice tend to perform better financially.  Increasingly, the presence or absence of these other services also predict whether there is a path to continuing independence.

It is no surprise that primary care physicians are employed by hospitals and health systems more often than are specialists.  Besides generally getting paid less for their services, ancillary services that provide material revenue are not as easy to come by for internists, pediatricians and family medicine physicians.  Though, as we’ll discuss in a coming post, the move to value-based care has opened a new source of revenue for which primary care providers are well suited.

So yes, physician practices that wish to remain independent must become a care delivery platform. Generating various sources of revenue from the same universe of patients is one feature of the platform idea.  As reimbursement continues to compress and labor costs do what labor costs do year over year, the margin left over from pro fees alone is ‘not dope.’  You now must think about this part – what you used to consider the essence of your practice – as merely the headwaters of your river.  Monetizing more and more of what flows from your core service is how you will remain independent.

Revenue streams are just one aspect of the platform idea.  We’ll discuss others as we work through this this series on this concept.  Next up…a couple of warnings.

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 1, 2019

Pronunciation Options

Niche.

Do you scratch it or give it an upper-class nod to the French origin of the word?? Do you say ‘nitch’ or ‘neesh?’ Do you judge me if I use the more plebeian pronunciation? 

I only ask because it seems the path forward for independent physicians is increasingly bifurcating into one of two fundamental strategies.  You can build your practice into a ‘platform,’ something we’ll explore more in coming posts, or you can pursue one of several niche alternatives, however you wish to pronounce it.

Now, the niche road may, at first glance, just seem like a fancier way to describe a solo or small practice, especially if you say ‘neesh,’ but I want to press into that a little more to get at some emerging differences.

Small practices, as we’ve known them in the past, are getting harder and harder to sustain.  If you are a garden-variety solo physician, making a living off your pro fee claims submitted to third party government and commercial payers, it has been getting tougher for years now, so this is not news.

There are obstacles at every turn.  Managed care contracts are ‘take it or leave it’ deals as reimbursement rates continue to slide.  MIPS and MACRA either increase costs or further nibble at payment rates.  Technology is complex and expensive. New compliance issue sprout like dandelions in the spring.  And employees…well, humans are messy, aren’t they?

On the positive side, there are more options than ever before for physicians who want to pursue the niche strategy.  Concierge medicine and a seemingly endless stream of cash-based physician services are just one type of this alternative.  Others carve a distinctive clinical focus that sets them apart, again often with a cash-pay service line that supplements the traditional fee-for-service model.

Also, a plethora of contractor gigs are now available, from time covering a telemedicine shift to time in the urgent care.  Some physicians now make their nut by getting on a plane to somewhere in rural America twice a month for a long weekend, not for a camping trip, but instead to cover the ER on a locum’s assignment.

The point is for many physicians, the path to independence is increasingly personal.  They find a niche that works for their skills and life objectives.  They customize and configure their professional career more as a solitary professional than a medical practice.

This model works and comes with many advantages.  But if you go this route, save aggressively and invest smartly for there is likely nothing to sell at the end of the run.  When you’re done, you’re done. 

Alternatively, if you want to build and be part of a medical group the stakes also keep getting higher.  Even that may not be enough.  Now, instead of ‘practice’ you want to think ‘platform.’  There are many versions of this model as well and we’ll start exploring those. 

At least how to pronounce ‘platform’ is clear.

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, 2019

Audio Jambalaya

After being in New Orleans for three days of industry meetings, yes, I am mixing my metaphors, just like some good jambalaya… a little of this, a little of that. 

As several of us strolled the French Quarter one evening, our ‘business casual’ attire making us stand out as the weirdos, one woman had her phone out, camera rolling.  It was her maiden voyage to Bourbon street.  The sometimes-jarring mix of sights, smells and tastes is the embrace of the Crescent City. 

After some great Cajun food, we struck out hunting for good live music. The Quarter didn’t disappoint.  And this was a Monday night.  Dueling pianos with sing-alongs, old white guys playing Chicago and Journey covers, kids in the street drumming rhythms on a paint bucket.  Country, rap, old rock and roll.  You can find it all. 

Then finally we hit The Big Easy pay dirt – a jazz quartet with a drummer who looked homeless, a lead singer wearing a borrowed suit that was too big, and an old, beat up saxophone.  The boys could play.

Thinking about the sounds of this unique place is fitting because I’ve had sound on my mind a lot of late, specifically the rapidly emerging innovative edge around AI-enabled voice assistants.  Siri, Alexa, Cortana, Nina, Bixby, Watson and others are coming to healthcare and it may be some of the best new technology news that physicians have had since the EMR era began.

There is a long list of criticisms we could level against the current EMR solutions, but without question tops on that list would be the negative impact that clinical and billing documentation has had on physician time, satisfaction and patient care. Pick one of a million stats that make the case.

Fortunately, it looks like help is on the way.  Now that the base infrastructure and capabilities for voice-enabled assistants is in place, there is race in the market – big tech players, established voice-recognition solution providers, a hundred start-ups – to tailor this capability to the specific needs of physicians. Some of the stuff that is coming looks really interesting…as in, ‘get you your life back’ interesting.  Start kicking these tires.

Let me close with a little side rant. 

We wrote several years ago that while the billions of government EMR subsidies did get healthcare digitized quickly, it came at the cost of jacking up the natural order of how new technology solutions evolve and improve in a competitive market, especially early. 

We predicted then that the historical pattern of it taking 20-30 years to get right any enterprise-level software, like the EMR-PM combo, would still apply and we’ll stand by that thought.  These voice-enabled improvements are one example of what ‘getting it right in the first place’ would have entailed.  But well-intended government intervention means that we’ve all had to live in the middle of this mess instead of letting the early market solve it the right way.  

Let the market work.  Fortunately, it is.

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 13, 2019

There Goes the Neighborhood

I was in New York last week and found the debate between local Democrat party leaders about Amazon’s new headquarters fascinating.  Some welcome the move into the Queens neighborhood across from Manhattan and the 25,000 high paying jobs it will bring, while others have pronounced it as all sorts of evil for the displacement gentrification will bring to current residents.

When somebody big moves into the neighborhood, things change.  Whether it is good or bad all depends on where your bread is buttered.  Personally, mine is buttered all over.  Don’t judge me.

Speaking of big and loud folks moving in, CVS recently opened three new Health HUB concept stores in the Houston area.  These provide a glimpse into how the 9,600-store retail chain is thinking about its increasing focus on healthcare, starting with the bright red ‘Welcome to the Health HUB’ branding on the front door.

Slow moving retail items have been shuttered to devote more square footage to health and wellness products.  More space means the Minute Clinics can expand services to include phlebotomy, diabetic screening and even sleep apnea assessments.   Pharmacists are expanding their role in patient education; registered dieticians provide one-on-one support and teach onsite classes.

Speaking of which, the space is configured so that areas can be blocked off for yoga classes.  Don’t have a mat?  Don’t worry, they are right over there by the durable medical equipment section.

If this sounds like a lot and maybe a tad confusing, never fear.  The ‘care concierge’ is there to help you get everything you need from your visit to the doctor/pharmacy/health club/lab/grocery store/tire and lube center.  Yep, they are even taking on the Walmart Greeter.

Throw in a separate announcement about CVS’s video visit service ($59 via your smart phone, all major credit cards accepted), which will soon be covered by CVS’s new insurance company once the Aetna acquisition closes, and you start to see what is being cooked up in the board room there in Woonsocket, Rhode Island.

This all begs the question, ‘Who is CVS NOT competing with?’

We could detail out of all the segments of healthcare they are looking to consume, but I think the more interesting angle on all of this is how they are positioning themselves against the aforementioned wheat thrasher from Seattle, another outsider with its sights set on the $3.5 trillion healthcare market. 

Do you really think taking yoga class market share from the local Y matters a whit to the $69 billion-dollar company that CVS will be when the Aetna deal closes?  Please. 

But what does matter are all of those smiling human beings located in the store, right there on your way to work.  This is the opposite of the ubiquitous brown boxes dropped off by the UPS guy.

Oh, and it is pretty different from that big imposing thing called a ‘hospital’ as well.

Yes kids, the neighborhood is changing.

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 6, 2019

The Warm and Sleepy Anura Myth

Dr. Victor Hutchison is a herpetologist at the University of Oklahoma, a job title with an unfortunate pronunciation that probably causes him problems at parties.  No, he doesn’t study what you think he studies.  Amphibians, not sexually transmitted diseases, are his field of work. On second thought, his work might make him very interesting at a party.

In one study, Hutchison examined the ‘critical thermal maxima’ of several species in the Anura order of the Chordata phylum. Yes, he tested to see if, in fact, if you put a frog in cool water and gradually heated it up if the frog would or would not jump out.

Oh yes, this guy makes the party cook (hey, we were overdue for a really bad pun).

Fortunately, for the frogs at least, no one is testing the first half of the metaphor and dropping frogs in boiling water.  Scientists all agree that would not go well unless the animal’s legs are being used in a Cajun dish.

However, the core of the analogy doesn’t hold up.  According to Dr. Hutchison’s research, ‘As the temperature of the water is gradually increased, the frog will eventually become more and more active in attempts to escape the heated water.’

The legend is a lie, the frog is not stupid and eventually hops out of the pot.  The next time some dolt uses this overwrought analogy in your meeting, smack them with intellectual superiority.

We bring this up because the water is getting really warm and the frog is not happy about it.

A few years ago, some researchers published a measure of healthcare affordability in an article in JAMA.  Their Healthcare Affordability Index was calculated by simply dividing the average cost of employer-provided family health insurance by median household income. 

Sure, you can take issue with this measure (e.g. what about out of pocket spending?), but it is valuable because of its straightforward nature than can be calculated by a 4th grader, which also means there is a 50/50 chance it can also be understood by members of Congress.

More than half of Americans get their coverage through their employer. Additionally, these rates are negotiated, not dictated by the government, so this is a pretty fair proxy for what is really happening.

The study notes that in 1999, the index was 14.2%.  Year over year increases took it to around 25% in 2008.  The public concern on affordability was, in part, what put President Obama in the White House.

The index jumped dramatically in 2011 and hit a peak of 31.4% in 2014.  The good news is it came down almost a point over three years, ending 2017 at 30.6%.

The bad news…2018 was 31.5%, a new record.  A family policy cost $19,616.  Median income was just over $61,000. 

Rising denominator + flat numerator = index moving higher.  That is just math.

The frog – voters, employers, the 3,145 people running for the Democrat nomination – is getting restless.

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.