ADVISORY e-ALERT     March 24, 2009
Advisory Law Group, a Professional Corporation
Rickstown County Anesthesia Associates negotiated a highly successful renewal of their exclusive contract.  With a three-year term, the group, which had provided services exclusively at Rickstown County Community Hospital for over fifteen years, was to receive $2.5 million in stipend support annually which would result in a projected per physician income of approximately $490,000.  The contract provided the group with virtual control over the O.R. coverage schedule by way of veto power in respect of any expansion in coverage. The agreement was signed in August 2008.

Rickstown County Community Hospital closed last week. 

Rickstown County Anesthesia Associates' twelve anesthesiologists are scrambling for work.  The anesthesia groups at the two smaller hospitals in the area are not recruiting.  Sam Shiller, M.D., president of the group, said that he and his colleagues are caught in the bind of having homes that are not easily marketable and little to no prospect of work anywhere within a fifty mile commute.

The Rickstown story is a simulation, not journalism; however, each year dozens of acute care hospitals close. In fact, according to the HHS Office of the Inspector General, during the decade of the 90's, 440 general acute care hospitals closed.  The OIG's report for the year 2000, its most recent, states that 64 acute care facilities closed in that year alone.

So, if you are a hospital-based physician, what's your group's plan to avoid the impact of your hospital closing?  

In the past, I have written extensively about the need for hospital-based groups to provide services at multiple facilities in order to gain leverage in respect of contract negotiations. But just as important, groups must expand beyond a single hospital base in order to preserve their existence.  Your group simply is not a group if its entire existence depends on the renewal of its exclusive contract or on the continued operation of one hospital.

If you argue that the chance of your hospital closing is small, you've missed the point entirely. The correct analysis is not simply to evaluate the odds of the hospital closing, but to consider both the probability of that event and the extent of the impact that would occur if the hospital closed. One simply has to look at the recent collapse of the financial industry to understand that although a risk might be small, if the attendant consequences are high, there may well be a disaster looming in your practice's future.

Groups that today are simply sitting by the sidelines, thinking that they can wait out the recession, are increasing their exposure to drastic failure. 
Groups that today are actively positioning for their expansion (see the Strategic Group Process™ for more information) are exploring alternative income sources both in terms of expansion in depth (at their present facilities) and in expansion of scope (at new facilities).
Times may be tough but there are tremendous opportunities to thrive.  Sitting by the sidelines compounds the downside potential:  Not only will you continue to run the risk that your facility might close or that you might lose the exclusive contract, you also run the risk that another group with a focus on its future will displace you in the course of expanding its scope to your facility.
Contact Mark F. Weiss for more information.

For office-based physicians, exploring ways to increase practice income often includes the question of expanding the scope of business operations to include what have historically been services rendered by allied health professionals.  This would include, for example, physical therapy, audiology and hearing aid dispensing, or even less accepted (in terms of Western medicine) modalities of treatment such as chiropractic and acupuncture. 

Expanding into allied health or complementary and alternative medicine ("CAM") therapies requires creativity and planning, both in terms of regulatory compliance and business goals.  In many instances, expansion of practice scope done improperly results in licensing violations as well as, of course, in tremendously complicated kickback and self-referral situations.

Often the missing element in many physicians' planning is the failure to consider the long range impact of an expansion in alternative and CAM therapies.  The key here is to think in other than a reactive manner - the question is not one of simply increasing short term profits, but rather how to achieve long term objectives.  For example the structure to be established, and the compliance analysis, might vary completely if the long term goal includes expansion of the allied health/CAM therapies beyond the walls of your current practice.

Thinking, not just looking, before you leap into alternative and CAM therapies may not be cheap, but it's downright inexpensive when compared with the cost of the consequences of leaping from the frying pan into the fire.




Mark's writing has recently been featured in:, March 12, 2009:  The Profit Center: Part 1 -- 7 key steps to contract success. [To view the article on the site, click here.]
This article will be available soon on our website.  Until then, if you would like a copy sent via email, please contact us at:


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The materials presented in this Advisory e-Alert are educational only and are neither legal advice nor a substitute for it. Advisory e-Alert presents a general discussion which may or may not apply to your particular legal or factual circumstances. The distribution of Advisory e-Alert is not intended to create, nor does it create, an attorney-client relationship. Please do not send us confidential information without receiving explicit authorization from Advisory Law Group to do so. Do not take or avoid taking any action as a result of the materials presented in this e-Alert without first obtaining legal counsel.   
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In This Issue
What Will Happen To Your Group When The Hospital Closes?
Office-Based Practice: Expansion Into Allied Healthcare
Videocast: Relationships Between Groups And Their Members
Recently Published Articles
The e-Alert Archive
Free Teleseminar: Positioning Your Group
Mentor Program
The Wisdom. Applied. Blog
APRIL 9, 2009

Obtaining a highly favorable exclusive contract or other long term agreement with a hospital requires far more than engaging in the face-to-face phase of negotiation:  You must carefully position your group and the story of the benefit it provides to the facility.

Film stars groom their image as much as, or even more, than their skills -- after all, far more talented actors are waiting tables. 
Hear Mark explain why your group's image is vital to its relationship with facilities and learn about telling the better story.
April 9, 2009 at 4:00 p.m. PDT.
Enroll in this free teleseminar by April 2, 2009 by sending an email to
Mark's mentor program, the Advisor Program, is designed to provide an extremely high level of personal guidance for solo physicians, including those just completing their residencies, as well as for physician group leaders. Its focus is on personal career guidance and on leadership skills, not projects.
Admission to the program is upon application only - space is highly limited.  If there is no space availble, you will be placed on the waiting list.
For more information on the program, click on the following link:  The Advisor Program
The Wisdom. Applied. Blog
Can't get enough free advice? 
Read Mark's new blog, containing frequently updated mini-articles on issues relating to the business of healthcare.
The Wisdom. Applied. Blog appears on ALG's website. 
Read it ... often!
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