ADVISORY e-ALERT     December 21, 2009
Advisory Law Group, a Professional Corporation
As this article goes to press, the future of the 2009 healthcare "reform" push is up in the air.  It doesn't really matter how the current bills fare; sooner or later some type of reform will be enacted into law -- after all, it's really about control, a drug far more powerful than heroin to the political class.  And, for your purposes, the steps that you need to take, right now, in order to thrive in the face of this looming future are the same.
The Two Choices
So what can your medical group do? 
Although the situation may be complex, the answer really is simple -- you have two choices: you can do nothing or you can take steps now designed to dramatically increase the chances that your practice will thrive. 
Note that I haven't mentioned "survive," as survival in this context actually means to capitulate.  No, there is no middle ground.
Assuming that you don't want to wave the white flag, your group must immediately take the following steps:
Admit That Your Group is a Business
Yes, you are physicians and your group is a professional practice, but if it's going to thrive, you have to understand that it's also, and foremost, a business.  Therefore, it must act like one.
Your group must become strategic on multiple levels.  It must develop an overall business strategy.  It must develop substrategies for each particular instance previously thought to be independent, e.g., an exclusive contracting strategy and a data management strategy, that are consistent with the group's overall business strategy and which take into account the interrelationship among the various substrategies.  Finally, just as the strategies are aligned, the tactics employed in furtherance of each of the particular substrategies must also be coordinated.
Beyond the smallest of groups, two or three physicians, leadership cannot be by consensus or paralysis will set in. 
Successful groups must have leaders and leaders must be allowed the time required to lead and the ability to fail without fear of retribution. 
Payor Exam
There's only so much discount that any physician group can give and still remain a viable concern.  This fact is often lost to groups that have significant Medicare and Medicaid populations and then permit managed care payers to extract large discounts. 
Your group must immediately examine its relationship with each currently contracted payor and adopt a strategy to maximize reimbursement.
Group-Member Relationship
Just as ships have closable, watertight compartments to avoid the loss of the entire ship in the event of a leak, the group must have the ability to reduce compensation to, or shift work away from, or even jettison a member in the event that this is required to assure the group's existence.
Re-Examine Compensation Plans
Although there are many ways to structure a compensation plan, no matter how yours is structured, it must be refined to avoid locking the group into a fixed level of compensation, whether in terms of absolute dollars or fixed per-unit/time worked.  If the group does not have the ability to quickly adjust the amount of cash outflow, a cash flow crisis, even if temporary, will result in insolvency. 
Strategic View of Hospital Contracting
You must embark on a long-term strategy in connection with the group's relationship with each facility.  Even though "reform" will likely result in a tightening of finances for both physician groups and hospitals, you must establish unique experience structures that allow the group to extract money from the hospital.  This requires long-term thinking and implementation.
Framing the Issues
Despite compliance issues, facts and budgets, emotion plays a leading role in decision making.  Not only is telling the better story essential, choosing the theme of the story is required.  Nowhere is this more true than in establishing the relationship between your group and a hospital.
Understand that there's a battle on the meta level to frame the issues and that winning it can determine the outcome of the more observable conflict.
Touch Points
Each touch point with hospital administration, with other members of the medical staff, and with patients and their families is actually an element of the process of building support for your group's positions.  Everyday interactions impact upon the group's image.  In order to advance the group's interests, you must control or influence as many of those touch points as possible.
Political Leadership
The group and its individual members must become politically active.  This means electing society group leaders who are willing to push for your financial interests and it means calling for the resignation of leaders are prone to co-opt your long term security for their short-term political gain. 
Give Me A Lever Long Enough . . .
Successful groups understand that they must create leverage.  By having options to the deal, in respect of facility contracts, in respect of contracts with employed or subcontracted physicians, and in respect with their relationships with other third parties, they create tremendous negotiating leverage.
In particular, in connection with their exclusive contracting relationships, they avoid the most significant mistake a group can make:  Permitting the hospital to believe that the group's mere existence turns on the hospital's decision to grant or renew the exclusive contract.
It's About Time
You must start this process now, because achieving a transformational result requires a long term view, optimally several years.  After all, the goals are long term:  group and member physician success.  An understanding, in fact, an expectation, that it will take time and effort to achieve these results is necessary and required. 
But It's Not About a Timeline
Progress in positioning your group to achieve maximum power in its relationships, and, therefore, to thrive, is not a linear process.  The process involves an ongoing series of interrelated strategies and tactics.  Each of its elements, once started, continue. 
Hardly Any Guaranties
As stated at the outset of this article, no one can guarantee the outcome of the current "reform" debate.
And, no one can guarantee that if you take each of the foregoing steps, and the many more that are required in order to thrive, that your group actually will.
Plans go awry and there will be challenges to your strategy along the way.  In fact, there will be countless small and major challenges thrust at you in countless ways.  But the beauty of a strategic outlook consisting of interlocking steps is its flexibility while still guiding you to your envisioned future. 
Come to think of it, there is one thing that I can guarantee: if you simply continue to conduct business as usual, the chances are that you will not only not thrive, you will probably fail to survive. 
Let us know if we can help you thrive. 




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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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