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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition MARIA K TODD October 2016


Table Of Contents 01

What this ebook is about

01

About the author

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Grim Reality #1 - Go Live Dates

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Grim Reality #2 - The Membership Fees

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Grim Reality # 3 - The community's reaction

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Grim Reality # 4 - The buyer persona of your ideal customer

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Grim Reality # 5 - The number of memberships you are likely to sell in year one

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Grim Reality # 6 - The number of memberships you will lose each year to attrition

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Grim Reality #7 - For many practices it can take as long as five years to grow to a goal of 300 patient members

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Grim Reality #8 The marketing, branding, advertising, and public relations costs more than the price of website design

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Grim Reality #9 - All social media sites are not equal

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Grim Reality #10 - When you cancel your managed care plan participation, you shut the faucet off on marketing that the plan did to steer patients to you


Table Of Contents

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Grim Reality # 11 - You must create a "product" to sell in exchange for the membership fee

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Grim Reality # 12 - Many managed care plans will terminate your contract for breach of contract and allege that your membership fee is a form of balance billing

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Grim Reality # 13 - You may not be able to quit your managed care contracts whenever you choose to do so

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Grim Reality # 14 - If you quit the Medicare program, you must wait two years if you decide it was a mistake and want to re-enroll as a provider.

The Handbook of Concierge Medical Practice Design is formatted as a workbook where you can page through exercise after exercise to inspire you as you plan and visualize your new practice and business model. No two concierge medical practices are the same unless you opt for the "franchise" models (e.g., MDVIP, Mentor, SignatureMD, etc.) and SAME IS LAME when you compete for market share. Differentiate yourself from your competition and establish your unique personal and professional brand. Bring back the joy you initially felt when you completed your training and were ready to make a difference.

Available from any retail or online bookseller.


The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

What this book is about This easy -to-read e-book contains 14 Grim Realities about Concierge Medical Practice and Direct Pay Primary Care Transition that few healthcare management consultants will tell you up front. In fact, most of the consultants I've encoutered will simply nod their heads when you tell them what you want. A head nod is NOT a contracted deliverable, but they'll take your money just the same. I won't do that unless we have a meeting of the minds and come to an informed consent understanding about the grim realities of concierge or cash based medical practice transition. This information contains much of what I want you to understand before you hire me -- or any other consultant you choose to help you through the transition.

About the Author Maria Todd is the author of the Handbook of Concierge Medical Practice Design. She's assisted hundreds of physicians and dentists... and one veterinarian to transition to a concierge or direct pay business model all across the nation and a few in other countries including the UK, Spain, and in the Middle East. She's honed her skills as a consultant over the past 40 years and has developed a reputation for fairness, practicality and honesty as a trusted authority about the business of healthcare.

Contact Maria Now

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #1 - Go Live Dates Usually, come October 1st, my phone begins to ring with last-minute requests to transition a physician or dental medical practice so that they can be ready for a January 1 start under the new model. That's really the first grim reality. If you wait until October 1, with Thanksgiving and the winter holiday date blackouts and work breaks, and you want to do things correctly, that's probably not possible except in very rare instances.

Grim Reality #2 - The Membership Fees Furthermore, you hit people at the worst possible time for a $1300-$1800 expense. They plan to travel, which costs money for the holidays. They may instead plan to host, which costs money. They plan to feast, which costs money. They plan to splurge on presents, which costs money. They are facing a new insurance year and new annual deductibles of up to $6000 (or more). They may be facing another semester of college for their kids, which must be paid for, which costs money. You get the picture. How could you have the insensitivity to ask for your concierge membership fees at the worst possible time - and call yourself compassionate and caring?

Some consultants may try to soften this with the fact that people could sign up as a gift giving idea for their family spouse or partner or as a gift couples decide to buy instead of a new TV. Well yes, that's not FAKE NEWS. But the grim reality is that most people don't. They buy the TV.

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #3 - The community reaction You may have a current established patient panel of 3500-4500 patients per physician and mid-level extender. Not all will transition to the new business model. It is more likely that you will jettison 3200-4200 patients who will need to find new doctors and dentists. Oh joy. At a time when people are pivoting managed care plans, facing new participating provider choices, closed practices what aren't accepting new patients, and 3-month waiting times, you "dump" 3200-4200 patients out in the cold to fend for themselves. How will the community as a whole react? How will your professional colleagues react? How will your referring colleagues react? Usually there's a significant amount of professional jealousy for those who envy your courage to pull the trigger. There's also going to be a significant amount of resentment by the rest of the colleagues who feel pressured to absorb these displaced souls. You are the reason they are eating grab and go meals and microwaved frozen meals for dinner. You are the reason they can't go to the movies with their partner or friends. You are the reason they can't make their daughter's dance recital. They are still in the office dictating or entering chart notes at 8pm or doing it from a laptop at home. They have to get the bills out to make timely filing just so that they get an EOB that says 100% of the allowable has been applied to the patient's annual deductible. Revenue until collected as patient responsibility: $0. Let's see how many social invites you get from those community-based colleagues after they learn what you did. Heck...they won't have time to invite you or accept your invitation now that you have time to entertain or join in the fun. Timing is everything, but the right timing for you may not be the best for everyone else. You have a tough decision and some soul searching to do before we begin.

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality # 4 - The buyer persona of your ideal customer So out of the 3500-4500 patients you currently have on your managed care patient panels, how many are described as follows? How many remain where you can circle every bullet point below? They expect the best in everything, including their options for sustaining good health and well being. They are discriminating in their choices and precise in their demands. They don't care if you accept their insurance or not. They seek a different style and pace of healthcare delivery. They expect a premium healthcare advisory service and they are willing to pay for private care navigation, house calls, direct admits, expert medical management, patient advocacy, special services that may not be covered by their health insurance and care coordination that extends beyond the confines of your four walls. They expect telehealth, SMS, email and direct-to-your cell phone contact to immediately respond to their needs and manage the care for themselves and their families. They want a doctor with an established word-of-mouth and online reputation as the best available in the community. They have an interest in achieving and maintaining long-term well being, weight management and anti-aging for their active lifestyle. They have special needs and health conditions that align with your passions in medicine or dentistry. They are the patients you want to keep. They are the ones who bring joy back to the practice of medicine or dentistry for you. They pay their bills on time, as invoiced, including the membership fee. They are ready able and willing to buy at the time you announce your transition to the new business model. They don't expect a discount. They don't need a payment plan. They are ready to write a check that costs $0.25 to deposit; not 2.9% in credit card and debit card transaction fees. They are concerned about the cost of their prescription medications, but not to the point of not following instructions to take their medication as prescribed and fill their prescriptions same day. For the last 5 years, they've responded to health reminders for immunizations, colonoscopies, pap smears, and annual checkups without fail. You send the reminder; they comply and schedule their appointments. You tell them to lose weight and get more exercise, they do it. You tell them to cut sugar and salt, they comply. You tell them to back off the bad habits, they follow doctor's orders. THAT'S WHAT YOUR IDEAL CUSTOMER LOOKS LIKE.

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #5 - The number of memberships you are likely to sell in year one Can you list your existing ideal customers above by name? How many fit the previous description for which you can circle every bullet point? Let's call that subset from the 3500-4500, your addressable market. Now from the addressable market, how many can your staff call on the phone using a set script to invite them for an informative seminar and reception. How many will agree to attend so you can announce your transition, cost details, membership amenities included in the program, and have people in the back of the room to help them sign up and pay their membership fees? How many memberships do you believe you can sell in the first year? Of the remaining memberships available from the original limit you envisaged, what's the remaining number of open slots for other patients who may be less than ideal? Who are they? How will you reach out to them? How likely is it that they will buy?

Grim Reality #6 - The number of memberships you will lose each year to attrition Most practices churn and burn 30% of their memberships each year on average. There are several reasons for this, all are somewhat avoidable. But life happens, people move, people die, circumstances change, so even if you do everything right, you cannot count on 100% of renewals each year. The "near perfect practice" will still experience 5-10% membership attrition that must be sold each year. So if you targeted 300 and in year one, you sold 122, you, if you lost 30% come renewal time, you must back fill the loss of 37 patient members before you get to count 1 new patient in growth. But wait. What if you are successful? Merritt Hawkins and other physician employment and recruiting firms estimate that 10% of physicians are considering a transition to concierge or DPC in the next few years.

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

What if new rivals appear in your community? Will they claim some of these departing patients with a better or different offer? Better customer service? Better or different amenities and membership bonuses and benefits? Better marketing and public relations? Better advertising? Better branding? Many consultants give you "yeah but" at this point telling you that some of their departing patients will come to you. Again not FAKE NEWS. It could happen. It is possible. How much do you need in cash reserves each year to tide you over? If the attrition risk is 30% and your membership fees are $1800, do the math. It isn't rocket science. (X-30%)/12=?

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #7 - For many practices it can take as long as five years to grow to a goal of 300 patient members. Many concierge medical practice transition consultants won't tell you this because they a) fear they'll scare you out of the decision to move forward or hire them; b) they have no idea how long it takes because they just started consulting on this and have no experience with the pace of membership growth; c) they make assumptions of facts not in evidence. One of the reasons I belabor the demographics analysis of a practice prior to writing my initial consult report and recommendations is that I want to know with a reasonable degree of expert certainty that the community can sustain the membership base you want to target. All year round! If you are located in a snowbird fluctuation community, that must be taken into consideration for surges and contractions. This is where I believe that "informed consent" is crucial to your success. My team of support staffers analyze the practice's proprietary data, the local market data, the community health needs data and I personally interpret the findings and come up with a hypothesis; not a guarantee. How many memberships you sell is not a consulting deliverable it is a sales result. No one can guarantee how many memberships you will sell in your first or subsequent years. That's on you and your sales tactics, price, brand, competitive advantage, customer service, and value proposition. If you don't make it, that's not the failure of the consultant and more than advising a patient to lose weight and they fail to lose weight. Your advice wasn't flawed. The failure was in their inability to execute!

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #8 - The marketing, branding, advertising, and public relations costs more than the price of website design To build a very basic 5-7 page mini website, you need: a theme template that will cost money certain fonts that have been chosen to coordinate your brand image may cost money plugins that cost money to make the site function as designed custom photography and video that should be of you and your office and your staff; not stock photos that the guy or gal up the road is also using photo and video editing and pre- and post-production services, SEO treatments custom content someone must write and/ or edit if you write it yourself and apply SEO treatments a custom-designed logo rendered in different sizes and formats for different uses and for use in color and black and white collateral URL registration fees and hosting and CDN services

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Waypoints on GPS programs (Wayz, Google Maps, Bing Maps, etc.) to show where your practice is listed (Often bundled into listing accuracy fees to receive notifications that a new listing popped up, but that doesn't pay for someone to correct any erroneous entries.) How did you think your business gets listed on these? Magic? Google Analytics must be set up so that information and insight on "how" people use your website is accessible. Some of the most impactful tests and results I recommend to my clients comes directly from ideas that I would have never uncovered without Google Analytics reviews and reports. The Google Analytics system is available free. The research, output review, interpretation of data and strategies and tactics derived from its use and deployed for continual improvement to help you stay on target are not free and take time. Anyone can get data out for you and package it into a pretty report, but what will you do with it and how will you interpret it to know if you should change something? You can learn what to do, but in the meantime, who will you trust to guide you until you gain competency with this? Someone assigned to check the website back end each day 7 days a week, for security patches and updates, intrusion hack attempts, spam posts and attempts, and back up the system to the cloud in case something breaks and a system restore is required. Listings claimed on all physician review platforms (HealthGrades, Zocdoc, Yelp, Google, Angie's List, and others.) Brand consistency, image and integrity and reputation monitoring and management for any comments or feedback posted - good or bad. (Expect quotes of about $300 a month for basic reputation monitoring, nationwide. Expect that this only notifies you of a new feedback or comment, not the response you need to provide within 24-48 hours.) Hundreds of listings must be monitored and corrected around the clock. These are added daily without your consent or control by web marketing firms. Information is publicly sourced from public records and other sources (like your billing service address instead of your physical address, etc.) through the use of robotic web crawlers. They can create a cascade effect of erroneous information populated across the web in seconds. Each must then be corrected individually, by hand, by a human being. (Listing accuracy costs about $150 a year as a monitoring service which produces alerts of suspected errors that must be verified and dismissed, but that doesn't pay for the time for someone to correct any erroneous entries.) The grim reality is that all marketing costs money. Website creation and all their accouterments cost money and time for maintenance. These are mostly ongoing costs, not "one and done" startup fees. You shouldn't do any marketing or start creating the website for your new brand of concierge or DPC business without first determining IF the practice should be transitioned in the first place and if you have an addressable base to meet and sustain your revenue and practice goals. If you skip the website like so many doctors and just try to wing it with a Facebook presence, save your time and effort. That's like sweeping dust into a dustpan with a fan blowing on the dust pan. 9


The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #9 - All social media sites are not equal Okay so that's the website. Next you have all the social media platforms to establish a presence. These include Facebook business page, Twitter, Pinterest, Instagram, YouTube, SoundCloud (for podcasts) and more. Social marketing consultants want to sell you their services. They may tell you you'll need one of each. You could end up with 5, 10 or even 20 of these pages to create, manage, post content and maintain as the rules, terms, and algorithms change. Ask "WHY" they recommend what they recommend? The grim reality is you shouldn't just go build or commission someone to build one of each. You should only build the ones that your customers are likely to find you and engage with. Anything beyond that is a waste of time and money. Not just the time to set it up, but the time to maintain it and post meaningful content with which established and prospective members will interact. Furthermore, healthcare marketing is fraught with complexity: ethical considerations, consumer protection considerations, legal "white coat" advertising compliance, and more. Many novice marketing and advertising consultants will tell you about "remarketing". Google will take down remarketing strategies and tactics by physicians and medical sites as a violation of terms of service. They will issue you a naughty marketer citation and you'll be monitored for years to come. One each of these platforms, there's a certain way to post that works and a way to post that's a waste of your time and effort. You'll need images for each post, your logo, your branded tag line, your fonts and content. Who will create this? The logo, graphics, fonts, and a way to "push" visitors back to your website means graphic tools etc. first, then website, then social media. I am certified by Google in digital marketing but I had to take all the generic information from the certification and then overlay the knowledge unique to "healthcare marketing" and compliance considerations for branding, advertising and public relations on top of that to have a complete skill set to do my clients any good.

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality #10 - When you cancel your managed care plan participation, you shut the faucet off on marketing that the plan did to steer patients to you The discounts you negotiate with PPOs, HMOs and other "health plans" in general together with passing credentialing and privileging criteria is what you eliminate if you cancel your contracts with third-party payers and insurers. But the grim reality is that you also eliminate the "steerage" of new business to your practice as a participating provider. So now, marketing, sales, growth, is all on you. That's why you need to figure out or get advice on branding or re-branding, marketing advertising, public relations and social media and SEO treatments. If your addressable market has changed (*Grim Reality #5) your message changes, your ideal client is not "anyone with Cigna, United, Aetna, etc.". How you connect with them effectively comes from knowing your customer's consumer behavior, disposable income, health trends, and orientation to health and wellness. This is also why I overlay demographics data and conditions and procedures of high frequency in your existing pre-transition practice onto the local market information. I try to triangulate several pieces of data to come up with a recommended unique marketing and advertising and public relations strategy. It is not copy paste for all concierge and DPC medical practice transition clients with whom I consult. Not by a long shot! The software I use to perform the market data costs me $250 per client report generation. The social media and online medical dental platform presence analysis (HealthGrades, RateMD, WebMD, and others) and ranking data and aggregate feedback scoring and report costs me another $150 even if you don't have a website. Those are all bundled into my initial consultation fee because I cannot produce the level of detail in my report and recommendations without it. If you decided to buy the same access to the research data and tools, you'd pay even more but the problem you'd encounter right away is that they don't sell to the public. I purchase an annual high-volume license for frequent use. If I purchased a lower volume subscription, my per data pull cost would be higher. Most consultants who do a concierge practice transition assignment on occasion don't pay for these subscriptions and tools. I spend more to be able to maintain my brand differentiation and provide the product I believe is necessary to do a good job.

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The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition

Grim Reality # 11 - You must create a "product" to sell in exchange for the membership fee Product creation for Concierge Membership and DPC practice transition is not as easy as you might think. The worst examples may be researched on the websites of your competitors in your community and other doc and dentists outside your community. The first rule to repeat: SAME IS LAME. If you are identical in your offer as the guy or gal up the street, you become a commodity seller and compete on price. Is that what you had in mind? If so P-L-E-A-S-E don't call me for help. You don't need help. You need education so you can decide. Not training. Education is all about learning the theory. Education may reinforce knowledge in which that you already have a foundation. Training gives you the skills to do something rather than just know about something. You can't overcome commodity positioning with training. You must understand why SAME IS LAME and then use training to deploy a tactic and strategy to avoid being categorized as a commodity seller. I educate clients about "why" and "what" to develop as a product based on their unique capabilities, services, local market demographics, and ideal customer persona. One day, a few years ago, a doctor in Scottsdale Arizona called me and said "I need you here now!" It was December 26th. He said "I'd rather pay you and use my profits rather than pay so much in taxes." So I boarded a flight and appeared at his door on the 28th. After hours of talking with him about options, location, marketplace, competition, his reputation, etc. He said "Thanks. You know, I've got a buddy up the street that paid over $10,000 for a consultant to set him up as a concierge practice. I think I'll offer him $2500 for a copy of his membership contracts and the other stuff the consultant prepared for him. Then, I can shadow his price by about $150 a year less. My daughter can make me a website for free on Wix. I've got dinner plans tonight so if you want to head back to the airport now, that's cool." I closed my mouth and smiled so he wouldn't see the furrowed eyebrows, picked up my briefcase, shook his hand, wished him the best of luck, and headed to the car. I drove to the airport had a glass of wine, boarded the flight, and flew home. I checked up on him a year later. He's bankrupt and his practice is closed. That's as silly as saying, "My neighbor paid the doctor for a consult and got a prescription. I'll just take what they are taking since my symptoms are sorta similar." Then you check on them and they died due to an anaphylatic reaction to their neighbor's medication that caused tongue swelling and hypotension. Was it the medication that was the COD or stupidity? Part of what is needed when you decide to transition your practice is a new product development. It involves 7 steps or stages. It doesn't take a long time to do, but it requires consideration, data, market research, and many of the parts of the grim realities I already listed. 12


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 Basic design(s). Utilizing basic internal and external analyses described above, along with

current market trends, we first decide how you will differentiate your product from your competition. To begin the process, you come up with whatever you want. I constrain you like the string to your balloon by applying expertise and experience about how to keep your balloon lean, mean and scalable. I reel you in to keep you nimble and contribute by asserting guidance and flexible discretion over which activities or amenities are included. If you plan to attract both Medicare and non-Medicare age members, you may need to develop multiple versions of your product to suit different types of customer/members.  Product refinement. Pre-screening your idea by asking trusted friends and patients for their feedback and interests. Offer then a discount as a thank you for supporting you with this. How we go about this is client specific. There are many methods. My job is to recommend the appropriate one, not copy what your neighbor did or didn't do. Arranging private tests groups, launching beta versions, and then forming test panels after the product or products have been tested will provide you with valuable information allowing last minute improvements and tweaks.  Testing the concept. One very subtle difference many doctors and dentists 9and many consultants who want to add concierge and DPC consulting to their services menu) are unaware of because they were never taught is that testing the concept is different from test marketing. Many rush straight to test marketing and fail prematurely. In concept testing we determine if consumers understand, need, or want the product or service you plan to offer.  Business Analytics. While we did some practice analysis to begin with, this analysis is different. In this stage, we'll build a way to measure and monitor your profitability and progress. Here, we include input metrics, such as average time in each sales cycle stage, cost of each amenity to deliver, as well as output metrics that measure the value of launched products, utilization and uptake, percentage of new product sales, attrition, and other figures that provide valuable feedback. Even if an idea doesn’t turn into product, keep it in the hopper because it can prove to be a valuable asset for future products and a basis for learning and growth.  Product development. You must be ready to offer the entire product, (e.g., technologies for telehealth, testing and diagnostics, services that require supplies and/or certification like BioTE, stem cells, compounding dispensary, hypnosis, portable equipment for house calls, hospital privileges for direct admits, etc., ) on day one. You cannot ask a patient to pay in full for their membership fees for a "coming soon" product.  Pricing. Most new products are introduced with "introductory pricing". That infers a deadline where the price goes up. In this late stage, you’ll gauge overall value relevant to COGS (cost of goods sold), making sure internal costs aren’t overshadowing new product profits. You continuously differentiate consumer needs as your products age, forecast profits and improve delivery process whether physical, or digital, products are being perpetuated. This is where most 2nd year concierge and DPC practice physicians and dentists lament they wish they had done a better job of product design and pricing. They tossed in all kinds of amenities without knowing COGS and now are under contract to deliver the goods upon request.  Commercialize. You are ready to sell with advertising, marketing, public relations, branding, contracts, all locked and loaded and ready to go. Refreshing advertisements during this stage will keep your product’s name top of mind of those in the contemplation stages of purchase. Remember there are often as many as 12 "taps" to product and brand awareness for people who never heard of you before.

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I request that my clients purchase a copy of my Handbook of Concierge Medical Practice Design. This book is a workbook unlike any other available in the market to guide you through the design process. It is not a business plan or financial forecasting and overhead expense projection template. It is available from any retail or online bookseller. It isn't inexpensive. My publisher gave me a limited author giveaway supply years ago that is now depleted. Only self-published authors can dictate price and give away an unlimited number of free copies. I'm just the author... and have to honor my contract with the publisher or face really nasty repercussions. Rather than hold them on-hand in my garage or supply closet with the other 20 books I've authored, I offer my clients to reduce my initial consulting visit fee by the price they paid for the book. That's the best I can offer. Simply save your receipt and tender a copy with your payment to take the reduction. That way, you get a fresh copy that isn't dusty or shop work and, since I live in the Mojave Desert, you have less risk of receiving a free scorpion who has taken up residence between the pages. Meanwhile, every exercise you complete in the book enables us to do more, faster, in my one-on-one time with you.

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Grim Reality # 12 - Many managed care plans will terminate your contract for breach of contract and allege that your membership fee is a form of balance billing When I consult with doctors and dentists who wish to transition their practice to concierge medicine, many express a desire to maintain their managed care contracts. They've heard about a hybrid model and are afraid to just pull the plug on managed care faucets. Some may not have a choice. Many health plan contracts contain prohibitions in the language that restrict you from starting or transitioning a concierge practice or requiring people to pay a membership fee to see you. I know what to look for, I know where they've pointed in the contract with other clients. When they terminate your contract for cause, you trigger an entry into the National Practitioner Data Bank. That's not a good thing. You must then answer "yes" to those questions about "have you ever been terminated from a managed care or insurance plan", or had privileges restricted, etc. One workaround for this if you plan to continue as a contracted provider is to start a second corporation and transact the business for the concierge membership package of amenities and the membership fee under that corporation.

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Grim Reality # 13 - You may not be able to quit your managed care contracts whenever you choose to do so You may have to wait until a certain window of opportunity to give notice of your intention to terminate. If you miss that window of opportunity, the plan can argue that you cannot quit without another year or two or three before you can terminate your contract. Sometimes the intent to terminate notification window is tied to an anniversary date. I've seen many a signed contract that says this but doesn't have an anniversary or an effective date in it. The effective date line in the contract was never filled in. That doesn't mean you get to elect to use the signing date. The effective date is often a defined term. To determine the prohibitions and termination requirements, I do a cursory review of the contract looking only for those elements. If I see some really funky terms or high risk terms and requirements I may mention them, but that's a difference scope of review. When I review your current managed care agreements, it is to make a quick and dirty spreadsheet to see what I am dealing with in terms of due diligence. Nothing more. To analyze rates, terms, requirements and dangerous language and recommend alternative language and help you contact the payer to attempt to negotiate changes, that's a separate scope of work under a separate or additional fee agreement. The thing about it is, I can do neither if you don't have complete copies of your contracts ready for me, scanned as a Word or PDF document. Pictures of pages (.tif) sequentially scanned are of little value to me because I need them in Optical Character Recognition, or OCR. OCR is a technology that enables you to convert different types of documents, such as scanned paper documents captured by a digital camera into editable and searchable data.

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Grim Reality # 14 - If you quit the Medicare program, you must wait two years if you decide it was a mistake and wish to reenroll in the Medicare program Many physicians are unaware that if they decide to establish an all cash practice and quit their participation in the Medicare program, they must wait 2 years to re-apply. Also, if you decide to target Medicare beneficiaries as customers, you cannot include any services that Medicare pays for as a Covered Service in your amenities package. HHS has determined that concierge-style agreements are permitted as long as Medicare requirements are not violated. Unless a physician has opted out of Medicare, the predominant requirement is that an access or membership fee cannot be charged to a Medicare patient for services that are already covered by Medicare. This means that you will likely need to configure a separate amenities and inclusions package product, use a different membership agreement form and charge a different price point that reflects these alternatives. When deciding to offer a membership program to Medicare beneficiaries, we can help you design your package configuration and provide you with a membership agreement template, but we strongly urge you to have everything reviewed by a competent and qualified health law specialist attorney with knowledge in this domain. In July 2003, the OIG settled a case involving a physician from Minneapolis, Minnesota, who the OIG alleged had violated his assignment agreement when he created a program whereby the physician's patients were asked to sign a yearly contract and pay a yearly fee for services that the physician characterized as "not covered" by Medicare. In that case, the OIG alleged that because at least some of the services described in the contract were actually covered and reimbursable by Medicare, each contract presented to the Medicare patients constituted a request for payment other than the coinsurance and applicable deductible for covered services in violation of the terms of the physician's assignment agreement. In March 2004, an OIG Alert was issued reminding Medicare participating providers that they may not charge Medicare patients fees for services already covered by Medicare. OIG used, as an example, a case involving physician’s charge of $600 for a “Personal Health Care Medical Care Contract� that covered, among other things, coordination of care with other providers, a comprehensive assessment and plan for optimum health, and extra time spent on patient care. Because some of these services were already reimbursable by Medicare, the physician was found to be in violation of his assignment agreement and was subjected to civil money penalties. The physician entered into a settlement with OIG and was required to stop offering these contracts.

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The 13 Grim Realities of Concierge / Cash-based Medical Practice Transition

In 2007, OIG settled another case involving a physician engaged in a concierge-style practice. There, the physician, who also had not opted out of Medicare, asked his patients to enter into a contract under which the patients paid an annual fee. In exchange for the fee, the membership agreement specified that the doctor would provide members with: (1) an annual comprehensive physical examination; (2) same day or next day appointments; (3) support personnel dedicated exclusively to members; (4) 24 hours-a-day and 7 days-a-week physician availability; (5) prescription facilitation; (6) coordination of referrals and expedited referrals, if medically necessary; and (7) other service amenities as determined by the physician. The physician was similarly found to have violated the Civil Monetary Penalties Law by receiving additional payment for Medicare-covered services and agreed to pay $106,600 to resolve his liability. As demonstrated by these settlements, violations of a physician’s assignment agreement results in substantial penalties and exclusion from Medicare and other Federal health care programs. It would behoove a concierge physician to tailor contracts offered to Medicare patients. Fees charged under such contracts should relate only to noncovered services and amenities. For example, fees could relate to additional screenings by the concierge physician that are not covered by Medicare or amenities such as private waiting rooms. According to the GAO’s 2005 Report on Concierge Care Characteristics and Considerations for Medicare, HHS OIG has not issued more detailed guidance on concierge care because its role is to carry out enforcement, not to make policy. Your situation and any specific concerns regarding the structure of your concierge membership and amenity agreements or practices may benefit from a private letter advisory opinion from HHS addressing your concerns. Advisory opinions are legally binding on HHS and the party so long as the arrangement is consistent with the facts provided when seeking the opinion. The grim reality is that the private letter advisory ruling usually costs between $10,000 and $15,000 to go through the process with most attorneys.

I am not authorized or permitted to assist in this private letter advisory process unless I am hired by your attorney and the engagement is protected by attorney-client privilege. In this situation, your attorney must engage me and pay my expert fees for any involvement on my part. This arrangement protects you because there is no consultant-client privilege under the rules of Medicare.

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If you have any questions, I am available by phone or email. (800) 727.4160 mercuryadvisorygroup.com/contact

THANK YOU

The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition  

This easy -to-read e-book contains 14 Grim Realities about Concierge Medical Practice and Direct Pay Primary Care Transition that few health...

The 14 Grim Realities of Concierge / Cash-based Medical Practice Transition  

This easy -to-read e-book contains 14 Grim Realities about Concierge Medical Practice and Direct Pay Primary Care Transition that few health...

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