Viewpoint Volume 5 Issue 1 Spring Equinox 2019 by VerdenGroup

WELCOME VIEWPOINTISTHEVERDENGROUP'SQUARTERLY MAGAZINEPROVIDINGOURPERSPECTIVES ONTHEBUSINESSOFHEALTHCARE

ABOUTVIEWPOINT&theverdengroup ViewPoint is a digital publication that looks at the business of healthcare from the perspective of The Verden Group's consulting professionals and other colleagues working in the field. Subscribe to ViewPoint to stay on top of all our news and views on the business of health care. Read past issues of the magazine and additional content at: ver den view poin t .com The Verden Group is an innovative consulting firm focused on educating and empowering medical practices to navigate through the increasingly complex business of healthcare. The Verden Group delivers expert consulting services and advice to individuals and groups of any size, from start-ups to super groups. From credentialing to contract negotiations and management, marketing to social management, PCMH transitions and strategic retreats ? we are your Partner In Practice. To learn more about our services, visit w w w.t h ever den gr ou p.com

www.ver denviewpoint.com

INTHISISSUE SHAREHOLDERAGREEMENTS

SUCCESSIONPLANNING

12 12

uccessionPl anning: 08 Swhat isit &why youneedit

Whether you're a partner or sole owner, don't wait for a crisis, the time for succession planning isnow!

Assessingthe pros& consof partnershipsversus going it alone.

SHAREHOLDERAGREEMENTS: 12CRITICALITEMS

Paul Vanchiere on 12 critical itemsthat should never be overlooked.

WHYPARTNERSHIPSmay be OVERRATED

PODCAST: insandoutsof buy-ins &buy-outs Susanne & Brandon talk Practice Ownership benefits, pitfalls& risksto buy-ins& buy-outs.

POLITICS: THEMEDICAREFORALL DEBATE

INSURERSAREBUYINGUPPHARMACY BENEFITMANAGERS Insurersbuying up PBMsisdisruptive and will blur the linesbetween insurance & delivery of care.

Susanne Madden examinesthe debate and feasibility of Medicare for all.

INTHISISSUE PRACTICEOWNERSHIP- podcast

PARTNERSHIPVS. INDEPENDENT

PCMHBEHAVIORALHEALTH DISTINCTION

Find usat these conferencesand events acrossthe country.

What you need to know about the NCQA distinction and why it may be worth achieving.

Connect: events&conferences

PAYERPOLICYCHANGES: TOP7FORFEBRUARY

pointsof view: recommendedreading A selection of curated newsworthy linksby the team at The Verden Group.

The latest data on Payer Policy Changesfrom The Policy Authority.

To subscribe and read back issuesvisit:

www.verdenviewpoint.com

THISISSUE'SCONTRIBUTORS STAFF Publisher Susanne Madden

SUSANNEMADDEN, MBA, PCMHCCE FOUNDER&CEO THEVERDENGROUP

Copy Editor & Layout Heidi Hallett Cover Design Scott Hodgson Web Master Scott Beyer

BrandonBetancourt PracticeManagement consultant CONTRIBUTINGEDITOR

SUBSCRIBE HEIDIHALLETT contributor &creativeconsultant THEVERDENGROUP Produced by The Verden Group, ViewPoint is available by free subscription and distributed seasonally. Print copies are available by request. Please contact us for pricing.

AMANDACIADELLA PCMHSPECIALIST/ SENIORCONSULTANT THEVERDENGROUP

contact The Verden Group 48 Burd Street Suite 104

PAULVanchiere, MBA FOunder of Pediatric Management Institute

Nyack, NY 10960 877-884-7770 inquiry@theverdengroup.com www.VerdenViewPoint.com

LETTERFROMTHEPUBLISHER

For many, this winter season was one for the record books. Notable events include snow in the Southeast, strong cold waves and several major winter storms in the Midwest and Northeast. The good news is that Spring is around the corner. However, for many still experiencing winter conditions, the promise of fresh buds blooms, rising temperatures and new beginnings seems like an illusion. Much like weather developments and transitions from one season to the next, transitional periods in medical offices can be tumultuous endeavors. Particularly as it relates to buy-ins, buy-outs and the forms of medical practice ownership. For our Spring Equinox issue, we provide practical tips to help guide practices during critical transitions periods helping to avoid potential conflicts that tend to bring tension to a partnership. Contributors this issue include Paul Vanchiere, founder of the Pediatric Management Institute, who highlights critical terms shareholder agreements ought to include to ensure smooth ownership transfers, and Brandon Betancourt, fellow consultant, whom I am delighted to welcome as a contributing editor for our Spring Equinox ViewPoint issue. Brandon and I had a chance to record a podcast that is jammed packed with valuable and insightful information, kicking off the podcast by asking about buy-ins and moving into valuations, paths to partnership, assumptions some physicians have when selling the practice to partners and much more. Brandon posed several interesting questions about practice ownership when we were putting this issue together. He asked, what is the upside of becoming a partner? Why would one want to become one in the first place? You don't want to miss his compelling article on the 10 Reasons Why Partnership Are Overrated . . . No better time than now to do a little 'spring cleaning' on your partnerships!

Susannemadden 7

01 SUCCESSIONPLANNING: what it is&why youneedit Susanne Madden, MBA, CCE Founder & CEO, The Verden Group

The process of identifying and developing new leaders who can replace others when they leave or retire is essential work that practice owners often neglect. Whether one is transitioning ownership to other partners or preparing to sell the practice, succession planning is an important process that ensures your medical practice is well prepared for the future. Em er gen cy Plan n in g The first thing you need in place is an emergency plan. More than once, we?ve received panicked calls from practices where the senior partner, or worse, sole owner, has passed away unexpectedly, leaving staff and patients scrambling to fill the gap. If you are a sole owner, the time is now to determine who may be able to step into your shoes if the unthinkable occurs.

Leadershipinpractice First, identify the areas of your practice that will need the

Agreements on page 12 and listen to our podcast 'The Ins

most immediate attention. That usually means ensuring

& Outs of Buy-Ins & Buy-Outs' for more on this]. Don?t wait

that you can meet payroll and keep the staff working for

until you are getting ready for retirement to discuss

some time while your emergency plans are executed. The

retirement. There may be many factors to work through

cash will run out quickly though if there is not someone in

with your partners including:

place to continue to generate revenues. An employed -

physician or mid-level provider can help sustain the

Can you cut back on-call hours, weekends, rounds, etc., prior to retirement and remain a

business in your absence, even if only temporarily. If you

partner?

don?t have someone in place already, you may consider reaching out to a colleague in the area who may be able to take over your practice in the event you die or are severely

Is there any buy-out?

If so, have the terms of the buy-out been defined (how much, paid over what period of time, and is

disabled.

it dependent upon the practice?s fiscal health?) Next, determine who will own the practice upon your Depending upon your compensation model, you may be

death. Make sure you have identified to whom your assets

entitled to the amount of your specific accounts receivable

will pass in your estate planning. Keep in mind that in

minus overhead. Or perhaps a fixed amount has been

most states, you can't pass your practice to a

discussed, but that may need to be revised based on the

non-physician so you'll need a physician to take over.

current value of the practice. In many cases, the value of Finally, make sure your staff knows what to do in the

being a partner has been realized throughout the course

event of a sudden departure. For example, determine how

of ownership, and no buy-out is considered.

your team should communicate with patients, who can If a buy-out arrangement is contemplated, here are some

access key accounts, and who will be the point person that

more popular options:

will coordinate details.

Plan n ed Depar t u r e

One year ?s net earnings based on an average of the previous three years earnings;

Emergencies aside, most practice owners will have the

The equivalent of the value of the practice divided

luxury of effectively planning for transitions. Note that key

by the amount owned (e.g., in a partnership of

transitions can also be around key personnel ? your

four, one would hold 25% of the practice, so

trusted office manager of the last 20 years may be the

Value / 25% = buy-out);

keeper of vast knowledge about your business ?

An amount equivalent to the buy-in (particularly

effectively transferring some or all of that know-how

for a partner that bought into an existing

before your office manager departs may be just as critical

practice);

planning for the departure of a partner. It can often take

A fixed amount agreed to by the partners.

considerable time to find a replacement, and you will want Buy-outs are typically paid over the course of two to three

to make sure that there is some overlap between your

years, to ensure minimal impact on the practice?s finances.

outgoing and incoming managers. Moreover, adding a

However, should more than one partner wish to retire at

resignation notice provision to your employee policies for

the same time, a staggered approach to buying out may

managers is a good idea to ensure that adequate notice is

need to be implemented to avoid draining cash from the

given before that critical team member leaves.

practice within a limited period. Tr an sit ion in g Ow n er sh ip t o You r Par t n er (s) Tr an sit ion in g t o Sale If you are in a partnership, you may or may not have any If you are a sole owner, you may have an employed

guidelines in your partnership agreement that address

physician that you can either groom for partnership or

how to handle outgoing partners [read Shareholder

successionpl anning

"Fundamentally members of great teams trust one another on an emotional level. They are comfortable being vulnerable with each other about their weaknesses, and mistakes."

that may be willing to buy the practice from you. If not,

area and there is not a high demand for practices, on

you will want to start preparing your practice for sale,

paper the value may be high due year-to-year earnings,

even if you intend on practicing for several more years.

but due to low demand, there may only be one buyer

Operating your practice with the goal of maximizing its

seeking it and the offer could be substantially lower than

value will help you to realize that value well ahead of

the identified value.

retirement, as well as ensure that you obtain the best Typically, independent physicians make the best buyers

price possible when you are ready to sell.

of independent practices. Venture capitalists may have Preparing your practice means taking steps to minimize

some interest, but their goal is to maximize a return on

debt, improve collections, streamline operations for

their investment. Hospitals typically don?t pay anything

efficiency, maximize productivity, and grow your practice.

for practices; instead, they guarantee employment and assume the cost of transitioning medical records, data,

Be aware that there are several methods used for valuing

and other assets into their organizations.

practices, and each one produces different price points [you can read more about that in our Autumnal Equinox

For those reasons, making investments early on in your

Issue, 2017, here: w w w.ver den view poin t .com ]

ownership will help to ensure that you maximizing profitability at all times means, and that you will have

At the end of the day, your practice is worth what

been well rewarded for your efforts by the time

someone else is willing to pay for it. If you are in a rural

retirement comes around.

02 sharehol der agreements: 12Critical Items Paul Vanchiere, MBA Founder, Pediatric Management Institute

Whether it is a seasoned consultant, attorney or accountant, when it comes time to draft a shareholder agreement, it is recommended to hire someone with experience in these matters. An experienced consultant can assist stakeholders in establishing a fair and equitable contract. However, while most practices have competent legal counsel that can help shareholders with their agreements, not all experts have keen insight into the nuances of medical practices. The good news is that shareholders can use their priorities to determine specifics that work best for them and their practice. Consider addressing these often overlooked items when collaborating with your trusted advisor: Per son al r espon sibilit y f or codin g au dit s Improper coding or documentation penalties followed by a healthcare company?s recoupments efforts can negatively impact a practice financially. To mitigate the risk, consider including a stipulation that emphasizes that providers are responsible for their coding and documentation ? as well as for error penalties. Also, include ?clawback? provisions specifying how potential recoupments are handled after a shareholder is bought out 13

sharehol der agreements or leaves a practice. These provisions should not be limited to shareholder agreements but also included in an employment physician agreements. Spou se appr oval To avoid any potential conflict after a shareholder dies or goes through a divorce, it is essential that shareholders? spouses sign the shareholder agreement. Appropriately crafted, this eliminates inherent challenges to the practice valuation and buyout process. Moreover, such a requirement is quite useful when facing buyout opposition from an estate or soon-to-be-ex spouse. Per son al gu ar an t ees f or f in an cin g Shareholder agreements often have generic language about how personal guarantees for practice loans are handled. Address whether such guarantees are on a pro-rata basis and if shareholders will indemnify each other ?s allocated warranty. Whatever language you decide on needs to correlate to the final loan agreements, which would likely take precedence over the terms of your shareholder agreement. Con secu t ive days ou t of of f ice A practice retains a certain amount of overhead regardless of whether a shareholder is actively seeing patients. Therefore, a shareholder who is away for an extended length of time can complicate a practice?s ability to keep up with such costs. Determine up-front how many days a shareholder can be away before enforcing an alternative compensation formula or buyout. Disabilit y The best shareholder agreements include a clause that says compensation will continue at the usual rate until a shareholder ?s disability policy kicks in. A disability provision requires shareholders to carry a disability policy that begins 45 to 60 days after the beginning of a disability. This stipulation minimizes the financial impact to the practice during a time when additional expenses may put downward pressure on the practice's finances. Those shareholders who can?t obtain disability insurance may seek a variety of ways to escrow a portion of their salaries each year for such contingencies or provide an alternative compensation formula for them.

sharehol der agreements M ediat ion or Ar bit r at ion Clau ses

Pledgin g of Asset s

Including a mediation or arbitration provision in case of

The shareholder agreement should specify that individual

stalemates over major decisions is recommended.

shareholders cannot collateralize stock ownership.

Shareholders may call upon a neutral third party to

Specifically, they cannot pledge stock in the practice as a

facilitate a resolution in such instances. The agreement

guarantee for any personal loans or the like.

should further state that the issue will be resolved by Per son al Ban k r u pt cy

binding arbitration should mediation not work. These terms motivate involved parties to come to a consensus

Practices should seek legal counsel concerning how to

in the mediation phase. Without such verbiage, the

minimize impact resulting from a shareholder filing for

mediation phase will lack the teeth needed to drive a

personal bankruptcy. The last thing a medical practice

resolution.

needs is third-party meddling.

M edical M alpr act ice Tail Cover age Fu t u r e Expan sion an d Fin an cin g The agreement should address how the tail coverage for Consider the following scenario. Two physicians invest

a departing physician will be paid and whether or not this

$100,000 in a new location. Instead of taking a loan, they

amount will be deducted from the buyout price. Tail

reduce their income for the year by $50,000 each. One of

coverage can be very costly, depending on how long the

partners dies during the next year, and a significant

departing provider has been on the policy as of their last

portion of the valuation formula takes into consideration

date with the practice, and whether it is a claims-made

the ?benefit of owning the practice.? How do you

policy.

compensate the heirs for the reduced income in the For ce Ou t Pr ovision

previous year and loss of benefit from that investment?

Assuming the shareholder agreement contains the

While every situation is different, one way to mitigate this

explicit formula to value the practice, there should be a

problem is to obtain outside financing to fund expansion

premium allocation (10 to 25 percent) to be paid should a

efforts. While this does not reduce all the issues, it does

majority of shareholders wish to buy out a particular

address one part of the equation. Similarly, care needs to

shareholder. A force out provision presents a financial

be taken to avoid a scenario where a shareholder reduces

incentive to carefully select partners aligned with the

his or her earnings in a given year to fund the acquisition,

shareholders before adding a new partner. More

yet is bought out before the investment is recouped.

importantly, it contributes some motivation for all the partners to weather challenges.

If you have concerns about your current agreements or lack of succession plans, there is no better time than now

Failu r e t o Plan Pr ovision

to begin to address those. Start by reviewing your Practices should have as much notice as possible of

partnership agreements. Run scenarios such as

individual shareholder retirement plans, due to the time

described throughout this article: if your senior managing

and expenses related to recruiting and grooming another

partner had a heart attack tomorrow, are their plans in

shareholder. The agreement should stipulate that the

place to quickly and deftly manage their departure? Don?t

buyout amount is discounted by 25 percent in the event

wait until you need a plan; prepare a plan in place in

of a physician not providing at least two or three years?

advance of a disaster, and your partners will thank you

notice of retirement. Obvious exceptions would apply for

for that in the future.

disability and death. Consideration should also be given to scenarios in which a shareholder loses his or

Pau l Van ch ier e is pr esiden t of Pediat r ic M an agem en t In st it u t e, w h ich h e f ou n ded t o pr ovide an ar r ay of ser vices f or pediat r ic m edical pr act ices of all sizes f ocu sin g on f in an cial an d oper at ion al issu es.

her ability to be covered by medical malpractice, retain board certification, or remain on provider panels.

03 pol itics: themedicarefor al l debate Susanne Madden, MBA, CCE Founder & CEO, The Verden Group

The passage of Medicare under the Johnson

Dif f er en ces Bet w een t h e Goals of t h e ACA an d

Administration in 1965 was opposed by mostly Republican

?M edicar e-f or -All? (M f A)

members of Congress who believed it would ?sever t h e Essentially, the goal of the ACA was to provide health

t ies bet w een doct or s an d t h eir pat ien t s.? They also

insurance to all Americans, but ?except for the equality

broadly feared it would lead to a wider acceptance of

embedded in the Essential Health Benefits (EHBs)

socialism ? at the same time the Cold War with the Soviet

requirement ? reducing disparities in all aspects of

Union was raging.

insurance coverage based on socioeconomic status was While the ?Medicare-for-All? (MfA) bill of 2003 (H.R. 676)

not at its core. In contrast, MfA has a goal of increasing

was replaced by the 2010 Affordable Care Act (H.R. 3590),

equality across the US population in accessing healthcare

there were still many MfA proponents. Therefore, another

through implementation of a ?single-payer ? model.

MfA bill (S.1804) was introduced in 2017 by Senator Meanwhile, President Trump and the Republican Congress

Sanders ? although there was no doubt that Senate

have attacked the ACA on multiple fronts in an effort to

Republicans under a Trump Administration would block it.

return to the same nationwide healthcare system that had Among the current Democratic primary hopefuls seeking

left 50.7 million Americans in 2009 w it h ou t h ealt h

to be the Democratic Party?s candidate in the 2020

in su r an ce ? and resulting in a tremendous obstacle to

presidential election, approval of MfA has become another

healthcare access for specific subpopulations across the

way for these candidates (especially Bernie Sanders) to

US (i.e., people with pre-existing conditions and

differentiate themselves from each other to the voting

low-income workers).

public. Hist or ically Assessin g M edicar e ? Su ccess or Not ? The following presentation is an attempt to clarify Medicare was a federal response in 1965 to the problem

whether MfA is actually feasible in the US, and why the

of a health system failing older Americans. For a 12-month

debate surrounding its feasibility matters ? regardless of

period between 1962-1963, the CDC r epor t ed the

whether a vote in the Senate ever actually takes place.

following in 2009: while 28% of the population under age

healthcarechanges 65 had no hospital insurance, 46% of seniors had no

Senate bill to repeal the ACA, an additional 19 million

hospital insurance.

uninsured people were predicted by 2016 ? and 24 million by 2025 (with the CBO estimating an ACA repeal to result in

In 2007, a study of Medicare?s impact conducted by the

an in cr eased def icit of $137 B).

National Bureau of Economic Research reported a definitive decrease in the one-year mortality rates in

Before Medicare was enacted, millions of seniors were

Medicare-enrolled patients due to Medicare enactment.

utterly dependent upon their adult children to pay their

This r epor t concluded that Medicare decreased both

medical expenses or forego healthcare. Likewise ? before

mortality and morbidity in Medicare-enrolled people aged

the ACA ? millions of adults of all ages were unable to

65 and older (as well as reduced hospital readmissions).

obtain health insurance to cover their treatment costs. The

Clearly, Medicare was a positive step towards improving the

result is that many became needlessly disabled, unable to

public health of a subset of Americans that had survived the

participate in the labor force, and financially dependent

Great Depression.

upon their adult children.

In response to the inability of Medicare to contain spiraling

It is widely recognized globally that the h ealt h car e cost

healthcare costs, the Centers for Medicare and Medicaid

bu r den of a nation is linked to the proportion of its

Services (CMS) ? after ACA passage ? embraced a shift to

population unable to access healthcare services (since

value-based payments. Diverse health economic studies

providing treatment for chronic diseases is more expensive

concluded that the longstanding hospital Fee-for-Service

than treatment at an early disease stage). This is a major

payment system was a k ey con t r ibu t or to spiraling

reason that turning the clock back to a pre-ACA insurance

healthcare system costs, and the CMS had an internal

climate does not make sense from either a public health or

budgetary incentive to curb expenditures.

economics standpoint.

Meanwhile, 98% of sen ior s (56.8 m illion people aged at

Com par in g Can ada?s Healt h Syst em t o t h e US Healt h

least 65) are now covered by Medicare in comparison to

Syst em

only 19 million in 1966. The ?umbrella? that Medicare represents has stretched beyond anything imagined in 1966

Paid partially through federal and provincial taxes, Can ada?s

(so achieving any secondary CMS goal of cost-containment

?sin gle-payer ? h ealt h syst em is administered through

was rendered impossible by unanticipated changed life

plans created in each province or territory. While specific

patterns). Indeed, most seniors in the US are living to an

?necessary? health services (e.g., hospitals, physicians, and

advanced age never anticipated in the 1960s, and also living

surgical dentistry) must be covered, provinces and

longer alone in their own homes with minimal psychosocial

territories have a great deal of discretion in their covered

supports.

healthcare ? and Canadians can also purchase supplemental health insurance. Canada?s physicians are not

Wh y Tu r n in g Back t h e Clock on Healt h car e Access is a

government employees, but are private providers similar to

Bad Idea

the US. Meanwhile, Canada?s m edicat ion pr ices ar e also low er than in the US.

In accordance with President Trump?s election promise to his voters, Senate Leader Mitch McConnell guided

According to an ar t icle in 2018 in the Washington Post, 90%

Republican senators in their (fortunately) failed attempt to

of Canadians are opposed to eliminating their ?single-payer ?

fully repeal the ACA ? although it has been significantly

healthcare system despite some frustrations (such as long

weakened through their other strategies. Had they

waiting-times for elective surgeries). However, an ar t icle in

succeeded, hospitals and physicians (as well as the public)

2017 in the Queen?s Gazette (of Queen?s University in

would have been subjected to upheaval and confusion

Kingston, Ontario, Canada) suggested that their system was

beyond that existent before the ACA was passed in 2010.

?underperforming? due to lack of adaptation to changing Canadian healthcare needs and trends.

Notably, as calculated by the Congressional Budget Office (CBO) in 2015 in conjunction with a Republic-sponsored

Numerous studies have shown that the US has one of the

healthcarechanges most expensive healthcare systems in the world, and it is

promotes more equal access to care for all Americans in

certainly more expensive than the system in Canada. We

order for the US to regain global respect for our expressed

also are not quickly adapting to changing healthcare trends

values as a nation.

(such as the emergence of individually-tailored, gene Avoidin g Fu r t h er Har m t o t h e Nat ion?s Pu blic Healt h

therapy cancer treatments costing an exorbitant price per dose).

As shown by the many years after President Truman asked Congress to cr eat e a n at ion al in su r an ce f u n d that

How t h e US Healt h car e Syst em ?s St ak eh older s Dr ive Up

Republican senators ? in tandem with healthcare system

Cost s an d Pr even t Ch an ge

stakeholders ? resisted this idea before Medicare was There are four primary stakeholders that shape policy in the

enacted under President Johnson, passage of an MfA bill

US healthcare system:

may only be possible in the US if it occurs in incremental stages (such as through enabling enrollment at age 55

1. Healthcare providers;

instead of 65, followed by age 40 at a future time).

2. Insurance companies; According to an ar t icle in Health Affairs in 2017, Senator 3. Pharmaceutical companies;

Sanders?proposed MfA bill would end the Medicare and

4. Medical schools

Medicaid programs ? rather than expand them. This may not be a path toward minimizing disruption of the

Each of these four stakeholders drives up the cost of

functional elements of our healthcare system. However,

healthcare in the US (albeit for different reasons). Private

that also does not mean that any proposed MfA would be

insurers have exerted tremendous political pressure

disruptive ? nor does it mean that MfA is a better ?fit? for US

through lobbies to preserve their financial status and

society than either the ACA (or some other model).

influence over physicians and hospitals. Partly due to high US malpractice costs and the high cost of medical school

Strengthening the ACA is a short-term solution to a

tuition, physicians and hospitals in the US are also focused

long-term (generational) problem, but sometimes a

on maintaining as high a revenue stream as possible ?

short-term solution is needed. Unfortunately, President

regardless of the cost to the overall healthcare system.

Trump and congressional Republicans are focused on destroying the ACA, and totally resistant to a ?single-payer ?

Fear -M on ger in g as a St ak eh older St r at egy f or Resist in g

model.

Ch an ge

Con clu sion ? Self -Edu cat ion as t h e Key t o an In f or m ed

A recent New York Times ar t icle in 2019 reported that

Decision

lobbies for the healthcare insurance and medical industries are already galvanizing against MfA ? should a Democratic

Instead of enabling the public to participate in the debate,

candidate supporting MfA win the 2020 election. The same

Republicans and special interest groups are still engaged in

fear-mongering employed against Medicare ? that

the same misinformation campaign as before Medicare?s

enactment of an MfA will lead to socialism ? is being

passage ? which is claiming that MfA would be a first step in

employed again to stifle insightful debate.

the US toward a socialist dictatorship.

Wh at is t h e Best Appr oach t o Im pr ovin g t h e US

Just as President Trump?s goal of rebuilding a manufacturing

Healt h car e Syst em ?

industry as existed in the 1960s is unrealistic, returning to the healthcare system of the 1960s (when most physicians

The existence of other health systems that are less costly

still made ?house-calls?) is likewise unrealistic. The public

than in the US ? along with the recognized, skyrocketing,

deserves to truly understand the ramifications of diverse

stakeholder-fostered costs to our healthcare system ? show

proposals for healthcare system change in order to

that something needs to be done in the US to come up with

participate in the national debate. Masking it by fear

a solution. Whether through ?fixing? the ACA or enacting

mongering does not contribute to a real solution.

MfA, the US healthcare system needs to be one that

04 10Reasonswhy PartnershipAreOverrated Brandon Betancourt, Practice Management Consultant

I once interviewed a resident that was job hunting with several practices in the area, hoping to secure a job that aligned with his career objective before he graduated the following summer. One of the first questions the young physician asked was how soon it would be before he could become a partner. The question brought me pause. Now, discussing partnership opportunities during an interview process is not necessarily a bad thing. Like discussions about salary, benefits and on-call schedules, the partnership track is an important issue to discuss. However, the timing of the question was disconcerting for me. Leading with the partnership question gave me a sense that the candidate had only considered the perceived upside of becoming a partner and had not considered the risks, responsibilities, and potential pitfalls inherent in becoming one.

partnershipsoverrated While I can appreciate a physician's desire to pursue a

Thus, when considering becoming a partner, keep in

partnership option, I think it is essential to consider both

mind that a partnership may provide you a seat at the

the pros and cons. Because sometimes, becoming a

table and an opportunity to weigh in on important

partner is not always the panacea some think it is.

issues, but having real influence in decision-making doesn't happen automatically.

Th er e isn?t a pot of gold at t h e en d of t h e r ain bow You w ill h ave t o assu m e adm in ist r at ive du t ies A common assumption is that once you become a partner, your income will drastically increase. This isn't

A frequent oversight is not realizing that administrative

necessarily the case. As an owner, you get what is left

duties will increase when you become a partner. These

over after everyone else is paid.

tasks are necessary to keep the practice functioning efficiently ? for example, reviewing reports, financials,

Physicians in primary care have a more significant

managing on-call schedules, being the primary contact

challenge because there are few high-margin procedures

for IT issues, operations, human resources, or a

or ancillary services they can offer compared to their

combination of all of these.

specialist peers. Consequently, most primary care physicians are only as productive as the number of

With a few exceptions, a medical practice is only as

patients they ? and the other employed providers ?

productive as the number of patients it sees. Therefore,

see each day. The ability to see a high volume of patients

to minimize productivity dips, the administrative tasks

is what drives profit.

assigned to partners are usually performed after patient and administrative duties have been attended to -

Other factors that determine a practice's revenue is their

charting, Rx auths, consults & lab reviews, and patient

insurance ?mix?. For example, if the practice serves a

call-backs and so on.

large Medicaid population, the practice is likely to be a high volume-low margin practice.

Some practices agree to carve out time for partner physicians to spend time during regular work hours on

While physician partners generally earn more than

practice management related duties. However, this

employed physicians, it is not merely a result of

means that productivity ? generating revenue for the

becoming a partner. It is a result of hard work and

practice - will decrease. Thus partner physicians in these

effective management of the practice, along with the

roles need to be prepared to justify their time and how it

collective business acumen of the practice's leadership

translates to revenue for the practice.

team. You 'll get paid last A par t n er sh ip does n ot au t om at ically give you con t r ol

Once you become part-owner, employee payroll and other practice overhead expenses get settled before

Among the allures of becoming a partner may be the

partners receive their share of the income. If the clinic is

idea of control and influence over decisions and

keeping within budget or doing well financially, partners

outcomes around important practice matters. Many

usually don't see an income disruption. However, when

physicians soon realize that control and influence is

cash flow is low, or insurance payers delay payments or

often an illusion.

unforeseen expenses arise, partner pay is the first to be suspended so that the business can continue running.

In most partnerships, hierarchy exists. Which means the longer the individual has been a partner, the more

You r n am e goes on all t h e loan s an d lin es of cr edit

control and influence they will have over a new partner or partners. Unless there is a leadership succession plan,

Think for a moment what would be among the

it is highly unlikely that senior partners will relinquish

incentives for existing partners to bring on a new

control immediately.

partner? What is the upside of adding one to the current

partnershipsoverrated denominator when splitting the practice revenue? The

"Simply put, when partners don?t get along, working at the practice will be a miserable experience. Understanding the dynamic at the leadership level before jumping in as a partner will serve you well. "

upside of adding another partner often comes down to the diversification of risk. Here is an example to lend some context. Let's say the practice has a $500,000 line of credit and four partners. Each partner is responsible for $125,000. With 5-partners, the liability is reduced to $100,000 each. In other words, the established partners decrease their financial risk by 20% while the new partner increases their debt by $100,000.

when individuals have strong personalities (there is a reason they are "partners" and not "employees"). Getting

Therefore, in addition to potentially increasing your

along with partners is not always an easy task. Simply

workload with administrative duties and jeopardizing

put, when partners don?t get along, working at the

your steady income, becoming a partner also means you

practice can be a miserable experience. Understanding

assume your portion of the practice's financial liabilities.

the dynamic at the leadership level before jumping in as

You assu m e t h e r isk f or t h e bu sin ess

a partner will serve you well.

As an employed physician, if the practice declares

Get t in g ou t w ill cost you m or e t h an it t ook t o get in

bankruptcy, closes, or goes out of business, you're out of

Another downside that is often overlooked is not having

a job. As a partner, you, along with the other partners,

clear guidelines on how to dissolve the partnership in

assume the practice's liabilities. For example, all the

the event partners decide to go their separate ways. Few

names listed on the lease or the mortgage can

think about what will happen if they ?break up?.

potentially jeopardize homes, properties, or other assets if they were put up as collateral.

Consequently, breaking up a partnership can be as bad (or worse) than a divorce. Like a divorce, dividing assets,

Th e lon ger you r em ain a par t n er , t h e h ar der it w ill

employees, accounts receivables, lease(s), locations,

be t o get ou t

real-estate, computers, equipment, and furniture are

Doctors pursuing partnership opportunities focus on the

among the list of things partners will have to address. To

requirements to become a partner. Few, however, think

make matters worse, more often than not, partners end

about what?s involved in leaving a partnership. For

up having to resolve these issues with people they

many, it is hard to leave when they consider the

dislike.

investment of time, money, and sacrifices made for the

Par t n er sh ips can be h igh ly com plex.

practice. A departure would mean leaving everything they've worked for behind for someone else to enjoy.

Fundamentally, physicians are trained scientists and

Another common situation that makes leaving a

view the world through objective lenses. Information is

partnership difficult is the inability or unwillingness for

technical, research-based, and empirical. Partnerships,

the remaining partners to fairly buyout the exiting

however, have a different level of complexity that is

partner.

unpredictable and thus difficult to account for and measure. As a result, values and priorities don't always

Ch an ces t h at you ?ll alw ays lik e all you r par t n er s ar e

align.

ver y, ver y slim

These issues often span generational work ethics,

Learning to get along with just one person can be

overlapping ideologies, such as conservatism versus

difficult at times. Learning to collaborate with multiple

progressiveness. For example, while one partner may

partners is an even more significant challenge. Especially

think change is necessary for success, another may think

partnershipsoverrated that the way it has been done for years is working just fine. Retiring partners may be content to "just hold on" until they leave, while younger physicians may be passionate about making a difference in this broken system Fier cely In depen den t While this article may seem to paint a grim picture of partnerships, not all business partnerships are bad. There are, of course, many practice partnerships that are worthwhile pursuing. My intent with this article is to help set expectations about partnerships and provide context by shedding light on overlooked issues that non-partners can thoroughly consider when examining what it truly means to become a partner. If you wish to pursue an ownership opportunity, consider opening your own practice. It may seem daunting and risky. And it is! But consider this - for the same amount of work, grief, and sacrifice you'll put in as a partner, as an owner you will have the potential to earn more over the span of your career. You will also have the advantage of complete control, practicing medicine on your terms, meeting the needs of your patients the way that you best see fit, and overall having a much more rewarding career owning your practice.

Br an don Bet an cou r t is a bu sin ess m an agem en t con su lt an t . He w or k s w it h leader sh ip t eam s t o sh ape an d ch an ge w or k place cu lt u r e.

SUPPORTING INDEPENDENT PRACTICES For your pract ice t o st ay independent , you need access t o: -

Medical supply pricing that larger practices & organizations demand Vaccine purchases with the lowest prices & highest rebate program A suite of expert services & products to best support your practice Contract Management, HR, Compliance, Grant Sourcing and more

WE MANAGE YOUR COSTS AND SERVICES, YOU MANAGE YOUR PATIENTS. Find out how you can join here: www.IPMSO.org

05 podcast: THEIns andOuts of Buy-ins&buy-outs Susanne Madden & Brandon Betancourt

If you set up a structure whereby everybody gets a golden parachute when they're exiting and you have 3 or 4 doctors that are all retiring in a fairly short period of time, frankly you can destroy that practice ? you can sink the ship. - Susanne Madden on buy-outs

One aspect of why I think partnerships are overrated is because oftentimes people don't think about all of the work that goes into becoming a partner and the responsibilities that you have once you become a partner. - Brandon Betancourt on being independent

You want to work together for at least a year make sure that you're compatible [before talking about partnership] and that it's a good fit culturally within the dynamic of your practice - Susanne Madden on buy-ins

cl ick themicrophonetopl ay

Wan t t o h ear m or e podcast s lik e t h is? Visit : w w w.ver den view poin t .com / in t er view s

06 INSURERSrapidly acquiring PHARMACYBENEFITMANAGERS Heidi Hallett Contributor & Consultant

Major insurers are buying up PBMs at an increasingly rapid pace, sparking a major industry shift that may alter how consumers access prescription drugs and change the way insurers, pharmacies, and drug manufacturers negotiate. United Healthcare was the first to operate an in-house PBM with Optum Rx as far back as 1990, but other major carriers have been jumping on board in recent years. In the last six months alone, Cigna & Express Scripts merged, CVS acquired Aetna, and Anthem ramped up their plans to launch their in-house PBM in the second quarter of this year ? an accelerated move resulting from Cigna acquiring Express Scripts, which Anthem had contracted as their PBM. Im pact t o Em ployer s & Em ployees The rapidly changing landscape will impact employers and employees, but whether that will be positive in the way of lower prices or negatively in the form of more restrictive access and monopolies, few can be sure. A very public and

contentious dispute between Walmart and CVS Caremark made big headlines in January, as the two parties seemed to come to an impasse. A recent article in CNBC summed up the potential outcome if a resolution couldn?t be reached: ?Analysts said a break-up would have resulted in more than 50 million CVS Caremark commercial and Medicaid plan members no longer being reimbursed for filling prescriptions at Walmart.? Consumers breathed a big sigh of relief when the parties announced a deal had been reached a few days later, but the threat of narrowing prescription networks will remain top of mind for many as more PBMs leverage their negotiating power. If the trend continues (which seems likely), it will mean fewer choices in pharmacy and prescription options for employees that will, in turn, have a significant impact on healthcare costs for employers. Am azon?s Big M ove In t o Healt h car e Online retail behemoth Amazon made its?first major push into the healthcare industry when it purchased full-service online pharmacy PillPack in 2018. If it wasn?t already clear that Amazon plans to become a big player in the drug business, a series of new pharmacy license applications by Pillback just months after the acquisition removes any question of their intent to flex their power and expertise in distribution and delivery. Th e En d f or Tr adit ion al In su r an ce M odels? We can only speculate that the Walmart/CVS deal and Amazon buying Pillpack were catalysts to the increase in insurers buying PBMs, but it?s not far-fetched. Many insurers recognize the growth opportunities and decreased costs that a streamlined supply chain can offer. Insurers have been pushing for consolidation in the industry for years, expounding on reduced administrative costs and improved access for consumers ? whether these predicted outcomes are realistic remains to be seen. As hospitals and insurers merge with or acquire independent physician groups, managed care facilities, and PBMs, many would argue that the industry has only become more expensive and less consumer-oriented. One thing is for sure, these significant changes are disruptive, probably not terribly innovative, and blur the lines between health insurance and delivery of health care itself.

07 addingNCQA'sBEHAVIORALHEALTH DISTINCTIONtoyour PCMHRecognition Amanda Ciadella, MPH, PCMH CCE Senior Consultant, Patient Centered Solutions

If you are already an NCQA Recognized Patient Centered Medical Home, and may be considering adding behavioral health services to your practice, there is an add-on program that may help get you recognized for that good work. Why add behavioral health to your practice? There is evidence that suggests providing behavioral health services within a primary care setting contributes to improved health outcomes in patients. Participating in the "warm hand-off " between primary care physician and behavioral health clinician increases the likelihood that patients will be able to follow through with needed care, and can potentially reduce any stigma associated by patients seeking behavioral health treatment from other providers less known to them. NCQA ?distinction?in behavioral health can be considered a gold star for practices that have successfully integrated behavioral health services. The program functions as an add-on component to the Patient Centered Medical Home (PCMH) Recognition program. Currently, there are no financial incentives from payers for this distinction, separate to what they may offer for achieving the PCMH designation; however, recognition for providing behavioral health in your practice can help promote those services while integrating them into your medical home

model. Therefore, the NCQA fee of $500 to submit for the distiinction may well be worth the investment. Pr im ar y car e is exact ly w h er e beh avior al h ealt h ser vices sh ou ld be. Wh o can qu alif y? Primary care practices that have in-house behavioral health services offered by a licensed behavioral health specialist can qualify for the distinction. The behavioral health specialist can be your employee, a specialist who rents space from your office, or even a tele-health service. Wh en is t h e best t im e t o seek t h e dist in ct ion ? A practice can seek the distinction at any time! However, it?s recommended to do it during the initial work of becoming a Patient Centered Medical Home [PCMH] or during renewal because it?s easy to work on the behavioral health distinction simultaneously.. Furthermore, examples used to achieve your main PCMH recognition can be utilized for the BH distinction as well. If you?re already doing annual reporting, align the behavioral health project with your annual reporting dates so that, once achieved, you will have only one date for meeting annual reporting and behavioral health distinction requirements. How pr act ices m eet t h e r equ ir em en t s? You must use evidence-based guidelines and demonstrate that you can treat a patient over time and adjust their care plan while considering their goals. Practices that do one-time prescriptions and referrals to external behavioral health providers, and without a process for follow-up care, likely won?t meet the criteria.

LEARNWITHUS!

WHAT YOU NEED TO KNOW

Amanda Ciadella

To qu alif y: the practice must have in-house behavioral health specialist (ie, psychologist, psychiatrist, licensed clinical social worker, licensed mental health counselor) to achieve the distinction.

PCMH Specialist & Senior Consultant, Patient Centered Solutions, presents

Th e cost : there is a $500 flat fee per practice, regardless of the number of practice locations or providers.

"TheBusinessof Behavioral Health" PCMH Congress, September 6-8

Th e pr ocess: once you have worked through the pr ogr am r equ ir em en t s, you have an opportunity for the NCQA team to review the work before final submission. This helps to ensure that you meet all of the criteria before you submit, and can pass the requirements to achieve the distinction the first time you submit. Need more information about the distinction? Contact Amanda Ciadella at amanda@theverdengroup.com 31

Details: www.pcmhcongress.com

payer pol icy changes

JOINUSAt THESE CONFERENCES&EVENTS pediatric super groupconference -

Philadelphia, PA

May 15 ? 17, 2019

Presenting & Exhibiting

thefutureof pediatric practice2019 -

August 30 - Sept 1, 2019

Lake Beuna Vista, Florida

Presenting & Exhibiting

2019PCMHCONGRESS -

September 6-8, 2019

Boston, MA

Presenting & Exhibiting

08 pointsof view: recommendedreading From the team at The Verden Group

Mitigatingrisk onoutpatient bundl ed payment contracts Fr om Ph ysician's Pr act ice Bundled payments have been around for quite some time. From ?global?payments for deliveries to bundling of same-day multiple procedures to episode-based payment models under CMS?Bundled Payments for Care Improvement (BPCI) Initiative, hospitals and specialists alike have had some sort of exposure to the concept of ?bundling?. More recently, we?ve seen more and more commercial plans looking to the outpatient specialty market to apply the same methodologies. Click the link to continue reading: w w w.ph ysician spr act ice.com / pear ls

AAPRel easesUpdatedPeriodicity Schedul efor Infant,Chil d, andAdol escent Wel l nessVisits Fr om Healt h y Ch ildr en The American Academy of Pediatrics (AAP) has approved the 2019 Recommendations for Preventive Pediatric Health Care (Periodicity Schedule) which is a schedule of screenings and assessments recommended at each well-child visit from infancy through adolescence. AAP will describe updates to this annually reviewed schedule in the policy statement, "2019 Recommendations for Preventive Pediatric Health Care," published in the March 2019 issue of Pediatrics. Click the link to continue reading: w w w.h ealt h ych ildr en .or g

OutsourcingBil l ing: Is It aGoodCal l for Your Pediatric Practice? Fr om Ph ysician's Com pu t er Com pan y Nothing makes a pediatrician?s eyes glaze over more quickly than having a discussion about billing and collections for the practice. Revenue cycle models, A/R Days, insurance claims, and any number of other similar topics aren't covered in medical school but they're a critical component of the success or failure of a pediatric practice. Why? They provide the lifeblood for any business ? revenue. Click the link to continue reading:: blog.pcc.com

36 www.verdenviewpoint.com