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Copyright @Medical Management , Inc 2012
Hospital Owned Group Management
Copyright @Medical Management , Inc 2012
Hospital
Copyright @ Medical Management , Inc 2012
Why are hospitals acquiring• Everyone Else Is• Hospital Pie is shrinking• Secure Downstream Revenue• Consultants Tell them To• Keep Providers in the area• Reform is forcing them/ACA
WHY THE ACQUISITION TREND
Why are physicians selling:• Regulatory requirement fears (Stark, Anti-Trust, Compliance)• Contracting leverage• Losing Money/Better Pay• Not interested in running a business• Work-life balance• Retirement
Copyright @ Medical Management , Inc 2012
Copyright @Medical Management , Inc 2012
Hospital
Copyright @Medical Management , Inc 2012
Inherent Flaws and Result• Clinics Losing Money• Pressure from Board Members• Executive Turnover• Difficult Physicians• Decrease in Access/Productivity• Decreased Quality/Accountability• Increased Cost/Reimbursement• Intent of Law and Results of Law aren’t aligned
Intent of the Law:• To Decrease costs• To Increase Quality• To Increase Access
Copyright @ Medical Management , Inc 2012
• Financial Viability• Keep Providers in the area• Continuity of Care• Support System• Integrated Network of Physicians
Good Reasons for Acquisition
Copyright @Medical Management , Inc 2012
Construction Business Model• One time customers• Large $s• Payment upon completion• About Outcomes
Bowling Business Model• Recurring customers• Small $s• Collection up front• About Experience
Risk of Failure is Very High
Copyright @ Medical Management , Inc 2012
Copyright @Medical Management , Inc 2012
• Different Entity• Different Governance• Different Metrics• Different Revenue Cycle• Different Business and Delivery Model
Hospital Clinics
WHY DO HOGS LOSE MONEY:• Run as hospital department not separate entity• The hospitals decisions optimize earnings of health system vs. the group• Hospitals tend to have large risk management and administrative overhead• Hospitals strip the ancillaries from the clinic for better reimbursement• The benefits in hospital systems are generally higher• Hospital revenue cycle different than in groups, aren’t optimized for groups• Hospitals have many one time interactions. Groups recurring interactions• Healthcare is getting very complex providing a lot more business to
accountants and attorneys. Hospitals pay accordingly• Rates contracted for physicians are frequently contracted lower in order to
have hospital's receive reimbursement at a higher rate• Payer mix often changes when groups are brought into hospital ownership• Doctors don't have same interest in cost and quality control or accountability
in a hospital owned environment as when they own their own business• Physicians receive base salaries or insufficient incentives productivity drops• The groups size is often too small to focus on collections or credentialing
like one would in doctor owned business• The cost of failed or unwound acquisitions is costly to the system as a whole• Limited Physician Voice
Copyright @ Medical Management , Inc 2012
Hospitals Most Important Asset
GROUP CULTURE
Values
Purpose
Management
Governance
GROUP PEOPLE
Dyad ModelProviders
Back Office Procedures
Technology
GROUP SYSTEMS
Front Office Processes
Clinical Protocols
Revenue Cycle
Compensation Model
GROUP FINANCE
Group Specific Metrics
System Profit
(Printer/Ink)
NetworkJoint Ventures
BrandingGROUP
GROWTH
GROUP SUCCESS
Telemedicine
Copyright @ Medical Management , Inc 2012
Margin: 20-30%
Margin: LOSS
Real Life Example
Copyright @ Medical Management , Inc 2012
Questions to Ask Yourself
• Should I employ physicians?• If no:
– Am I supporting and partnering with area DOGs– Am I forming or being part of Clinically Integrated
Networks– Am I forming joint ventures
• If yes:– Do have the right physicians?– Do I have physician leaders (Dyad Model)– Do I treat my medical group as it’s own entity
• Medical Group specific Governance• Medical Group specific Processes (Clinical, Front &
Back Office)• Medical Group specific Revenue Cycle Management• Medical Group specific Branding
Copyright @ Medical Management , Inc 2012
Clinics
Copyright @ Medical Management , Inc 2012
Copyright @Medical Management , Inc 2012
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