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Copyright @Medical Management , Inc 2012 Hospital Owned Group Management

Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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Page 1: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

Copyright @Medical Management , Inc 2012

Hospital Owned Group Management

Page 2: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

Copyright @Medical Management , Inc 2012

Hospital

Page 3: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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

Page 4: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

Copyright @ Medical Management , Inc 2012

Page 5: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

Copyright @Medical Management , Inc 2012

Hospital

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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

Page 7: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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

Page 8: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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

Page 9: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

Copyright @ Medical Management , Inc 2012

Page 10: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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• Different Entity• Different Governance• Different Metrics• Different Revenue Cycle• Different Business and Delivery Model

Hospital Clinics

Page 11: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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

Page 12: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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Hospitals Most Important Asset

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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

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Margin: 20-30%

Margin: LOSS

Page 15: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

Real Life Example

Page 16: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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

Page 17: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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Clinics

Page 18: Copyright @Medical Management, Inc 2012 Hospital Owned Group Management

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Copyright @Medical Management , Inc 2012