« August 2011 | Main | October 2011 »

12 posts from September 2011

September 29, 2011

HHS launches new Affordable Care Act initiative to strengthen primary care

The U.S. Department of Health and Human Services (HHS) yesterday launched a new initiative made possible by the Affordable Care Act to help primary care practices deliver higher quality, more coordinated and patient-centered care. Under the new initiative, Medicare will work with commercial and state health insurance plans to offer additional support to primary care doctors who better coordinate care for their patients. This collaboration, known as the Comprehensive Primary Care initiative, is modeled after innovative practices developed by large employers and leading private health insurers in the private sector.



September 27, 2011

Physicians running behind schedule

There is absolutely no substitute for the human touch of when a receptionist personally tells patients that a physician is running behind schedule. Offering an apology to acknowledge the value of the patient's time and periodically updating patients goes a long way to de-fusing patient irritation. With long delays, it's better to offer re-scheduling than to have a patient leave, never to return.  However make sure the schedulers discuss arrival times with patients.

Having the front desk know if the physician is "on-time" is also key.  This should be communicated to the patient when they arrive.  A couple weeks of time study data should give you enough information to estimate your average times in each stage so that you can tell the patient fairly accurately when they will be seen. Make sure this is discussed with the offending physicians and the related impact on patient satisfaction, even knowing getting behind schedule sometimes can’t be helped.


September 26, 2011

Find Out if You Are Prepared For Version 5010

The Fall is here, and the Version 5010 transition deadline is now less than four months away! As the January 1, 2012 deadline approaches, your transition should be well underway. There are certain steps to be taking now during the fall to make sure you are on track for a smooth transition. 

If you are a provider, you should:

  • Continue external testing and making any revisions to systems based on previous internal testing
  • Test those transactions that are used on a daily basis, such as claims and eligibility determinations  

If you are a payer, you should:

  • Continue to coordinate the transition to the new formats and testing with providers, clearinghouses, billing services, and other business partners
  • Complete external testing and your Version 5010 transition by December 31, 2011 to achieve Level II compliance  

If you are a vendor, you should:

  • Continue to conduct external trading partner testing of Version 5010 with customers to achieve Level II compliance
  • Conduct solution rollout and provide customer support for the Version 5010 transition through the January 1, 2012 compliance date  

Please visit the CMS website for more information about Version 5010.

September 23, 2011

Reviewing/Affirming Your Group’s Compensation Philosophy

Before considering any specific pay formula or plan, the initial stage of analysis for an organization should be a review of its compensation philosophy, and today many groups are undertaking a careful analysis of what they feel the goals and objectives of their compensation formula should be. Goals for consideration might include such diverse issues as: 

  • Aligning compensation with work effort
  • Promoting a group culture
  • Providing health care services to underinsured or uninsured
  • Ensuring cost effective quality care
  • Ensuring a methodology that will attract and retain quality physicians
  • Improving service to referring physicians
  • Permitting balanced lifestyle for those physicians who desire better balance
  • Valuing business leadership and physician administrative services
  • Promoting teaching, education and research

When considering design principles for the income distribution methodology,, groups are wise to seek formulas that are well defined and understood, and which leave little that is subject to interpretation and the resulting potential for mistrust. Further, the methodology should employ measures that are simple, within the physician’s control, and which present a clear relationship to the desired behavior or goal. These characteristics are desirable to both the physician and compensation professional. However, in today’s reimbursement environment - that is neither rational nor simple itself, it is unlikely that a formula can perfectly meet all of those characteristics as well as satisfy the wants and needs of the physicians.

September 19, 2011

Product spotlight - Televox

If you could have a perfect day in your practice, what would that mean?? Is it having patients show up for appointments early, scheduling their follow-up visits and actually paying their bills on time? Would the staff have enough time to do their work and not spend all day answering unnecessary phone calls from patients? For many practices, it’s a combination of all of these things and more – keeping patients happy, reducing mailing costs, etc. Anything and everything that will make your life easier, right?

Then check out http://www.televox.com/healthcare/medical-practice.

Many of my clients use this service and I've heard nothing but good things about it.

September 15, 2011

How Does a Physician Merger Process Typically Work?

Merger processes involve a number of discrete yet inter-related steps. The general process is typically one of: 

Getting comfortable with each other

Understanding each others philosophy of practice

Due Diligence

Discussion and negotiation of key merger issues

Developing agreements in principle

Closing the merger

Implementing operational integration plans 

The specific steps of the merger effort are generally as follows: 

Friendship and courtship: Prior to substantive discussions, the groups likely have made contact with each other via informal means. 

Commitment to move forward: At some point, the groups agree that they should "get down to brass tacks" and look at the merger in a more formal manner. 

Antitrust review: Depending on the local market, a first step for many groups is to engage an attorney to conduct an antitrust review. While the details of such a review are beyond the scope of this document, the group should seek experienced legal counsel in this area if there are any concerns about creating significant market power. 

Merger Committee appointment and empowerment: Unless the practices are very small, it wise to appoint a Merger Committee to do the bulk of the discussion and negotiation effort in the merger. It is desirable that the rest of the physicians empower this group to discuss and negotiate on the key merger issues. Typically this Committee includes one to three individuals from each of the groups. 

Hire a Merger Facilitator: This is a vital part of the process. You need an independent person doing your due diligence, asking the hard questions, identify critical issues that must be resolved so the merger can take place, and basically acting as a referee during the merger process. 

Confidentiality, non-competitive use, "no-shop" agreement: In order to protect their rights and the confidentiality of information, the groups should have their attorney draft a letter in which each group agrees to (a) Keep the other group's information confidential, (b) Use the information only for the purposes of merger negotiations and (c) Not seek or negotiate offers with others for a period of time. While this last point is optional, it can be important if the groups are going to expend significant resources during their negotiations. 

Initial data gathering: In order to improve the efficiency and effectiveness of the merger discussions, a significant amount of information must be gathered from each group. Such information may include practice documents and financial information. In addition, it is typically appropriate to have each physician and administrator interviewed or surveyed to identify any merger concerns that they may have. 

Perform due diligence: During this effort, the facilitator, attorneys and accountants review a number of practice related documents to identify any issue that might impact the merger from a legal perspective. 

Merger Committee meetings/retreat to review data, discuss and resolve issues: Using the information gathered in step 6, the Merger Committee meets to discuss, negotiate and reach agreements in principle related to the key merger issues. There are two alternatives in how this process may be conducted: 

a. For groups who have already had significant discussion or are very knowledgeable about each other, a Merger Retreat (typically 2 to 2 1/2 days) can be used to finalize agreements in principle. 

b. For groups who have the need for more in-depth discussion and negotiation, a series of meetings are held during which agreements in principle are made. During this effort other professionals (such as accountants, attorneys, benefits consultants, etc.) are involved as needed. 

Reach agreement in principle and execute Letter of Intent: Once most of the key decisions have been made, the groups execute a Letter of Intent under which they agree to merge under agreed upon terms unless certain events occur. This authorizes the groups to move forward with step 9. 

Create merger documents: Once agreements have been made, the attorneys will draft:

Merger Agreement (primary purpose is requiring each group to make full disclosure about its activities). 

New Entity Corporate Documents

New Entity Shareholder Agreement (Buy-sell)

New Entity Physician Employment AgreementsOther needed documents 

At the same time, the accountants will be developing the financial information needed to close the merger. 

Perform due diligence: During this effort, the attorneys and accountants review a number of practice related documents to identify any issue that might impact the merger from a legal perspective. 

Develop post-closing operational integration plan: The work I have discussed up to this point is focused primarily on the legal and organizational aspects of the merger. Once the groups are on track to merger an operational integration plan must be developed. 

Merge ("Day 1"): The day that the papers are signed and all are committed to move forward. 

Implement post-closing integration plan: The operational integration plan is implemented.

September 13, 2011

CMS Says Physician Group Project Has Cut Costs, Improved Care

Last month CMS announced that its five-year Physician Group Practice Demonstration has reduced costs and improved quality of care. The project was launched in April 2005 and formed the blueprint for the Medicare accountable care organization program in the federal health reform law. The project offered financial bonuses to 10 health systems for meeting performance targets among 32 quality measures and spending at least 2% less on Medicare beneficiaries than nearby facilities. Seven of the systems met quality requirements for all 32 quality measures in the fifth year, and the other three systems met 30 of the measures. Over the five-year period, the 10 systems reduced costs by $134 million.

For more related information:

September 12, 2011

Sale of a professional practice

In this case, the 9th Circuit affirmed a District Court's finding that amounts received by the taxpayer for personal goodwill from the sale of his dental practice should be treated as the sale of a corporate asset with a subsequent dividend distribution. In the same year the taxpayer incorporated his dental practice he entered into a covenant not to compete with the solely-owned corporation. The courts denied him capital gain treatment for proceeds from the sale allocated to personal goodwill because, as an employee of the corporation with a covenant not to compete, any goodwill generated from his professional work belonged to the corporation. The patient relationships were personal, but the economic value of those relationships did not belong to the taxpayer since he had conveyed them to the corporation. Howard v. U.S., 108 AFTR 2d 2011-XXXX (9th Cir.).

Physican Practices and the Small Business Health Care Credit

As the deadline for filing extended 2010 tax year returns approaches, the IRS encourages small employers to verify whether they are eligible for the new Small Business Health Care Tax Credit. The credit is designed to help small businesses and tax-exempt organizations that primarily employ 25 or fewer workers with average income of $50,000 or less. Employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for the credit. For tax year 2010, eligible small businesses with no tax liability can carry back unused general business credits (including the small employer health care tax credit) five years, instead of the previous one year carryback period. Furthermore, businesses that locked into health insurance plan structures and contributions for 2010 (and so could not make any needed adjustments to qualify for the credit for 2010) may be eligible to claim the credit on 2011 or later year returns.

September 08, 2011

The Costs and Risks of Merging Physician Practices

While there are benefits to be gained, there are also costs/risks: 

-      Putting a merger together requires a significant amount of time from both the physicians and their administrative staff. Mergers often take six to twelve months to complete, and there are many issues to be discussed and decisions to be reached.

-      Professional costs (attorneys, accountants, consultants) are not insignificant. While professionals will seek to provide "ballpark" estimates at the beginning of the process, these estimates can change depending on the ability of the merger participants to negotiate and reach conclusions.

-      Many significant changes will (should) be required by all involved. It is not feasible to merge and keep everything the way that it was. Some level of operational integration will be required and this requires compromises by all involved.

-      It might not work. Anecdotal evidence indicates that 50% of all merger processes do not end in a merger. In some instances, this is a positive development as groups may not have the same long-term goals. In others, the lack of a disciplined effort to reach a decision results in people becoming frustrated with the lack of progress and dropping out.

-      External stakeholders might be uncomfortable with the merger. For example, hospital management may not be enthusiastic about a merger between hospital-based physicians. 

Even with these costs and potential negatives, many physicians have experienced that the benefits outweigh any risks. So move forward with your merger process and take control of your future.