Global Medical Solutions, LLC

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Global Medical Solutions, LLC
Albert E. Serrian, CPA, MBA
Atlanta, Georgia
Financial
Technical
Professional
[phone]
www.theMDsolution.com
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Global Medical Solutions, LLC
Denver Colorado
Atlanta, Georgia
www.byrnehealthcare.com
www.theMDsolution.com
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Our Healthcare Executive Team
William D. Knopf, MD PHI COO Michele Molden, PHI
CEO Albert E. Serrian, CPA, MBA GMS, CEO Marcel
Lisi, Byrne Healthcare Sue Eagan, Byrne
Healthcare Tom Baker, JD, Baker, Donelson,LLP Dan
Hillegass, CPA Gifford Hillegass, LLP Sheryl
Cherico, CEO MPACTS
www.piedmontheartinstitute.org
www.piedmontheartinstitute.org
www.www.themdsolution.com
www.byrnehealthcare.com
www.byrnehealthcare.com
www.bakerdonelson.com
www.ghi-cpa.com
www.mpacts.net
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Outline
1. History of Hospital Physician Models
2. Current Concerns
3. Five Primary Hospital Physician Models
4. The Bottom Line
5. Complete Hospital/Physician Clinical
Financial Integration
6. Typical Acquisition Process
7. Comments / Questions
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History of Hospital Physician Models
Until the 1980s, physicians in private practice
in the United States maintained autonomy from
hospitals, using the facilities as their
workshops in mutually beneficial arrangements
with no formal financial ties, excluding office
leases. In the 1980s, rapid growth of HMOs,
selective contracting, global capitation and
other provider risk sharing arrangements caused
many physicians and hospitals to develop new and
more closely aligned financial and legal
relationships. Hospitals anticipated that the
employment of or a close affiliation with primary
care physicians, as gatekeepers, would enhance
their market power.
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History of Hospital Physician Models
Hospital interest has been driven historically by
the desire for the physicians clinical business,
the need to combat managed care, and now the
threats posed by single specialty hospitals,
medical device vendors and consumerism.
Physician interest has been driven by fears of
managed care, reduced technical reimbursement by
CMS and desires for new sources of revenue. The
relationships between hospitals and physicians
are thus motivated and influenced by the role of
third parties.
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History of Hospital Physician Models
Other Relics From The Past
1. PhyCor
2. PhyMatrix
3. MedPartners
4. MedCath
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Current Concerns
The official new sticking point in the fight over
health care reform is the "public option," a
taxpayer-sponsored medical insurance plan that
Democrats want to offer as an option alongside a
menu of private insurance plans. Republicans have
turned this into the wedge of the moment -
pillorying it as big government sticking its
smelly foot in the hospital door, on the way to
sitting its whole morbidly obese body in the
waiting room, never to be removed. This public
plan could inexorably crowd out private plans,
leading to a single-payer system. The American
Medical Association put it this way "This plan
threatens to restrict patient choice by driving
out private insurers, which currently provide
coverage for nearly 70 of Americans."
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Current Concerns
We shouldn't be cavalier about the public option.
It's true that government would instantly become
the biggest and baddest insurer on the block,
able to effectively dictate terms to many doctors
and hospitals. We must be very careful about how
that would work.
You Be The Judge Can A Government Public Option
Work Efficiently?
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Current Concerns
You Be The Judge Can A Government Public Option
Work Efficiently?
There's the government option in schooling. All
across America, local and state governments, with
increasing involvement by the feds (No Child Left
Behind), educate young people. All told, it costs
us about 1 trillion a year. Therefore, 10 of
students are enrolled in private schools and
growing numbers are being home-schooled. Is the
government doing a particularly good job with its
dominant market share? No.
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Current Concerns
You Be The Judge Can A Government Public Option
Work Efficiently?
There's the government option in shipping, the
post office. The USPS is a quasi-governmental
agency with special privileges. But that hasn't
stopped FedEx and UPS from peeling away customers
by offering premium services and greater
convenience. Right now, the USPS, FedEx and UPS
split the overnight delivery market share with
about a third a piece. UPS and FedEx continue to
be profitable while the USPS is fiscally bankrupt
and the government will continue to funds its
losses.
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Current Concerns
You Be The Judge Can A Government Public Option
Work Efficiently?
There's the government option in retirement. We
call it Social Security. Enough said!!!
And, like it or not, there's already a sizeable
government option at work in health care.
Medicare, Medicaid and the Veterans
Administration all currently plagued with
problems and funded by the US Taxpayer.
You Be The Judge Can A Government Public Option
Work Efficiently?
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Current Concerns
You Be The Judge Can A Government Public Option
Work Efficiently?
The answer is no. Therefore, how can we position
our practice to be ready if this option is
implemented and the following is required
1. Coordination of Care
2. Meaningful Use of interoperable EMR
3. Improve Patient Outcomes
4. Global Episode-of-Care Payments
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Five Primary Hospital - Physician Models
1. Per-Click or Under- Arrangement Service
Agreements
Stark phase out 10/01/2009
2. Management Service Agreements
Stark phase out 10/01/2009
3. Gainsharing Agreements
4. Equity Joint Ventures
5. Hospital / Physician Complete Clinical
Financial Integration
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Per-Click or Under- Arrangement Service
Agreements
Stark phase out 10/01/2009
The Per-Click or Under-Arrangement model is
generally based on the hospital paying a
physician service organization a fee for each
activity performed, according to a predetermined
fee schedule. This fee is paid in all cases,
regardless of profitability or quality, and fees
and duties must be reasonable and appropriate
for the physician. Physicians create the PSO,
but there are few or no employees, and the PSO
contracts with various physician practices for
services. As part of these agreements, the PSO
usually works for the hospital to establish
protocols and to establish and monitor baseline
measurements on quality and outcomes.
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Management Service Agreements
Stark phase out 10/01/2009
In this model, a hospital enters into an
agreement with a new company, formed for the
purpose of managing a defined set of activities
for the hospital. The new company typically
includes both physician investors and
nonphysician investors who are typically service
line experts. It has a small number of
employees, including management professionals and
provides physician and management services at an
amount equal to or less than their existing
levels. Most of these contracts are with
individual physicians and administrators and
usually include service-level agreements for key
operating, quality, and financial indicators. In
this model, hospitals typically relinquish direct
operating control of the contracted area.
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Gainsharing Agreements
In this model, involving short-term agreements
between hospitals and participating physicians,
the hospitals compensates physicians for helping
it reduce costs while improving quality. The
cost savings are typically achieved through
reductions in waste and substitution/standardizati
on of products. Strict regulatory guidelines
address savings, quality, and participation
issues. Unlike the other models, gainsharing
agreements require no investment and have no
employees.
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Equity Joint Ventures
This model, funded through both hospital and
physician investment, requires the establishment
of a new corporate entity. Capitalization can be
cash or contributions of operating assets, and
both parties stand to reap dividends from
improved operations and service levels as well as
financial performance. These ventures may
involve purchasing or leasing existing assets or
creating new assets. The new company operates
independently, but may purchase services from the
hospital or the physicians individually.
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Equity Joint Ventures
In addition to being the most profitable
structure, the equity joint venture model can
help the hospital increase its capacity, improve
efficiency, or enter new markets. It will
require separate licenses, provider
identifications, and other structural items, but
can function as an integral part of a hospitals
service offering to the community. Over time,
the new company may sell, lease, or totally
replace existing assets. Of all the models,
equity joint ventures offer physicians the
greatest autonomy, but they can create conflict
between hospital and physician groups or
potentially lead to a domino effect where all
procedural specialists want their own similar
ventures.
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The Bottom Line
Provider survival will likely hinge on adapting
to these incentives. Integrating hospital,
physician, other provider operations and
financing is becoming an economic necessity. But
experience has shown us that hospital-physician
integration is far easier said than done. Many
more attempts have failed than succeed. Surviving
global episode-of-care payments, new electronic
record requirements and quality reporting
standards, will require true integration of
clinical and financial operations.
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Hospital / Physician Complete Clinical
Financial Integration
2009 PHI Model
A Care Model That Is Based On A Solid Foundation
Of TOTAL Alignment Between Our Hospital And
Physicians
A Fully Integrated, Strategically And Financially
Aligned Model
Assembled And Governed In Partnership With Key
Cardiovascular Physicians
Anchored With Comprehensive Inpatient And
Outpatient Services
Bound With The Commitment And Dedication Of PHC
To Ensure Its Success
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Typical Acquisition Process
1. Initial Discussions
2. Confidentiality Agreement
3. Term Sheet
4. Memorandum of Understanding
5. Letter of Intent
6. Due Diligence
7. Execution of the Definitive Agreement
8. Pre-Closing Period
9. Closing
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Summary
As increasing numbers of hospitals and physicians
continue to evaluate joint ventures, it will be
important to consider their long-term plans and a
number of questions. For example, does the joint
venture fit their long-term strategy or are they
just responding to an opportunity? When does a
joint venture make sense? What will happen if
they do not act on an opportunity? If the
opportunity is worth pursuing, how will they go
about planning for and implementing it? In the
new environment, improving quality and outcomes
while reducing cost can make excellent economic
sense, but only if joint ventures are approached
and implemented with an eye toward high
performance.
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Questions/Comments
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Global Medical Solutions, LLC
1755 North Brown Road
Suite 200
Lawrenceville, Georgia, 30043
www.theMDsolution.com
[phone]