A prominent spine surgeon and researcher at the University of Wisconsin received $19 million in payment over five years from spinal device maker Medtronic Inc., according to a senator who is investigating potential conflicts of interest in medicine.
The surgeon, Thomas Zdeblick, received the payments while helping Medtronic develop and promote a number of spinal products. Medtronic's $19 million in payments to Zdeblick from 2003 to 2007 went "greatly" beyond what was evident in disclosures he made to the university, Sen. Charles Grassley said in a Jan. 12 letter to the school's president.
Seven states and two family-planning groups have asked a federal court to block a new federal regulation that protects health workers who refuse to provide care that they find objectionable.
In three lawsuits filed in U.S. District Court in Connecticut, the states and groups sought an immediate court order preventing the regulation from going into effect and a permanent decision voiding the rule. The lawsuit challenges the regulation on several grounds, charging that it is too vague and overbroad and conflicts with other federal laws and state laws.
Most people instinctively associate hospitalists with internal medicine—that is where the specialty has its roots, and roughly three-quarters of practicing hospitalists are trained in general internal medicine.
But other specialties have been adopting the model—obstetrics and general surgery were among the first—and tomorrow's hospitalist may as likely be trained in neurosurgery, pediatrics, or virtually any other specialty.
We're already seeing the model spread. Baptist Memorial Hospital-DeSoto in Tennessee recently hired orthopedic hospitalists to handle hospital care 24/7, for instance. For an upcoming magazine article about women's health service lines, I spoke with executives from six leading hospitals about their obstetrics programs, and nearly all of them are working with laborists—also known as OB hospitalists—in one form or another. And all of them expect the model to become even more influential in the industry.
Why does it matter? For one, it's more than a passing fad—the hospitalist model will likely change recruitment and training in other specialties in the same way it has internal medicine. But more importantly, it is an effective approach to bridging the growing divide between physicians and hospitals, and it's one of the few that benefits both parties.
Hospital executives like the model because having a physician onsite 24/7 has been proven to improve quality and can help with ED coverage. Physicians like it as an option for avoiding the burdens of private practice, and those already in private practice can more efficiently focus on outpatient care, which often leads to more revenue. It has provided an option—though often expensive for the hospital—to avoid paying stipends for ED call coverage, and it appeals to a generation of doctors with new work-life balance goals.
When AtlantiCare Regional Medical Center lost four of its private practice OB/GYNs a few years ago, administrators couldn't even recruit replacements without laborist options, says Ann Szapor, RN, MBA, executive director for women's and children's services.
"We were finding that new OB/GYN physicians coming out of training weren't interested in joining private practices where they had to be on call every third night," she says.
The story is the same in most surgical and medical specialties, and if the trend plays out to its conclusion, the future healthcare marketplace will be very segmented. Private practice physicians that formerly divided their time between outpatient care and the hospital will focus primarily on the former, and hospital care will be the domain of on-site, employed specialists.
But both hospitals and physicians seem increasingly happy with that arrangement. And that doesn't happen very often.
Elyas Bakhtiari is a managing editor with HealthLeaders Media. He can be reached at ebakhtiari@healthleadersmedia.com.
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A recent report from MGMA confirms that operating costs are rising faster than revenue in many medical group practices. Although the findings are not surprising, the effect of the costs-revenue disparity is continuing to unfold, and how practices and health systems are responding could have serious implications for the practice of medicine.
MGMA Cost Survey: 2008 Reports Based on 2007 Data reports that although multispecialty group practices reported a 5.5% increase in median total revenue in 2007, median operating costs rose by 6.5%. Many single-specialty practices reported a similar trend. For example, cardiology practices' median total medical revenue decreased 0.61%, and operating costs rose 6.3%.
Physicians and groups offset practice overhead and add revenue streams when they expand into ancillary areas, such as imaging, lab services, and surgery centers. Although this works for diversified groups, it may have the opposite effect in subspecialty practices, says Allen Dye, vice president of marketing at Merritt Hawkins & Associates in Irving, TX.
Subspecialization may contribute to some of the financial woes practices are facing, especially with surgical subspecialties, as there isn't the same opportunity to spread out the risk as in a more diversified practice. "They are not as insulated from market change," Dye says. Moreover, as the practices add surgery centers and make other attempts to "look and feel more like hospitals, they are going to see what [hospital] margins have been doing for a long time," he says.
Practices are—or should be—questioning the role of services and procedures, such as:
Are ancillary services covering variable expenses and contributing to fixed overhead?
Are the ancillary services offered in the practice the highest and best use of office space?
Are there ancillary services that the practice should be offering in-house?
Is it financially worthwhile to continue to perform in-office procedures?
This article was adapted from one that originally ran in the January 2009 issue ofPhysician Compensation & Recruitment, a HealthLeaders Media publication.
Starting a medical practice today is not the same as it was 20 years ago. Today's younger physicians are opting for partnerships or buying established medical practices outright rather than starting one from the beginning. Although this is good for physicians who are considering selling their practices in the next few years, receiving both fair market value and right value can be a challenge.
The primary goal of the selling physician is to maximize the value of the practice two to three years before selling it. Common industry approaches focus on the selling process itself. A practice owner ready to sell his or her practice today may choose to work with one or more of the following:
A business broker who finds a buyer for you
An attorney who focuses on the sales contract
An accountant who focuses on final accounting and taxes
A business appraiser who evaluates your practice
Depending solely upon any one expert, or even a combination of experts, risks unplanned and uncoordinated support that may not be in the seller's best interest. Many have no industry knowledge and are focused on the sales transaction. This could cost the seller more than 20% of the selling price.
What buyers want
A practice has greater value when it contains elements that buyers want, such as fair market value and transferable goodwill. Therefore, the practice needs to position itself for sale by focusing on attributes that will raise these values in advance.
Because a transition period exists when a medical practice changes hands, compatibility between buyer and seller is important. Incompatibility can lead to miscommunication, misunderstanding, and litigation. Therefore, the motives and desires of the buyer are important to know.
Fair market value is a standard set by the IRS Code. This standard is used to help set practice prices and comply with fraud and abuse laws. Be aware that the practice price and the fair market value may not be the same. Understanding a practice's fair market value gives the seller a strategic ad-vantage that can make the practice more valuable to prospective buyers.
Finally, transferable goodwill is defined as intangible items that do not disappear once the owner phases out of the practice. Accomplishing transferable goodwill can be confusing to a practicing physician-owner when his or her perception is that the practice, the owner, and the reputation are one and the same. The professional corporation no longer needs to rely on this perception as a primary strategy; there are other options. Buyers will be focusing more on what is transferrable and buildable for their future.
Maximize value
If a practice owner is considering selling or merging his or her practice within the next 1,000 days, it would be prudent to find a firm that specializes in growing and maximizing the value of medical practices. The practice owner will most likely still be practicing and will need to continue the daily routine in order to maintain current value. This leaves little time to focus on the selling plan. Outsourcing the work to the right firm allows the practice owner to increase value while maintaining emotional stability within the practice.
The firm's expert will develop a strategic plan based upon the owner's future goals. He or she can also coordinate the processes between the attorney, the accountant, and any other vendor relationships. The practice owner should find a firm that thinks strategically. Such a firm is capable of seeing the broader picture, coordinating staff members toward a common goal, and blending daily routine with meeting selling goals. In addition, practice owners should seek a firm that possesses an entrepreneurial spirit. The buyer will need to feel confident that the practice is capable of successful growth once it is sold.
Selling a practice takes more than merely finding a buyer, having contracts made up, and determining the sale price. That approach results in more money being left in other people's pockets. Selling a practice requires consideration of the elements that go into making a practice more valuable and desirable.
Although this can take time, practice owners owe it to themselves not to turn the sale of their practice into a common transaction. After all, it is the owner's life that has been invested and the owner's future that will be affected.
This article was adapted from one that originally ran in the January issue ofThe Doctor's Office, a HealthLeaders Media publication. Horowitz is the owner of M2 Power, Inc., a strategic management firm that specializes in working with owners of health enterprises to gain greater income, wealth, and free time. Contact her at 516/409-0849 or by e-mail atinfo@m2powerinc.com for more information.
Recent reports show that the doctors who perform the majority of checkups and everyday care in this country are rapidly disappearing, says Allied Pediatrics of New York CEO Gary S. Mirkin, MD, in this column for Newsday. Mirkin says a "perfect storm" of paperwork and lower reimbursements are driving PCPs and pediatricians away.