Health System Service Line Strategies: Success Stories and Tales of Woe

Alaina Crislip, Member, Jackson Kelly PLLC, Claire Turcotte, Director Of Legal Services, Premier Health, and Chip Hutzler, Partner, HMS Valuation Partners, discuss successes and challenges regarding health system service line strategies, including reevaluating strategies on specific service lines, addressing service lines with extra capacity, embarking on joint ventures with other health care entities, revisiting service line arrangements, and ensuring services are maintained in the face of unexpected challenges. Sponsored by HMS Valuation Partners.

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Transcript

Speaker 1: 0:14

Support for A HLA comes from HMS valuation Partners, which is one of the largest and most experienced healthcare valuation firms nationally founded in 1996. They have been providing consistent valuation and compensation consulting services exclusively to the healthcare industry. Their clients include healthcare leaders at multinational hospital systems, large and small physician groups, law firms, and healthcare service entities across 47 different states. For more information, visit hms value.com .

Speaker 2: 0:48

Welcome to this A HLA podcast. Uh , my name is Lena Klip , um, and I'm here with Claire Turcott and Chip Husler . And we're here to discuss , um, health system service line strategies, success stories, and tales of woe. Um, we're, couldn't have thought of two, you know, better folks here to discuss this topic. Um, with , uh, Claire and Chip and I , um, go way back , um, to leadership , um, development with a HLA , um, Claire is , um, currently practicing with Premier Health , um, a Dayton based health system serving the southwest Ohio area. Um, Claire's role at Premier involves supporting strategy in business development and reimbursement, including structuring joint ventures and relationships with other hospitals and providers, assisting with service line strategies. Um, prior to joining Premier, I think most folks might be familiar with Claire , um, as being a partner at Bricker and Eckler, which is the Cincinnati , um, law firm. Um, and she was in their office in Cincinnati, Ohio, and she was practiced with them for about 15 years. Um, in total, Claire's been practicing for over 30 years , um, in private law firms in , in various states, and she's been in her in-house position for almost four years now. Um, Claire has been a long time supporter and, and contributor to a HLA and , um, a regular speaker and author, and is currently, has currently been named , um, an A HLA fellow. Uh, similarly , uh, chip also is well known . Chip has , um, been , uh, a lawyer for over 30 years and is a healthcare evaluator. He's been a member of a HLA for over 20 years, and is a regular speaker on valuation issues in the context of , um, complex legal framework. Um, again, as I noted , um, my name's Elena Christop . I'm with the law firm of Jackson Kelly . Um, I provide a counsel to a myriad of healthcare , um, provider entities and, and types and transactional compliance , um, and other regulatory areas. I also have in-house counsel and, and corporate compliance experience. Well, Claire , let's start with you. Um, let's , uh, look at maybe , um, whether, you know, the pandemic forced you or if you have experience working with, with , um, entities that maybe forced you to reevaluate your strategy , um, on specific service lines.

Speaker 3: 3:24

Sure. Um, you know, I think the pandemic caused many health systems to focus on cutting costs and gaining efficiencies across the board to try and work their way back to break even , or a positive operating margin. And that, that included looking at specific service lines and, and strategies there. Um, so, you know, a couple of trends I've seen , um, include considering partnering or joint venturing with third party vendors, for example. Um, these are vendors who of offer , um, a variety of experience areas, you know, management, operational experience, marketing experience, and expertise in a specific service line. Um, and oftentimes these vendors approach hospitals with, well-developed models that they've deployed with other health systems , um, in certain regions or even across the country. So they have a lot of experience to offer, and they've really kind of honed , um, a model that they, they think is valuable and they can do things like bring , um, new ideas about workflow efficiencies, staffing efficiencies, ways to improve the patient experience or the actual clinical care even. Um, they often have expertise in doing market analysis where they can help a health system , uh, really identify the best geographic locations or maybe the best segment of the population to focus on for a particular service line. Um, maybe they have the ability, they believe to get better payer contracts if they are , um, going to help open non-hospital sites where the services would be billed as a freestanding entity such as a , a freestanding imaging center or some other, or urgent care or some other , um, similar type of, of site. Some of them have a different , um, look and feel about the way the service would be delivered. That might be , uh, for example, more oriented, more of a retail type setup that could have to do with the geographic location, possibly maybe away from the hospital in a more , uh, suburban mall type setting. Or , um, maybe the service is a women's service that that is operated more in a spa-like setting and would attract a certain type of patient to that setting. Um, so, so they have a variety of different things to bring that may be kind of different than the way the health systems operated that service line before. And a real, these, these can be a great opportunity for a health system to really , uh, consider how they could change their service line. Um, and, and there's a process these vendors usually go through to, to evaluate that opportunity. Um, and, and really a big part of this is whether the health system thinks , uh, the bang is worth the buck. At least that's how I've seen it looked at. I mean, is, are these benefits that this vendor could bring and how the service line could be redesigned, is that gonna bring enough benefit to the hospital to be worth giving up a portion of the business to the vendor if, for example, it's gonna be operated as a joint venture. Um, so in that scenario, a true operating joint venture, the hospital would be kind of putting their whole service line into the joint venture with this vendor splitting the profits. Oftentimes those arrangements include , uh, management function where the vendor has a management entity that provides management services to this, this new joint operation, or maybe the management company itself is joint ventured. I mean, so there's, there's variations on the theme, but there, but I've seen this across a variety of different service areas. Um, so , um, you know, it's, it's an interesting opportunity to just kind of explore what, you know, how a hospitals could redesign their service line to , uh, provide better care, maybe better access, reduce costs , and in the end , um, be more profitable and, and serve as a vehicle to, to improve the profitability of the health system overall.

Speaker 4: 7:38

I'll add a couple of comments to it, and then, then we'll move on , uh, to another topic. But I'll say I've also seen , um, in particular rural facilities who don't really have the best handle sometimes on their own data and, and what, what they need to do or what areas they're strong or weak in. I've seen them focus on just hiring , uh, some vendors to help them just understand what strategies they might even consider to pursue what their data's telling them. So at a baseline, they need help just to kind of get to the question, to answer the question of what they could do better and, and where there might be opportunities, and then how to do that. So that's , uh, seem , there's a couple companies out there that help rural facilities in particular with that question. So I've seen that a bit too. Uh, but that, that's sort of my only additional thought. Great, great thoughts, Claire.

Speaker 2: 8:41

Well, thank you. Well Chip, we'll, we'll start with you on this next one. Um, are there any particular examples , um, you know, from, from your experience in this area that you can think of in which a service line, you know, maybe had extra capacity , um, that wasn't effectively utilized and, and in those types of situations, what, what have you seen , um, addressed as far as , um, those instances?

Speaker 4: 9:05

We do see those transactions , um, frequently. We even saw them, you know, in years gone by, but they become more popular recently where a particular , uh, health system or facility may have extra capacity in a given service line. Um, whether it be cardiac or whether it's orthopedic or whatever it might be, it could be any number of service lines. And effectively they work with other healthcare entities that are in the region , uh, to offer that up to them as assistance as a way for the region to perhaps tackle that particular patient need more efficiently and more effectively. Uh, and I've seen that in , in a few instances where that's done. And while there's legal issues to tackle to ensure that you stay compliant with all the various laws, there's obviously, it's obviously commercially reasonable, right? It makes sense to try to use the resources in a given region more efficiently if you can. So we've definitely seen folks do that, and when they have extra capacity, they'd rather not lose money on that if they can. They'd rather deploy that. And when a neighboring entity doesn't have that service or that capability, it's helpful to them. It has drawbacks. Um, at times , um, sometimes you hear some complaining that maybe , uh, they're really just trying to drive more patients in the direction of one party or the other, but typically I've found that it's a win-win for both sides, and it can really work well if it's done well. You have to really spend a lot of time upfront to make sure everybody understands what , um, the parties are gonna do for each other to make it work the best. I don't know , Claire , if you have thoughts on that, but that's what I've seen.

Speaker 3: 10:57

Yeah, sure. I mean, I , um, I've certainly seen that type of arrangement where , uh, a hospital partners with another hospital or provider to kind of stand up a new service or a , or a service line joint venture , um, maybe at a , a rural hospital or a smaller community hospital, you know, larger hospital has experience with that, and they can , um, and essentially enable that service to be provided in that rural or smaller hospital community , um, so that patients in that community can get their care, you know, right at home. And that that health system can , um, either operate that service, that smaller system can operate that service, or , uh, maybe it's the larger facility is actually gonna , uh, put out a tentacle and have a , you know, a remote site in that other market to operate the service. Um, this could be due to the system having extra capacity, you know, additional , you know , uh, physicians that have extra capacity , uh, for example , uh, in that specialty. Or it might be just , um, a strategic alignment effort to have a strategic alignment with that smaller community hospital, rural hospital , um, and to be offer expertise that they have to enable that particularly specialty service to be area offered in that market. For example, I've seen this with radiation therapy, I've seen it with , um, medical oncology, chemo infusion, cath lab , uh, other cardiac services and so on. Um, so really, you know, it's a way to get that sort of more highly specialized acute care service into a smaller community hospital or rural hospital market , um, to serve those patients. I , I mean, I think you're right in terms of, you know , uh, pros and cons, I think it can be done as a win-win. Um, I think, you know, part of the goal of that type of strategic alignment is often for the larger hospital to kind of be , um, for there to be referrals back to that, that hospital for other types of services or maybe some specialized services that might come out of that. For example, surgical oncology might come back to the big system and the smaller hospital might do the medical oncology infusion at their site . So different thoughts like that, but I think that can , uh, work. Um, other types of , um, ways I've seen, you know, additional capacity or knowhow maybe is a different way to put it, be , uh, deployed is if a health system has developed , uh, a new service line and they develop expertise in kind of standing up that service, they can develop , um, a consulting arm or sometimes it's called a venture arm that is literally actually, you know, a health system sponsored consultant firm , uh, or arm that goes out and helps other systems stand up that same service or do that same kind of joint venture. Um, this is often, you know , um, offered by, by larger systems to go to, again, sort of rural or smaller community hospitals. Um, and that can be, that can be really helpful because they've developed it on a lot of know-how in the course of doing it themselves. Um , another idea would be to create , um, a staffing company of some kind, whether that was physician staffing or other types of hospital staffing. I think that's probably not as viable , uh, in today's market for, for a , a number of types of folks just because of , um, labor shortages. But certainly that's an option , um, if, if a health system found that it had that extra capacity that it could be deployed elsewhere.

Speaker 2: 14:54

Okay . Well, thanks, Claire . Those are, those are some great thoughts. Um, do you have , um, maybe, you know, teeing off on this one, do you have additional tips maybe on supplemental deployment or deployment for service lines , um, either in, in, you know, maybe based on knowhow that term that you used, or to the extent that maybe they have this extra capacity, they have extra folks or, or, you know, either through the service line or they have, you know, maybe they've overhired the number of physicians, but maybe tips on how you would deploy these service line strategies that they can consider?

Speaker 3: 15:29

Yeah, well, I think a couple of things. I mean, just in general in partnering with another, you know, a health system partnering with another hospital , um, or system, you know, it's, it's important to get the basics right, you know, focus on relationship building , uh, building that trust, that trusting relationship , um, exploring whether or not there's a cultural fit. You know, if you're gonna operate a service together in a joint venture or you are gonna be in a , a , an arrangement where you're providing a service on somebody else's campus , um, you're gonna be working together for, for, for a period of time, you have to make sure that there's a fit in terms of culture. Um, and, and certainly that you have common goals. Um, if both parties aren't , aren't there trying to kind of solve the same problem, address the same need and so on, where they don't have the same outcome or goal in mind or the same culture or philosophy, then um, often things can fall apart and, and sometimes that's not discovered until a lot of time is spent, right? I mean, you can spend a lot of time exploring an idea only to find that really in , uh, down the road, you know, that that one party isn't on the same page as the other party. Um , and then just in terms of more legally oriented tips , um, you know, I , identifying, you know, potential structures and vetting those structures , uh, early on, you know, vet the regulatory issues, consider reimbursement early, who, who can or wants to bill for the service and what are the options there. Uh, for example, could you meet, can you meet the provider base status, regulation location, the location requirement? Um, if the idea is that, say the larger system would actually open its own site on the other hospital's campus , um, you know, there's some constraints there. Um , similarly if you're gonna try to do like a hospital within a hospital type approach. Um, so just getting those issues on the table early enough. So again, you're not expending a lot of time and effort only to find that the structure you have in mind doesn't work under the applicable regulations. Um, also just a , another issue that I think has kind of become more , uh, part of my everyday thinking , uh, as an in-house lawyer is actually antitrust. So mind your antitrust PS and Qs, make sure the people involved realize and recognize that when you're talking with another hospital system, or even in that third party vendor scenario that I mentioned earlier, those folks are generally your competitors, even if they don't currently have the service, you're talking to them about having the service, right? Or a third party vendor may actually be a competitor because they may operate their own independent sites as part of their services that would be competitors with your system, or they are partnering with other hospitals to do that service as a joint venture in your general market. So you have to keep in mind that these parties you're talking to, you're exploring this potential opportunity, are often your competitors. You can't, you have to avoid sharing competitively sensitive information with them. Things like, you know, detailed information about your current strategic planning in that area. Certainly your payer contract information, your payer rates and so on, even your staffing costs and things like that are generally treated as competitively sensitive. So what I've seen people do to manage that issue is often to hire a third party consultant that can look at some of those things in what we call a black box. So they, you send all the information from both sides to a consultant and they can kind of compare, you know, compare options like, should you operate these sites as independence or hospital based , and you look at the different rates or which hospital system has better rates for this service. They aren't gonna share the details of that with both parties, but they can kind of say directionally, what's better? Or Here's, you know, the , the , the differences about this much without going into details. Um, so, so that's just something that I think has become , um, more, again, you know, a prominent in my current role. Um, as far as tips for that consultant type role, that opportunity that I mentioned, you know, I think if, if a health system's gonna try to become a consultant to help other hospitals stand up a service, they should develop a model or two that they wanna focus on at least as a starting point, something concrete that can be , um, proposed as the opportunity. Um, so that, so that there's something concrete to discuss. It might vary in the end a little bit from that, but it's something that it can be , um, even more easily explored. Develop the right team, make sure that you have the right people on your consulting team that are gonna be needed to address the key issues that the other hospital would need to , uh, address in order to stand up that service. You know, operations, finance, reimbursement, marketing, maybe somebody who knows about accreditation, the different things that are gonna be important to them to, to work through, to actually stand that up. Be transparent about what your capabilities are and what your limitations are. If there's something that's gonna be needed and you don't have that on their team, your team as a consultant, be upfront at the , and and tell the other hospital, Hey, this is what we have to offer, but you're gonna need to find another resource either internally or another third party to assist with this part of it. Um, you know, just have had some experiences where that wasn't made clear. And then, you know, the, the hospital that was engaging, the consultant had needed assistance and support, had questions about areas that the consultant really had nothing to offer on, and that created a challenge , um, and some frustration, frankly. Um, so, you know, you don't wanna oversell what you can do for sure. Um, it really has to be more than, okay, we've done this in our shop and this is, this is exactly how we did it here, because there may be differences between the two organizations, differences in size, differences in structure, differences in philosophy, difference in market, you know, climate, things like that, that might really suggest that the client hospital has some different needs. And if the consultant can't anticipate any of those, or can't assist with anything that is gonna be different than what they did, then it's really not as helpful.

Speaker 2: 22:22

Sure. Chip, do you have any, anything to add maybe in that space and maybe even, you know, through, you know, kind of, you know, supplemental deployment of those service lines, you know, maybe the deal management perspective from your experience, you know, pacing, pacing of the deal and maybe making sure that you have any valuations, you know, in a timely fashion.

Speaker 4: 22:42

Yeah, you definitely do need to make sure you do a lot of that upfront as best you can. Sometimes it is last minute on the valuation piece because you don't really have the terms nailed down, but you wanna make sure that that all makes sense. I mean, to me, I see these types of deals in particular see it where we were talking before, how you see it often where a larger system may be helping out a more rural or, you know, isolated system. Um, and there it strikes me as commercially reasonable because , uh, that system might otherwise not have its doors open without some of these additional services, or they might be, it might be hard for them to keep their doors open, let's put it that way. And so the infusion of assistance from another system is helpful , uh, for that purpose. And what that other system gets in return is some , um, intangible, you know, sure, they also may get referrals of patients, but , um, the , that's not what the payment is based on. Instead it's based on , um, the services they're providing and so forth. And there's benefits to both sides , um, despite that, that are, are helpful and really keep that community-based facility open and operating and, and there's a convenience factor that , that , that's worth something. So when you think about the valuation, you think about those, those kinds of things as having value as well. So to me, that's , um, the way I think about those types, those aren't the only types, obviously of, of transactions where capacity is, is used elsewhere. There may be more, more , uh, nearby ones that are more equal in , um, financial position and market position. And those have some of the issues. Claire mentioned antitrust, and so I gotta be careful, but , um, but usually we're brought in after those things have been worked out. So hopefully , um, hopefully those get worked out ahead of time. I think we probably , uh, wanna move on to the next topic. Sure . But there's plenty of tips. You could, there's plenty of experiences there. We've seen where, where , um, where there's things to talk about.

Speaker 2: 24:53

Okay. Okay. Great. Um, Claire , um, moving on here , uh, I think you mentioned earlier, you know , uh, trying to identify and select, you know, your appropriate partners , um, when we're looking at, you know, community served by healthcare entities, you know, and, and looking at joint ventures , um, do you have any tips maybe on identifying, you know, the parties for those entities to joint venture with? Or, you know, based on your experience whether there's certain types of joint venture arrangements that are particularly successful?

Speaker 3: 25:27

Um, sure. I mean, I think, again, kind of back back to basics in , in doing any kind of a joint venture, and that would apply here to service line ventures, you know, making sure that you have , um, strong leadership behind , uh, the joint venture effort , um, both management leadership and physician champions , uh, that are supportive and engaged in the process. Uh , management buy-in and support on both sides. Um, I can't tell you how many times I've seen things fall apart if, if one of those factors is missing , um, particularly physician champions because for a clinical service line , uh, to change, to change the way it's being delivered from, you know, currently to some future state is going to require , uh, physicians probably to do some things differently and to maybe be working with physicians at a different system or with a consultant or something like that, that that is gonna , um, require them to be really on board and to bring along their colleagues who might not be at the table in the discussion, but are going to act , be affected by it. So, so that's really important, again, that trusting relationship and having , um, shared expectations and goals. Um, other things, factors that may contribute to success or , you know, for particular types of joint ventures is timing. So if, if it's a particular type of opportunity that , um, you know, it's a kind of a hot growth service type or something , uh, or a new type of structure that becomes available due to reimbursement or something, I mean, for example, right now we're seeing a lot more interest at health systems and having an a SC strategy because of , um, you know, reimbursement shifting to more and more procedures being , um, a SC only with certain payers. And so , um, that's, that's something where, you know, if the timing is right with the reimbursement going in that direction, you can kind of capitalize on that. Um, keeping in mind that, you know, tides turn particularly with, you know , uh, market trends and reimbursement and, and so some joint ventures may be time limited , you know, for the next X years. That's the hot model or thing to do and take advantage of that. And then, and then that opportunity may change and they may have to shift. Okay.

Speaker 2: 27:53

Chip, let's , uh, let's go to this next question here. What are some signs that an arrangement, you know, a service line or a particular arrangement may be ripe for revisiting?

Speaker 4: 28:04

Well , um, good question. What we've seen a lot of in the recent years, obviously with , uh, the pandemic, maybe some staffing shortages and inflation, is that labor costs has increased dramatically. And , um, a lot of arrangements, particularly your hospital based arrangements, your emergency medicine, anesthesiology , um, and so hospitalist, even things like radiology, which historically , um, didn't necessarily have any payment going on, there was just kind of a mutual exclusive, have seen , uh, recent labor cost increases due to shortages, due to maybe inflation, due to , um, people's changing attitudes about working in during the pandemic and so on. And all of those things have caused a lot of those arrangements to be revisited by health systems. Maybe at the request of the, of the providers, right? The providers have said, Hey, we can't continue to provide this , um, either without , uh, the , without any payment or for the payment that you're currently making because our costs have increased, but our revenue has not increased at the same pace. Now maybe revenue will eventually catch up, but in the short term , some of them are needing to revisit an arrangement because they're just, they can't continue to carry on those losses. Now, typically when you pay a stipend like that to a hospital-based specialist, let's say anesthesiology , um, you're paying a flat amount, particularly if it's mature arrangement that's been in place for a while . And both sides take kind of equal risk that , that they'll either collect more or less than they expect, and it could lead to a slight loss that the doctors have to cover in one year and a slight gain in another year that , um, that they make it up on, or that ends up be looking like almost a mini windfall. But it's okay because if you set that stipend correctly, both sides take sort of equal risk of that happening. There's hopefully equal risk of a loss versus a game on that. But if the paradigm shifts and now it doesn't seem like there's any way to get to , uh, a positive number, then people wanna revisit those arrangements. And so you have to spend time revisiting that, and you have to take into account what's happened to fair market value. Has it changed dramatically because of labor shortages or, or cost increases, inflation and so on. And typically it has, and you can factor that in and hopefully get to a place that the parties can negotiate an arrangement that they can live with that's compliant. And we're seeing a lot of that right now in a lot of those specialties. And at a lot of places, it doesn't matter whether it's , uh, big urban areas, rural areas, it's all over the place. Um, we're seeing a lot of those changes. As I mentioned, even radiology, which historically had no payment, suddenly sees their cost being so high that they need some small payment to make it up, at least in the short term . And you do need to revisit that regularly because obviously , um, over time maybe that volatility will subside a little bit and you'll be able to revisit things and perhaps , uh, get back to a place where you were before, but maybe not. We'll , we'll have to see. It's been particularly volatile recently in my 20 years of being evaluator, you know, this is the most , uh, inflationary period we've had. I can remember back to inflation when I was before I was evaluator in in earlier times, but during the time I've been doing this, we really haven't had the level of inflation we've seen the last couple of years. Hopefully it's subsiding a little bit and , uh, and the government has done what it can to , uh, alleviate that, but you don't know for sure until you kinda see more sustained periods of, of lower inflation. So , um, that's had an impact for sure on what's going on. And there may be other things that you, that cause you to know you've gotta revisit an arrangement. Volumes can change, right? Um, payer mix can change and those things can impact it as well. Typically, those things are things that we're historically we've seen in other situations and been ready to deal with, and we've built into the model, the risk of a change in volume or payer mix. Um, but if it's a dramatic change, one we weren't expecting, then that could cause it as well. I don't know , Claire, if you have any thoughts, but that's what I've seen a lot of lately.

Speaker 3: 32:29

Yeah, sure. Um, yeah, I agree. I mean , um, certainly labor cost increases have really been impacting hospital-based provider arrangements , uh, more recently. Um, and, and creating that kind of challenge for, for hospitals who of course have to have those, those folks engaged , um, really any service area hospital is required to have where they have a contract with an independent provider would, is being impacted by a labor cost increases in inflation. Um, and these groups are really facing significant challenges in covering their costs . I think, I think it's a legitimate problem , um, that, that , um, they come to the hospital with. Um, and so, you know, if the group hasn't been subsidized or isn't getting a stipend, as you've mentioned, ship , you know, a lot of them are asking for that, or for groups that historically have had , uh, subsidies in place , um, you know, groups are coming back and saying, you know, to continue to provide the coverage, the service level that you need. You know, we're experiencing a huge increase, like 30, 40% or something, and we're having trouble recruiting people, retaining people, and we could use help with that. Uh , we've certainly seen that. Um, so, and at the same time, the hospital's experiencing significant cost increases for the hospital's , uh, labor, you know, just basic hospital personnel, nurses, you know , um, and so, so they don't exactly have extra money that available to, to pay these additional costs. So it presents a challenge on both sides. And in the face of this, I think hospitals are looking at ways that maybe they can work with those hospital-based service providers, you know, your anesthesiologist, emergency physicians, radiologists, et cetera , um, to see if that service can be provided in a more efficient way. Um, so maybe that involves , um, the hospital taking on certain functions, administrative functions that traditionally were provided by that group. Things like , um, the billing function, bi billing and revenue cycle management, or assisting the hospital with , uh, the group with recruiting for , um, provide physicians or apps. Um, maybe the hospital would consider employing apps directly instead of having the group employ them, and that there's some efficiency that can be gained there. Um, this could go all the way up to the group , um, being, you know, the serv the group services being billed under the hospital payer contracts under , uh, say a professional services agreement model where the group reassigns their billing to the hospital to the extent that the hospital is able to get better rates for their services through their contracts. So for example, a lot of hospitals have a global contract with a big payer that includes both the hospital services and the physician services. So while they may not have historically billed for, say, emergency services or anesthesia radiology, they may be able to add those, that those rates that service to their contract at better rates than the group can get on their own. Or it could just be that they have a better capability to do the billing and collecting for the group , um, and can get some revenue enhancement that way. Uh , they're also looking at more transparency from groups. I mean, I think a lot of to be compliant health systems have, you know, oftentimes historically in prior times required a certain amount of expense information, you know, look at the books of the group to a certain degree to support a subsidy or stipend, but I think they're demanding even more. Now, if you , you know, essentially if you're gonna ask for this big increase, we need to see the justification for that. And in the course of that, maybe we can redesign how you run your group to some extent. Um, and , um, you know, without that transparency, maybe the , the hospital isn't gonna be able to get comfortable with the increase in the subsidy. Um,

Speaker 2: 36:49

Those are some great thoughts. Um, chip, I was gonna tee off one last question unless you have a comment on, on Claire's thoughts there

Speaker 4: 36:58

A couple more. Yeah, and Claire , you're absolutely right. Um, what I would say is , um, you're, you're right about the concept of transparency. You know, historically, some groups have been very transparent, but others have been reluctant saying, well, that's proprietary information, you know, our collections and so on. And I'm of the view and always have been that if you're getting a subsidy , um, then the, the entity subsidizing you has , um, some ability or , or should have some ability to have , uh, some knowledge of why you need the subsidy, what the, what the justification for that is. And so there ought to be some transparency. Now they might regard that, no, it's a stipend. We're providing coverage. It's not really a subsidy, but the fact is , um, they wouldn't be able to cover their costs without it. So I , I think that it , even though it may be structured as a stipend, it effectively is a subsidy in most cases. And so transparency there is a good thing, and some of them on their own haven't been that successful. There've been some bankruptcy. So , um, one thing we're seeing a lot of as a solution is just employing , um, all the providers in many instances, including the doctors. That doesn't work in all states, of course, but in, in the states where you can employ the providers, we've seen some of that. And I think also maybe on a , a larger level, some facilities are asking their providers to work a little harder, frankly. Um, there are some specialties , uh, where the providers, maybe the typical number of hours per year is a little lower than other specialties, and the hospitals are saying, we'd like you to kind of get closer to what these other specialties do in terms of hours, because , um, that's gonna be a more efficient solution than just bringing on more providers at a lower number of hours. Um, and you know, it's not , um, it , it's a , it's maybe partly a lifestyle question. You're asking people to say, Hey, listen, in the face of this hard situation we're in, we need you to give up some of that lifestyle, not entirely, but some of it , um, to, to maintain this relationship because otherwise we're not gonna be able to do this in the most efficient way. Um, you don't have to do things in the absolute most efficient way for the cheapest price, but you want to be , uh, trying your hardest to make things as efficient as you can. So I think that's what I would add onto that. Elena , I know we have time probably for one more question, then we're probably heading

Speaker 2: 39:22

Yeah, yeah. Let's, let's , uh, I'm just gonna tee this one up and then whoever, you know, either you or Claire, you know, feel free to chime in here. Um, you know, we're talking about service lines and, and, you know, unexpected challenges that health, you know, healthcare entities may face. Um, is there any advice that either of you have, you know, for ways that, that these healthcare entities can prepare and, and ensure that they're providing, you know, basic services to their communities or even, you know, even more specialized services , um, to their communities , um, in, in the face of these unexpected challenges?

Speaker 3: 39:58

Um, sure. I can jump in there with just some high level thoughts. You know, I mean, I think it's, it's difficult for hospitals to prepare for, you know, any possible type of unexpected challenge , uh, whether that's a pandemic or a financial challenge, like inflation , um, or, or something else that might occur. But having said that, I think , um, you know, hospitals would do well to really , uh, remain vigilant about managing their costs, like most of them are now , uh, focused on, and to continue to strive to operate as efficiently as they can so that when an unexpected challenge occurs, they're able to with withstand that. I mean, part of that might be have , be be have , uh, having some kind of reserves , um, to cover, you know, an unexpected cost increase or something like that. But basically just to try to operate , uh, as, as, as leanly and efficiently as you can while still delivering quality services to your community. Um, also just to, to develop a culture that's nimble , um, a culture that thinks creatively embraces change and is able to , um, actually implement changes reasonably quickly. I mean, I think with the pandemic and following the pandemic health systems that have, have done well and recovered quickly, are those that can actually move, move fairly quickly to make a change. Um, you know, for example, in my own health system, we've implemented a new type of working called, you know, the agile , agile team workflow, where, where teams work in an agile manner on , uh, making improvements through group meetings where they solve problems and actually make decisions. They actually do the work in a meeting. So instead of having a meeting where assignments are made and people leave and they go do the work outside the meeting, and then they come back a month later and report out what they did, they actually make decisions and make changes that are implemented right in the meeting. And so we've deployed this across a variety of areas. I've, I've been most involved with things with our digital health and physician documentation where they've, you know, they, they claim to be saving , making changes that are gonna save literally millions of dollars in terms of the way certain things , um, are done in our , uh, documentation system that to read to, to improve efficiencies and so on. And, and it's through this agile method. So just to throw that out there as an idea , um, that that can help , uh, prepare for unexpected changes.

Speaker 4: 42:32

Yeah, I think that that's great. Um, I totally agree with that. I would say, if I think about situations like this , uh, to, to tell a , a quick story, I remember a health system once coming to me , um, needing some fair market value help because a, a hospital-based provider group was basically gonna walk out the door, and ultimately they did walk out the door because they weren't happy. Um , but for the hospital, it turned out to be an opportunity to figure out how to do this in a better way than they were doing it. And while they had to use locums for a couple of weeks until they could kind of , uh, get some other providers in place over the next 12 months, they actually spent less money. And , um, the group that they ended up putting in place did a better job collecting, and they were in a better place. So they were able to, by being forced to revisit it, they were able to actually end up at a better place than where they were before. And they didn't ever expect that to happen. And they were , there was, they felt like crisis at the beginning, but when they look back on it, they said, it's kind of good that we went through that crisis. It wasn't really our fault. The group didn't really understand and, and was the one that walked away, but we , um, were able to use that as an opportunity to kind of take the lemon and make lemonade. So that's, that, that can happen and it , it can happen when you're sort of forced with having to look at things very closely and, and examine them. So definitely encourage people to think about how you don't wanna be in crisis to have to do it, can you do it before you get to crisis?

Speaker 3: 44:08

Okay . Totally agree. I mean , I think that, that, that is, you know, part of that is having that culture that embraces change and is, you know, able to move quickly, whether it's a crisis or just , you know, an opportunity to reevaluate how , uh, a service is delivered and to come out on the other side of it better. Well, chip and Claire , um,

Speaker 2: 44:30

It's always a pleasure. I appreciate you both, you know, chatting with us here today and, and giving us some, some insight into creative ways to evaluate and, and considerations for hospitals and healthcare entities , um, to consider when they're, they're, you know, evaluating how to redeploy or creative , uh, considerations for their service lines. This has been, you know, really helpful and , um, hopefully folks will, will , um, have enjoyed our, our chat. Let's do this again sometime soon. I

Speaker 4: 45:01

Agree. Appreciate it. Thank you so much.

Speaker 1: 45:02

Thanks. Thank you for listening. If you enjoyed this episode, be sure to subscribe to a HLA speaking of health law wherever you get your podcasts. To learn more about a HLA and the educational resources available to the health law community, visit American health law.org.