WeeklyRush

Fraud + Abuse

There have been some eye popping headlines lately about the use of kickbacks to induce physicians and others to refer patients. Apparently, the FBI has just scratched the surface.

Kickbacks are career ending for healthcare professionals and cause significant issues for the company and investors involved. As someone who has experienced the organizational fallout, it’s a lesson that you don’t easily forget.

I worked for an organization under the first OIG settlement for use of kickbacks and other practices deemed abusive. What I learned is that people cross the line when they are under pressure to meet financial targets. 

Investors expect two things from leaders: growth and/or profitability. So I thought it might be helpful to frame the fraud and abuse risks that way too.

Growth:

A focus on growth increases the risk of kickbacks. To minimize the risk, you should have a process in place to:

1/ Identify all your potential referral sources. 

Potential referral sources are physicians, organizations owned by physicians or a family member and others who can influence patients.

2/ Review all the payments made to the potential referral sources to ensure they are supported by a contract. Contracts need to be reviewed for:

  • The nature of the agreement
  • The payment to ensure it reflects fair market value for the services rendered
  • The documentation requirements

3/ Review the documentation for services provided to ensure the services were actually provided in accordance with the contract.

4/ Educate those contracting with a potential referral source on the risks and requirements.

Profitability:

The shading things some people will do for their own gain is almost limitless. 

To minimize risk you need to be constantly looking at the financials, asking questions and validating the answers when something looks off.

With that said, the most vulnerable numbers are the revenue numbers.

1/ Trend and benchmark the charges

2/ Review the number of changes to the charges and the timing of the changes

3/ Review the methodology for contracted write-offs and discounts 

4/ Watch for deviations from the methodology

Potential issues:

1/ Out-of-network strategy 

2/ Over utilization

3/ Additional outlier payments 

4/ Tucking and smoothing to meet financial targets

All of these issues are problematic. The underlying reason and business practices will tell you how problematic.

The Risk is Real

For me, the most memorable cases is that of Richard Scrushy, Founder of HealthSouth and felon. Yes – felon.

Richard and his inner circle intentionally misstated HealthSouth’s revenue numbers by $2 Billion before the problem was uncovered.

The numbers alone make it memorable. However, the problem surfaced just after we launched our online training programs that focused on all the processes needed to accurately report revenue. The case validated our why.

The government is now using data and AI to catch fraudsters. It’s a good time to make sure your I’s dotted and T’s crossed and that you have a process in place to keep them dotted and crossed.

People or Idea?

What’s more important – people or the idea? When posed to a group, the response is usually 50/50. 

According to Ed Catmull, co-founder of Pixar and author of Creativity Inc., the result means that people genuinely don’t know. The answer is people because ideas come from people. 

Ideas are just a thought or a suggestion for a possible course of action. The idea isn’t the end all be all – it’s the starting point for figuring out how to solve a problem.

Steve Blank and the lean launchpad approach does a good job of explaining the process for how to evaluate the quality of an idea. However, the hardest part is getting people to share honest feedback with you. Why? There are a lot of potential reasons, from not wanting to hurt your feelings to thinking they have nothing valuable to contribute. The good news is there is a way to get the feedback you need.

Ask people to speak candidly. That sounds pretty simple but according to Ed it is necessary. People want to keep their job, client or whatever relationship you have with them in tact and fear that their honest comments will impair it. Asking them to speak candidly gives them permission.

Be candid with everyone. ~ Jack Welch

Radical Candor

If you are leading change and innovation within an organization, Radical Candor is worth reading.

I read it while working on a difficult consulting project that had massive scope creep, tight deadlines, budget constraints, holiday breaks and a challenging political environment. If there was ever a time for radical candor – that was it.

I modified the framework from the book to the 3D’s: Discuss, Debate and Decide in part because it’s easier to remember and it works when everyone speaks candidly. If not, you will end up with naysayers and sabotagers.

The 3D’s

Discuss: It’s just about acknowledging the problem and generating ideas to solve the problem. Ideally, the group to build on each other’s ideas.

Debate: Once enough ideas have been generated and everyone has had a chance to mull them over, debate the merit of them. Things to consider:

  • The requirements
  • The impact and value to stakeholders and customers
  • The deadline and time constraints
  • The bigger impact to the organization 

Decide: Set a deadline and assign one person to make the decision.

If your stakeholders are strong decider types make sure they understand the process. A decision made before discuss and debate concludes will not be the best one. Tweaking is allowed after the decision.

According to Ed Catmull, executives need to protect those leading change and innovation – not the people managing the existing operations. It may be uncomfortable but change and innovation is essential to remain competitive. 

How matters

How matters more than most leaders thought.

Corporate America is changing. Business leaders are realizing that they need to think beyond the bottom line.

Some investors are pushing back but what they might not realize yet is companies can do even better when they consider the social and environmental impact in their policies and business practices.

Haven

Haven Healthcare is the new healthcare company formed by Chase, Amazon and Berkshire Hathaway that is led by Atul Gwande MD. Dr. Gwande has been sharing his experiences, thoughts and insights about the cost and quality of healthcare in his books and articles for more than a decade. 

Since formation, the company has been working to understand the needs of their patient population so that they can “create new solutions and work to change systems, technologies, contracts, policy, and whatever else is in the way of better health care.”

The “whatever else” in this case likely refers to the way American Corporations have focused solely on the bottom line. It should come as no surprise to any of us that Jamie Dimon, CEO of Chase is one of the leaders championing this change. 

He is likely getting some good data and management insights to support his position. Hopefully we’ll learn more about that when the Forbes article is published next month. Until then, you might want to check out this book.

Dying for a Paycheck

We’re likely going to hear about some of the work published by Stanford Professor, Jeffrey Pfeffer.

In Dying for a Paycheck, he shares countless stories and stats about the management practices that “literally sicken and sometimes kill employees” and that also negatively impact productivity and the bottom line. Wellness programs can’t compensate for the fundamental issues that exists in many workplaces and unfortunately, are not bending the healthcare cost curve as expected.

Researchers in Denmark are reportedly using prescription drug data to draw correlations between prescription drug use and the effects of entrepreneurship, organizational change, compensation and more.

My guess is that Haven is using their medical data to investigate the policies and business practices of the operating companies and drawing similar types of insights. It could be game changing for Americans and the healthcare industry.

Times change, we need to change as well. 
~ Nelson Mendela

Changing how

A lot of this might seem like common sense, but without data it is harder to convince people change is necessary.

I was an online learning provider during the dot com boom/bust days. We helped clients enhance their operations while providing a path for a brighter future for their employees. How you ask?

Our training solution provided the much needed training to those responsible for the revenue cycle and financial management of healthcare organizations. Most had never received formal training on the systems or best practices which from a financial perspective is a recipe for disaster.

Staffing decisions are emotional but became so much easier with data about the time spent on course work, modules completed and assessment results – all stats we needed to report as a CPE provider.  

We enrolled everyone in their required training modules and gave them time on the job to complete the course work. Some just didn’t complete all of their modules and not surprisingly, they underperformed in those areas of their job. It was a clear indication that they had no interest in the work.

Rather than terminating their employment, it was my opportunity to start a conversation about the right career path for them. There are really only three career options: 

1/ Develop functional depth

2/ Transition to a cross functional role

3/ Retrain for something entirely new

Even though the organization had less than 100 people, we were able to offer all of these options within the organization and financially, we had some of the best years. 

Investments in fundamentals and people pay off in companies of all sizes.

Training investments help people perform better on the job and prepare for a brighter future. Many of the people who successful completed our courses have already transitioned into new jobs. They didn’t have to experience the stress of having their job eliminated as some are experiencing now.

Industry leaders need to be making these types of fundamental investments to be profitable and accountable to all constituents going forward. Those leading in a strong viking and victim culture such as in law, finance and tech might find it harder to make the mental shift but it is time for change.

Regulation vs. Ethics

Can the healthcare industry self regulate?

I had a discussion recently with a CEO to fortune 1000 companies about the need for proper regulation. At the start of the conversation, he asked what I meant by regulation. So to ensure that we’re all on the same page for this discussion, let’s start with the definition of regulation.

Definition: A regulation is a rule or directive made and maintained by an authority.

Regulations are tricky to get right because they need to be protective but not restrictive – and somehow, they need to be efficiently and effectively enforced to work well. It takes a lot of work to strike the right balance. That may be why some politicians and business leaders would like to do away with all regulation and let the markets self regulate. 

AdvaMed


The AdvaMed Association for medical technology is taking on a self regulation initiative for 2020. They are developing a new code of ethics that is values based to better engage everyone in and involved with the organization in compliance. To do so, they have been reportedly working with all of their stakeholders including teaching hospitals, hospitals, clinicians, device and diagnostic companies to develop the new code.

At this point, they have identified six [6] key values for the new code of ethics:

1/ Innovation
2/ Education
3/ Integrity
4/ Respect
5/ Responsibility
6/ Transparency

It’s not clear yet how they plan to operationalize the values. What we know is that member companies will need to have policies and programs in place signed by the CEO demonstrating compliance in order to be awarded the AdvaMed seal of approval.

There is a carrot for member company participation. The seal will help business partners and customers identify organizations who are in compliance. That may also give companies selling solutions an edge in competitive bid opportunities.

There is no stick for non-compliance. AdvaMed will not initiate investigations or bring any action for non-compliance. 

The question that remains unanswered is whether ethics can protect consumers from corporate wrong doing and greed better than regulations?

However, the industry should welcome the attempt to self regulate even if it’s an added regulatory measure. With all the advances in medicine that are raising new ethical questions and concerns for the healthcare industry, ethics need to be ingrained in the culture for companies to earn the trust of partners, customers and patients around the world.

Relativity applies to physics not ethics.
~ Albert Einstein

Startup Comp

What is the value of your time and risk tolerance?

A member of the Female Founders Network shared her story of working for a successful startup that recently became a public company. She was an early employee but was never offered shares or options and questioned whether or not it was fair.

With the amount of pay inequity in the market, it would be easy to chalk it up to another example of gender inequality. Without knowing the numbers, I have to generously assume it has more to do with risk and reward.

Startups are high risk. It’s easy to look back at a successful startup and wish you were paid in equity. But how would you feel forgoing cash and benefits for a stock vesting plan if the company failed after 4 years? My guess is that the experience gained would not feel like adequate reward for most. That’s the risk – reward relationship of startup.

My advice to the Female Founder Network and you is to know the value of your time and your risk tolerance. Everyone deserves to be fully compensated for the value of their time. The method of compensation needs to reflects your risk tolerance. Methods include:

1/ cash + benefits
2/ stock + options
3/ blended

Time is one of your most precious resources that can only be valued by you. The method of compensation should be negotiated.

From a leadership perspective, we need to think about the person not just the position when offering stock and options. Doing so will help address pay inequity.