Letter from the President

Here we are in June 2021.  Memorial Day weekend typically signals the start of summer.  Life seems to be returning to some semblance of normal.  We are back to the planning of picnics and barbecues, vacations, dining out, baseball—all things that many of us took for granted 18 months ago, suspended largely since March 2020, now reappearing on our calendars.  While all may not have returned to 100 percent normal, staff and patients alike are eagerly pushing to forget about the past 16-18 months and get back to pre-Covid state.  As managers of processes and people, we are all addressing the health and well-being of our teams—providers, patients and staff. Ensuring that staff are taking time off to recharge as well as finding ways to recognize their sacrifice and endurance through various staff appreciation programs.  If we work directly with providers, we attempt to do the same for them.  But, what do we do for ourselves?  Who is there to tell us that we need to take time to recharge, or rather to make sure we have the coverage necessary to spend time away from the office, really away—in both body and mind. I am one of those who does not follow my own advice.  I encourage my team to take time off to recharge, but I fail to do so myself.  Even when I may physically be absent from the office, my mind is still there, going over details and messaging staff.  Without really removing oneself from responsibility both physically and mentally, the recharging will not be effective or worthwhile.  Might I recommend that everyone make a “Covid resolution” to take time every day to do something enjoyable that is non-work related.  To put work out of mind and focus on something important to you; not you the Manager, but you the individual.  When I am truly able to do that, I have found that it makes a difference in attitude and outlook.  I feel more energetic and able to focus when I do get back to a work project.

Sharing my own experience, recently I was impacted greatly by adopting our latest “fur-baby”.  Since my husband and I have been married, we have had at least one dog in our house at all times.  We have never gone more than a few months without any dogs at home.  Losing a beloved pet requires time to grieve and recover.  In 2018 we lost our two relatively young dogs within six months of each other. Both suffered from illnesses that required a great deal of care above that of a normal pet. The loss of those “family members” was emotionally draining and caused us to take a pause in our rescue efforts.  Fast forward to 2021 after navigating the Covid experience, as well as enduring a great deal of personal change in our lives, the idea of adopting another pet was far from my mind.  I credit my husband for taking the initiative to push me out of my comfort zone to adopt another dog.  It was exactly what the doctor ordered!

Perhaps your “therapy” is a vacation to a favorite or exotic place, or camping, or running, hiking or biking. Whatever your respite may be—open yourself up to finding a way to regularly incorporate that into your life.  If you don’t feel you have the ability to take an entire week off, then start by leaving early one day a week and just enjoy the sunshine or the rain.  Then, maybe that will turn into taking a ½ day off or even an entire day. I always think of the saying “How do you eat an elephant? One bite at a time.”  As with anything that seems overwhelming in its entirety, broken into smaller steps that are easier to tackle removes any barrier or walls that your mind may have put up.  Take care of yourself.  If you don’t, you won’t be able to take care of all of those around you.  Now that we are finally coming out of our “long, dark Covid Winter” we should be mindful to enjoy opportunities for community as we never know when those opportunities may be taken away again.  Don’t take anything for granted, enjoy every minute.  The PAMGMA Community offers various Webinars and Virtual events that are work focused, but perhaps a needed break from the day to day reality of running a practice.  Consider attending a Webinar or participating in a virtual round table.  Take the opportunity to connect with a fellow PA MGMA member who will understand your struggles.  Remember that PA MGMA is a community for everyone! #PAMGMACares

Traci Evans, FACMPE
Pennsylvania MGMA, President

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 Value of Membership

  • Leading analysts, experienced practice executives and industry suppliers discuss relevant practice issues
  • Enriched educational content from within the accredited American College of Medical Practice Executives (ACMPE) management skill-set
  • Leadership development through your contribution on the Board of Directors and/or Committees
  • Network and Collaborate, with your peers at regional events
  • Understanding emerging technology and applications to efficiently and effectively manage medical care and improve patient satisfaction
  • Listserv for you to share challenges and successes with healthcare leaders
  • 24/7 Access to the online Practice Resources and the MGMA Washington Connection
  • Complimentary registration to 12 webinars on current topics to benefit your practice
  • Advocacy on legislative issues and regulatory compliance
  • Participation in practice staff compensation survey

Membership in Pennsylvania MGMA is a rolling 12-months. You can enroll as an Individual, Affiliate, Faculty or Student member.

For practices which want to enroll in our Organizational Membership: Benefits include everything afforded to General members and:

  1. Discounted Dues - The more individuals you enroll as members, the higher the discount on membership dues;
  2. Transferability – If a member leaves the organization, the membership can be transferred to another individual who is affiliated with the organization; and
  3. E-Z Billing - One consolidated invoice for membership renewal.

Join PA MGMA Now!

Healthcare M&A: Top 12 Considerations for Physicians Negotiating the Sale of their Practice to Private Equity

By: John Washlick, Shareholder in the Healthcare Section, Buchanan Ingersoll & Rooney [SPONSORED]

Private equity (PE) remains very active in purchasing physicians’ private practices, but when acquisition activity is as high as it is now, practice owners have a number of cards to play in negotiating the best deal possible.

In fact, healthcare saw more than 300 PE deals in 2019 totaling more than $78 billion – the highest values ever recorded, according to findings from Bain and Company. Despite COVID-19, S&P Global intelligence is showing that trend is continuing.

Selling to PE firms comes with unique benefits to the healthcare provider, such as removing administrative burdens from physicians and allowing them to focus on practicing medicine. PE investment also gives practices the capital to modernize or upgrade, which benefits patients and can create economies of scale.

When a private practice decides to sell to a private equity firm, there are a number of points to consider when negotiating the term sheet and definitive agreements.  nd know the best practices when it comes to negotiating deals.
  1. Understand the value of the business: Practice owners must understand that the value of their business is far greater than its physical assets or current annual income. Depending on the size of the practice, the sellers may be well advised to engage their own appraisal of the business.
  2. Negotiate a purchase price: PE firms tend to base their purchase price on a multiple of EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization. Understanding the market rate for your type of practice is critical when negotiating a final sale price.
  3. Outline exactly what is included in the sale: Even a relatively simple office-based practice may be comprised of several business units or asset classes. These can range from patient accounts receivable, medical office buildings, intangible assets and new business opportunities. Physicians must outline what to include in the sale and what to retain.
  4. Iron out how the PE firm will pay for the assets: PE firms typically leverage equity, debt, or a combination of the two when making acquisitions. Each option has various implications for the selling partners, and it’s critical to understand the differences between them.
  5. Decide if the buyer will acquire a controlling interest: Some PE firms are satisfied with (or may actually prefer) having a minority stake in a business if that helps maintain the entrepreneurial spirit of its original owners. The selling partners must decide how much of their business they wish to retain.
  6. Determine if a representative from the PE firm will serve on the board of directors: A PE firm’s representation on the portfolio company’s board depends on whether the investment is in the medical practice or a derivative thereof, such as a joint venture. If a new entity is formed to consolidate multiple practices or to form a new business, it is more likely the PE firm will require significant representation on the board. Additionally, a PE firm may seek representation on the company’s audit and remuneration committees.
  7. Negotiate whether existing management will stay in place and have representation on PE/Affiliate Board: Even if the PE firm owns a minority position, it may demand “step-in” rights to allow it to take control of the business for a variety of reasons. Selling parties must examine these clauses closely to ensure their interests are maintained. Practice leadership should also consider requesting representation on the PE affiliate board or the board of the affiliated PE management services organization (MSO) that will be assuming management post sale.
  8. Establish capital support from the PE firm: Financial structures of PE investments depend on whether the deal is an asset purchase or a share purchase. The current value of the business is the starting point for all price negotiations. However, PE firms are adept at determining a company’s “enterprise value,” which assumes how it will perform after the infusion of capital and management resources. PE deals may utilize a variety of debt instruments depending upon market conditions and the particular nature of the business, and it is critical for the seller to understand the implications of this.
  9. Determine the impact on physician compensation and benefits: If a medical practice’s compensation plan is out of step with the current economic market, a PE firm may suggest ways to redesign the plan, like reallocating the compensation pool, to improve the group’s overall performance.
  10. Decide how and when distributions of newly generated profits will be shared with the physicians: The source of profit distributions will vary depending upon the nature of the business unit in which the PE firm has invested and how that entity affects the profitability of the medical practice.
  11. Negotiate restrictive covenants and non-compete agreements: It’s not unusual for physicians to be restricted to providing only professional services that are aligned with the PE investors’ interests. In states where such covenants may be enforced, attention must be paid to the scope of the geographic restriction both during and after the term of the physician’s employment.
  12. Negotiate exit rights: If a PE firm were to sell its interests in the business enterprise sooner than the physicians would otherwise qualify as 100% vested, selling physicians should negotiate that their interest nevertheless becomes automatically wholly vested at any time the PE sells all, or part, of its interest.
In most cases, PE transactions are the first and only transaction of this type that a physician will be engaged in during their careers. Not the same can be said of PE firms. Retaining expert legal counsel who can guide sellers through the process and eventual structuring, negotiation and documentation of the transaction, is an important step in ensuring the best possible outcome for all stakeholders.

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About the Author

John Washlick

John R. Washlick focuses his practice on healthcare transactions and corporate compliance. His background as a CPA affords him a unique perspective on mergers and acquisitions and their tax implications. His clients include hospitals, healthcare systems, physician practices, individual physicians, and entrepreneurs and investment-backed entities. John is a recognized authority on federal income tax issues involving tax-exempt organizations and the Anti-Kickback Statute and the Stark Law. John has experience in structuring, negotiating and documenting a variety of complex business transactions, including mergers and acquisitions, joint operating agreements, joint ventures, clinical co-management agreements, academic and clinical affiliations, and contractual relationships among providers and with third-party payors.

Issues Every Business Leader Should Overcome

By: Derek Goodman

Business leaders have many challenges to overcome. Some are external, including a down economy or poor talent pool. Others are internal issues that can be changed with time, attention, and intent. A few of these include missing the details, an inability to read other people’s emotions, poor self-confidence, and not recognizing employee strengths and weaknesses when trying to put together a complementary team.

Failure to Pay Attention to Detail

Small details can make or break a business’s success. Small business owners, especially, are prone to looking at just the big picture, which can lead to small missteps that have a negative impact on the future. Mundane administrative tasks are one example — everything from filing paperwork to not updating business hours online.

Making legal decisions early on is something else many small business owners miss — filing for LLC status, for instance. Something as simple as logging onto an online formation service to get through the process takes only minutes but might prevent a financial catastrophe. Leaders can also prevent other details from falling through the proverbial cracks by outsourcing some tasks to a virtual assistant.

Undeveloped Emotional Intelligence

Emotional intelligence is the ability to recognize one’s own emotions, as well as those being experienced by others. It is a useful quality in both personal and professional relationships. When leaders understand others — such as their employees, vendors, and customers — they can show more sensitivity and tailor their interactions to the person at the moment. This can help prevent tension in the workplace. Leadership training company RocheMartin explains that people can enhance emotional intelligence by becoming more self-aware and celebrating positivity.

Lack of Self-Confidence

Self-confidence is crucial in business, particularly for leaders. However, many high-achieving adults suffer from what some call imposter syndrome. This is a negative self-perception where the individual feels as though they are not responsible for their successes and have trouble accepting that their abilities have led them to a place of reverence in their organization. Over time, self-doubt comes through and can put leaders in a bad position if they begin to lose the respect of their subordinates. Those in a leadership role can improve confidence by practicing optimism, celebrating small wins, and networking with other leaders, according to Pragmatic Institute.

Inability to Develop a Team

Another area many business leaders don’t take the time to refine is their ability to develop a functional team. Although businesses are made up of individuals, these individuals must complement each other to bring the best to the organization. Leaders should look for team members with complementary strengths — for example, hiring someone with excellent speaking abilities and someone else with a stronger technical aptitude.

One way that business leaders can do this is by hiring from the right sources. When you’re in healthcare, it makes more sense to post jobs on a specialty job board like the Pennsylvania Medical Group Management Association. This way, the right individuals are targeted and are more likely to fully understand the scope of the position and the skills and talents needed.

Once you become a leader, you must continue to refine your skills. Make a point to learn something new every day. This could be how to better read other people’s emotions or ways to hire more efficiently. The point is to never stop learning and working on yourself. The moment you do is the moment that you can no longer lead effectively.

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About the Author

Derek Goodman

Derek Goodman is an entrepreneur. He’d always wanted to make his own future, and he knew growing his own business was the only way to do that. He created his site Inbizability, to offer you tips, tricks, and resources so that you realize your business ability and potential now, not later.

Is your practice positioned to combat the increase in Ransomware attacks?

Over the last 18 months, there have been dramatic changes in how most businesses leverage technology across all industries.  The everchanging threat landscape jeopardizing these businesses has also continued to grow exponentially, and while we have seen an increase in all different kinds of attacks, the most prominent continues to be Ransomware.  Ransomware not only threatens your business’ sensitive data, but also your finances.  As a result of the pandemic and our shift to a mass remote working model, there has been a 150% surge in ransomware related attacks with financial demands continuing to rise.  Now more than ever it is imperative that organizations be proactive with their IT security plan and understand the potential risks that threaten operations.

What is Ransomware and how has it changed?

Ransomware is a form of malicious software that is commonly spread in two ways.  The first threat comes through a phishing e-mail containing malicious attachments masquerading as a file they should trust.  The other comes from a user that inadvertently visits an infected website where malware is downloaded and installed without the user’s knowledge.  Once the malicious software gains access to the network, it will encrypt some or all the files, limiting your access to this data.  Encrypted files will then require a specific key to be entered in order to decrypt the locked data.   The user is presented with a message explaining that their files are no longer accessible and will only be decrypted once the victim pays the ransom figure (normally via Bitcoin) provided on the screen.  

Traditionally, Ransomware attacks only involved the deployment of ransomware without much intimate knowledge of who or what they were attacking.  It was a very transactional attack in the sense that they were not looking to prolong or further engage with their targets.  These attackers were simply waiting for the payment, and once received, would send the decrypt keys.  If there was no payment, they would not send the keys and just move on to their next victim.
More recently, the attacking approach has shifted. Along with a much higher price tag on their ransoms, attackers are also now focusing on the contents of the company data that they have taken control of, looking for ways to further exploit their targets.  These hackers will go through any available data (industry knowledge, key leadership, organization detail) and exploit the data they have taken for maximum effect.  No longer is it a scenario where if you do not pay, they simply will not send the decryption keys.  Now, if the ransom is not paid, they will share your company’s sensitive details on the dark web for anyone to see. This strategy ultimately makes it far more difficult for organizations to forgo payment and try to restore from a previous backup, given the high level of ramifications should they go that route.

Who are targets for Ransomware?

It is important to note that these attackers are opportunists. They are looking for organizations that cannot afford to be without access to their data, making it far more likely for these companies to pay a ransom quickly. Healthcare providers, law firms, government agencies and financial institutions all retain massive amounts of critical data making them far more susceptible to attacks. These ransomware attacks do not just affect large corporations either.  While some attacks are targeted, others are indiscriminately spread across the internet, looking for an unknowing user to click an attachment or open a link.

How can practices reduce their risk?

  1. Train your employees to identify phishing e-mails and educate them on the risks of clicking unknown links or opening e-mail attachments.
  2. Consistently review your organization’s security posture to ensure you are leveraging the correct blend of solutions in order to verify that you are protected against the ever-changing threat landscape.
  3. Have a comprehensive backup solution and make sure it is tested regularly.
  4. Confirm that a multi-factor authentication is enabled on all accounts.
  5. Keep all operating systems patched and up to date.
  6. Have a documented incident response plan: clear and defined steps and processes to take in the event of an attack.
  7. Assess and validate the cyber security protocol of any vendor that would have access to your critical data.
  8. Obtain a level of cyber security insurance that matches your organization’s needs.

It is imperative that organizations of all size, location and industry recognize that they are vulnerable to these ever-changing and malicious attacks.  By having a robust security posture and well-trained staff, your organization greatly mitigates the risk of ever falling victim to a ransomware attack.

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About the Author

Justin Krentz

Justin Krentz is a Senior Account Manager with Vertical Solutions whose main responsibilities include account management, operations and new business development . His experience spans 12 years of selling managed services and comprehensive technology solutions to small and mid-sized businesses, with a primary focus in the healthcare sector. 

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