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Reimbursement for Remote Patient Monitoring in Virtual Care

July 16, 2021 Chris Eades Practical Solutions in Health Care 00:22:06 Comments Off on Reimbursement for Remote Patient Monitoring in Virtual Care

Reimbursement for Remote Patient Monitoring

Hall Render Shareholders Chris Eades and Regan Tankersley discuss Medicare reimbursement considerations for remote patient monitoring as a part of virtual care.

Podcast Participants

Chris Eades

Attorney, Hall Render

Regan Tankersley

Attorney, Hall Render

Chris Eades: Hello, and welcome to Hall Render’s Virtual Care Podcast Series. Today’s focus will be Medicare reimbursement or remote patient monitoring services. My name is Chris Eades. I’m a shareholder here at Hall Render and a member of our firm’s virtual care team. I’m joined today by my fellow shareholder, Regan Tankersley, who focuses her practice on Medicare reimbursement, both in the context of traditional in-person services, but also virtual care services or telehealth services.

Chris Eades: Regan, thanks for joining us. Before we dive in, maybe tell us a little more about your individual practice.

Regan Tankersley: Yes, thank you. I am in my 19th year of practice as a healthcare regulatory attorney focusing on Medicare and Medicaid payment issues and regulatory compliance.

Chris Eades: Great. Well, Regan, so a hot topic in the realm of virtual care has been remote patient monitoring or remote physiologic monitoring, whichever term we want to use, for a number of reasons. It’s one of those areas where we have seen some permanent change already in the way of expanded reimbursement. It’s certainly an area that seems to mesh nicely with the concept of clinical integration and value-based care. Of course with technology and the advancements we see there, there’s simply a lot out there that we can do to potentially manage patients in a more efficient manner and in a more complete manner.

Chris Eades: So, it is a big topic and really the reason we wanted to kind of level set in terms of where we’ve been in the recent past and where we are today with reimbursement, specifically Medicare reimbursement. It’s also one of those many areas that you and I have discussed where we see competing definitions and concepts, right?

Regan Tankersley: Right.

Chris Eades: So, you and I often talk about the need for healthcare providers to understand there’s kind of the reimbursement side of the coin, all of the rules that apply to telehealth and other technology-based services that are specific to whether and how you can be compensated, and then of course there’s the professional side of the coin in terms of whether you can use these technologies to begin with to render care. If so, what do you need to do?

Chris Eades: So I mention that, right, because of course there are state to state different definitions and rules in terms of remote patient monitoring. We don’t want to lose sight of the fact that those concepts are out there and that we have to pay attention to them, but of course reimbursement is huge. It’s traditionally been the largest obstacle to providing these types of services, and so we did want to drill down more specifically on, again, where we are and where we may be headed with reimbursement in this area. So, I’m going to stop there and maybe, Regan, ask you to comment on whether or not Medicare has a definition that is specific to RPM.

Regan Tankersley: So from a Medicare reimbursement standpoint, RPM services are going to be described by those certain CPT codes that Medicare developed a payment rate for a few years back. I want to say 2018, but I know it’s within the last few years, prior to COVID, prior to the public health emergency. So from my perspective, I like to make the distinction, because we’ve seen a lot with the terminology between telemedicine, telehealth, virtual care, RPM services are paid for by Medicare under Part B.

Regan Tankersley: They are not true telehealth services as defined by the statute, by the Social Security Act that has a very narrow and discreet definition. An 1834(m) of the Social Security Act as to telehealth services, which are professional services rendered by physicians, mid-levels, eligible practitioners to provide those professional telehealth visits, consults, et cetera. RPM are not telehealth in that definition, you will not see those CPT codes listed on the Medicare list of covered telehealth services, they are just fee schedule-based services.

Regan Tankersley: I have to look into it on the hospital side, but on the physician fee schedule side, they’re paid for under the fee schedule. There are certain CPT code descriptors to describe different components of RPM, whether it’s the initial setup, whether it’s the data collection, whether it’s the interaction between the healthcare provider and the patient. So, I want to make sure people kind of understand that there may be some flexibilities during the public health emergency as to how RPM services can be provided and billed, but these services have been covered and paid by Medicare prior to the public health emergency.

Chris Eades: Got it. That’s an interesting point and an important point, right, because many of the state definitions that I alluded to would capture RPM as a defined telehealth service or a defined telemedicine service, depending upon what terminology the state uses. But as you point out, even though we think of RPM in a lot of ways as telehealth or telemedicine, technically it does not fall within the definition of telehealth for purposes of Medicare.

Regan Tankersley: Correct.

Chris Eades: So, why don’t we kind of touch base briefly about where we were with RPM just prior to the pandemic, because it was one of those areas in kind of the larger area of virtual care where we had seen some expansion. Let’s just kind of touch base in terms of where we were initially pre-pandemic.

Regan Tankersley: Right. So because of the nature of those services, they’re not an in-person visit with a Medicare beneficiary. So when Medicare developed payment rates to recognize that there’s a benefit to being able to remotely monitor patients and certain physiologic parameters, weight, blood pressure, all of those things that can be monitored remotely. Because of that non-face-to-face aspect to it, there was a requirement that the patient had to be an established patient of the billing practitioner who was going to be providing and billing for the RPM services, and there had to be consent obtained prior to initiation of those services.

Regan Tankersley: Those are all beneficiary protection measures, because they’re not there face-to-face with their practitioner, so it did require established patient and consent to be in place prior to the public health emergency. There’s been some flexibility because of COVID that Medicare is allowing during the public health emergency that the patient does not have to be an established patient prior to providing RPM services, and that the consent for the RPM services can be given at the time of that initial contact with the patient.

Regan Tankersley: So, those are the flexibilities that we’ve seen during COVID. There was also a flexibility related to one of the CPT codes that required a certain number of data to be collected and reported prior to being able to bill for that code once every 30 days. There’s been then some flexibility there during the public health emergency as it relates to patients’ beneficiaries with COVID or suspected COVID.

Chris Eades: So Regan, pre-COVID, pre-pandemic, was there flexibility to use RPM for both chronic care management and acute patient care, or was it only the former?

Regan Tankersley: I believe initially it was focused on chronic conditions, but there has been some policy clarification since COVID and part of the interim final rule flexibility recognizing that RPM services can be provided for acute care. Which is how you got that flexibility related to patients with COVID. That’s an acute condition, not a chronic condition. Then there’s been some policy clarification I believe moving forward that recognizes the utility and the value in those services, not just for chronic, but also acute.

Chris Eades: Then even pretty recently during the pandemic, this is one of the areas where we’ve actually seen some permanent change, right? We had kind of the rules pre-pandemic, we had some of the flexibilities that you mentioned in response to COVID, and then we actually saw some permanent change at the very end of 2020. What did that permanent change involve in terms of RPM flexibilities?

Regan Tankersley: Yeah. So part of the interim final rule flexibility, as we noted the consent and the established patient. So moving forward, Medicare has clarified through the traditional fee schedule notice and comment rulemaking, that moving forward the permanent changes after COVID will be that that consent that had talked about before that had to be obtained prior to these services being initiated can be obtained at the time of the services being initiated.

Regan Tankersley: That is a new permanent policy change, but CMS also clarified that post-COVID-19, post-pandemic, it is going to have to be an established patient relationship to provide those RPM services. So there’s been some clarification made, but the one really permanent change that they recognized on the consent issue. I think it’s important to realize too with remote patient monitoring, patient services, there’s lots of different devices that can collect data.

Regan Tankersley: I mean, my Fitbit collects all kinds of data, heart rate and your oxygen saturation, but for purposes of these defined terms and CPT codes for Medicare coverage purposes, it has to be a type of device providing the data that meets the FDA definition of a medical device. The data has to be sent automatically, collected and sent automatically to whoever the practitioner is providing the RPM services, it can’t be self-reported.

Regan Tankersley: So, it’s not a free for all. I mean, there’s still some coverage restrictions there related to the type of devices and the interaction that has to occur between the beneficiary and the billing provider for the codes that allow for the communication part to be built.

Chris Eades: Gotcha. How many days per month does the device need to monitor and report data?

Regan Tankersley: It’s at least 16 out of 30 under normal conditions. Again, there’s that limited exception during the public health emergency for patients with or suspected COVID that you can collect data less than 16 days and still report that CPT code that represents the data collection part of the service.

Chris Eades: Okay, so it sounds like then post-date of emergency, even with the permanent changes we’ve seen, that the two areas that will revert back, so to speak, would be, one, that RPM must involve an established patient. Then two, the exception that you just mentioned related to COVID treatment obviously would not apply at that point.

Regan Tankersley: Correct.

Chris Eades: So do we have any indication, Regan, in terms of where we’re headed next with RPM? Do we expect that we will see more permanent change or maybe additional flexibility? Is there any intel on that piece?

Regan Tankersley: I think as CMS continues to provide coverage and pay for these services, they’ll continue to monitor and collect data as to the utility. I mean, obviously I think the benefit of this type of data is that to be able to track patients for chronic and some acute conditions to hopefully provide for better health outcomes and to be able to treat patients sooner based on collecting that data that can be transmitted remotely, it’ll be interesting to see if there are permanent statutory changes made under the telehealth statute.

Regan Tankersley: For example, if going back to the original coverage for RPM services after the public health emergency, there has to be an established patient relationship. Well, can we establish that patient relationship through an initial telehealth visit? Part of that will go to are we going to have some flexibility following the public health emergency [inaudible 00:12:16] to the geographic limitation. That would really expand the ability to have that initial visit and establish a patient prior to establishing an RPM service for the program for those patients. Again, that’ll depend on whether we see a statutory change to the telehealth provisions.

Regan Tankersley: We’re already seeing sort of these RPM companies pop up, because part of the policy clarification with remote patient monitoring is that you can have auxiliary staff performing these services, but under the Medicare Incident-to regulation of services of auxiliary staff have to be directly supervised. RPM is a general supervision standard and CMS has clarified that you can contract with auxiliary personnel to provide the services.

Regan Tankersley: So, we’re already seeing RPM companies coming to physician practices with an RPM program to provide all of the technological support, all of the monitoring, and then providing the support then for the practitioner or their staff to be able to do the interactive communication parts of those services described by that codes. So you might start seeing more of [inaudible 00:13:24] industry pop-up to be able to support it to think about, one, for a data center entity.

Regan Tankersley: If we have some of these contract provision for auxiliary personnel and if we’re not limited by a supervision standard, considering what we do in different locations, different states. I mean, there’s still some of those things to consider, but I can see that happening more as kind of coming to a physician practice with here contract with us, we can provide the services for you so you can provide them to your patient population.

Chris Eades: Interesting. Yeah, we’ve obviously seen a lot of activity legislatively and we continue to see a high number of bills being introduced, most of them focused on reimbursement in the realm of virtual care. We’ve also seen some legislation that’s more specific to increased funding, and worth noting, I think, that we’ve seen some of that legislation be specific to remote patient monitoring.

Chris Eades: I know very recently there was some legislation introduced called the rural remote monitoring patient app, which intended to or is intended to establish a pilot grant program to support RPM in rural areas. So I think in addition to some of the rules themselves potentially changing, there’s certainly the possibility for some increased funding in this area as well that healthcare providers should be mindful of. You had mentioned, but just to emphasize. In terms of the actual technology, Regan, that can be used, what’s the threshold requirement there?

Regan Tankersley: So there has to be, one, depending on the CPT code we’re talking about, but for the data collection devices, there has to meet that definition of a medical device and it has to be able to capture and collect data and send it automatically. But as far as the codes that capture the interaction between the patient and the billing practitioner, that’s described. Then interactive communication, it has to be conversation in real-time. It’s synchronous, it’s a two-way communication.

Regan Tankersley: I believe a lot of that can be done … I mean, there aren’t the restrictions you see under telehealth regarding video, but you can use video enhancements. I think there’s another CPT code that can reflect some other type of services, but the data collection CPT codes have certain requirements, and then the communication-based codes with that interactive, that’ll have a set of requirements, and that’s going to be defined by those CPT code descriptors.

Chris Eades: Right.

Regan Tankersley: I would comment too as we’re talking about payment, my sense, and we know this from some of the committee hearings that have been going on in D.C., that if we do see some increased flexibility under telehealth, I mean, it could be a domino effect, like I just mentioned, that they end up changing the statute and moving the geographic restriction. Well, now you can provide more of these initial patient contacts via telehealth that open up the door to some of these other services like chronic care management and RPM. Will the fee-for-service system continue on or will there be some other methodology or mechanism to pay for some of these services?

Regan Tankersley: I feel like the Medicare fee-for-service system was meant to be reactionary. You’re paying for medically necessary treatment for diagnosis or treatment for people who are already sick, and I think part of these initiatives with virtual care is trying to capture this patient population and data to help provide for healthier outcomes before they get to the point that they’re really sick. Does the fee-for-service mechanism payment methodology really support that type of care? So, I think that still remains to be seen.

Chris Eades: Yeah, and going back to the earlier point that you made regarding the technology actually constituting a medical device. As simple as that sounds, we’ve certainly encountered concerns or issues in the employment setting or hospital setting where individual providers are seeking to use technology that kind of looks and feels like it’s a medical device, but in reality is not a medical device. So even though fundamental, I think it’s important to be mindful of that, that there are millions of applications out there and technology as well and wearable devices, et cetera, that do not rise to the level of medical device.

Regan Tankersley: That’s right.

Chris Eades: I also wanted to mention, you had pointed out one of the permanent changes involving the ability to obtain patient consent at the time of service, which provides some helpful flexibility. You and I field a lot of questions more generally about consent in the realm of virtual care, and so I think it’s also important with consent to keep two additional pieces in mind. One is, again, any state law specific requirements, right? So we’re talking about consent, again, for purposes of Medicare reimbursement, but RPM may be captured by a state telemedicine act, which itself has particular requirements for documented consent. So, need to remain mindful of those state law specific provisions.

Chris Eades: Then two, in a more healthcare provider specific context, quite often RPM is not the only service that you are providing electronically, right? You may be, as you pointed out earlier, providing RPM in conjunction with other types of virtual care services. So, approaching the consent process more strategically and proactively in a way to check all boxes, and also in a way for the healthcare provider to obtain a meaningful and helpful consent ahead of the time is probably a good idea and something that our providers should be mindful of.

Regan Tankersley: Well, and you raise a really good point between consent as required by state law, whether it’s in regard to telehealth telemedicine or just consent to treat, versus some of the specific Medicare coverage requirements for consent related to your ability to have coverage in both of those services, such as the RPM. So those are two those questions, but which one trumps, the federal or the state? We’ve got to comply with both.

Regan Tankersley: I mean, I think that’s just the important thing to remember is that if these certain services from a Medicare payment standpoint require a certain type of consent, we still have to comply with everything related to your state law. But I think too moving forward, I just read this article kind of on security and cyber-attacks attacking medical devices. Something kind of out there as far as whether or not what data devices you’re using to collect data, but how are we ensuring from a cyber standpoint the security of the data, making sure there isn’t any way to hack into patient accounts. So all of that, the more we do virtually, it’s going to just raise that compliance and risk level of how we’re making sure all this type of data and patient contact and information that’s being done virtually is going to be protected.

Chris Eades: Absolutely. Well, Regan, hey, thank you very much for your insight. To our audience, thanks for joining us. If you or your organization have any questions or topics that you would like to share with us, please contact us via our website at hallrender.com. Certainly feel free to reach out to me at ceades@hallrender.com, or Regan, particularly if you have questions specific to reimbursement in this arena. Regan can be reached at rtankersley@hallrender.com.

Chris Eades: As always, please remember that the views expressed in this podcast are those of the participants only and do not constitute legal advice. Thanks so much for joining us.

Practical Solutions in Health Care podcast logo

Virtual Care Considerations for Fraud and Abuse

July 7, 2021 Chris Eades Practical Solutions in Health Care 00:27:44 Comments Off on Virtual Care Considerations for Fraud and Abuse

Virtual Care Considerations for Fraud and Abuse 

Hall Render Shareholders Chris Eades and Ritu Cooper discuss what health care organizations should consider in regards to Fraud and Abuse issues with virtual care.

Podcast Participants

Chris Eades

Attorney, Hall Render

Ritu Kaur Cooper

Attorney, Hall Render

Chris Eades: Hello, and welcome to Hall Render’s Practical Solutions in Healthcare Podcast. This episode is part of our ongoing series called Critical Considerations for Virtual Care and we’ll be focusing on considerations for fraud and abuse.

My name is Chris Eades. I’m a shareholder here at Hall Render and a member of our firm’s virtual care team. I am joined today by one of my fellow shareholders, Ritu Cooper. Ritu is a service line leader in our healthcare compliance group, and she has particular experience with healthcare compliance related investigations, disclosures, and related matters. So really the perfect person to have available today to speak to these issues. Ritu, before we dive in, could you maybe tell us a little more about your individual practice?

Ritu Cooper: Oh sure, Chris, thanks. And thanks so much for inviting me to join you today. I’m thrilled to be able to talk to you about this topic. So yeah, as you said, I co-lead the compliance service line. I work primarily with large hospitals and health systems, large physician practice groups. I have some clients that are kind of other, that fit in that med device type space or med device adjacent. But with all of the clients, the work I do is compliance related and related to compliance with fraud and abuse laws, like Stark and Kickback and Civil Monetary Penalties laws, anything that really talks about referral sources and physicians.

As of late, probably in the last four or five years, I’ve done quite a bit of work with clients that are under CIA’s, corporate integrity agreements, and help manage all of the requirements that they need to comply with. So with that, I end up splitting my time working with compliance officers and with legal counsel. I sometimes look at myself as kind of that liaison between the two, there’s oftentimes, with a client, I might be engaged by both offices for very different projects.

Chris Eades: Perfect. So let me set the stage here a bit for our conversation today. We’ve seen a lot of headlines regarding the potential for fraud and abuse in relation to the provision of virtual care. And it’s a bit of an interesting dynamic because we saw these headlines and we saw some of these concerns well before COVID-19. The potential for fraud and abuse through virtual care was often cited, I think along with the concern for unnecessary spend as a reason maybe not to expand virtual care services, or at least facilitate expansion through just some more relaxed regulation and payment rules. And then of course, when that pandemic hit, there was just the need for virtual care, and we had to put aside some of those concerns, increase the flexibilities, and allow for the provision of care through virtual care as we’ve seen.

And so, at this point, as we ease out of the pandemic, it’s an interesting dynamic because the genie is out of the bottle, so to speak, in terms of the benefits of virtual care. It’s been used, there are lots of studies that demonstrate that it’s in demand and will continue to be in demand, that many providers want to be able to use virtual care. But we’re now starting to see and hear the same sorts of concerns that we saw pre-pandemic, and those include the concern for fraud and abuse.

And so even just a few weeks ago, the US government’s Accountability Office issued a report and highlighted, as part of that report, concern regarding fraud and abuse. One of the quotes from that report was, “Both the Medicare and Medicaid programs are on the GAOs high risk list in part due to concerns about fraud, waste, and abuse, the increased program spending, the lack of complete data, and suspensions of some program safeguards increase these risks.”

So it seems to, once again, be front and center, we’ve seen also the US Department of Justice make it very clear that the DOJ will be looking for fraud and abuse in this arena, and those individuals that do try to take advantage of some of those flexibilities, we’ve even seen headlines, again, just a few days ago, where the DOJ announced criminal charges against 14 telehealth execs who were alleged to defraud Medicare. So has been, it continues to be kind of front and center here as we talk about virtual care. So, with that in mind, Ritu, what’s your initial take on fraud and abuse in this arena, do you see this as an area that is ripe for abuse, and if so, why?

Ritu Cooper: Oh, absolutely, Chris. I mean, for all of the reasons that you’ve said. In fact, I was doing a presentation with someone from the DOJ and OIG for AHLA back in the fall, and on the day that our presentation aired, they announced one of the biggest investigations that was alleging fraud and abuse in the telemedicine space. There was also opioid as well, but I mean, there were 86 different providers, physicians, nurses, et cetera, that were even indicted, I mean, for anti-kickback type violations. And they alleged that there was, I think, $4.5 billion in claims related to telemedicine. And it was that there were unnecessary services that were provided, they were providing testing like genetic testing and various things via telemedicine, they were providing pain medication to patients they had not even seen ever in person, barely even talked to them via a platform, some of it could have been even very, very brief telephonic conversations.

So, in preparation for that, they didn’t tell me that it was going to drop the day that our presentation aired. But when we were preparing, they were talking about how, just like you said, pre-pandemic, this was an issue, and definitely a heightened area of focus because all of a sudden we needed to be able to provide telehealth services. Very, very quickly. Whereas we had clients before and, Chris, you and I have worked with a number of clients where they’re contemplating and thinking about it, and then once we kind of tell them all the things they need to think about, they kind of shied away from putting a program together. But all of a sudden last March, all of our clients said, “Oh, I know I said it was hard, but now I have to, so let’s figure it out.”

And so I think that this area in particular, because from my vantage point, even though hopefully this pandemic will end soon, I don’t think telemedicine is ever going to end. I mean, it was an area that you saw years ago that was starting to come into focus. Now that it’s here, I think that we’re only going to be looking at ways to enhance the services that are provided while still trying to figure out how to fit within this fraud and abuse landscape.

Chris Eades: So Ritu, for the benefit of the audience here who may have different levels of familiarity with these rules and regs, let’s step back, and can you maybe highlight for us the primary laws or regulations that we’re even talking about here really in the context of fraud and abuse?

Ritu Cooper: Sure. I think the first one that I think is important to understand, and then the other two fall into place, is the False Claims Act. So all of these cases, or most of these cases come forth to the government based on their belief that there was a claim that was submitted to the government that was false in some way. And that’s the False Claims Act.

The vehicle that they use to claim that something was false was that you violated the Anti-Kickback Statute or the Stark law. And the Anti-Kickback Statute says that you cannot knowingly solicit or receive a kickback for referral of Medicare business or Medicaid business, any kind of federal health care program business. And so, that law is very, very broad, it doesn’t apply just to providers, to physicians, it applies to anyone who could be a referral source. So you may see pharma and device companies, anyone else, pharmacists, anyone else could fit into that mold for anti-kickback as someone who can be a referral source.

The Stark law, however, is a little bit more narrow. It’s strict liability, there’s no knowledge or intent that is required, it’s either you meet an exception or you don’t meet an exception. And the Stark law says that if you are a physician who has a financial relationship with a DHS entity, so it designated health services entity, like a hospital, which is probably primarily what we’re talking about today, you then can not refer patients to that entity unless you meet an exception. And then each of the exceptions have seven or eight different elements, and you must meet all of those elements in order to be able to be protected from any kind of Stark liability.

Chris Eades: So Ritu, what are the potential consequences here for a health system or a hospital provider that fails to comply with these provisions that you’ve talked about?

Ritu Cooper: So under each of the laws, both the Anti-Kickback Statute and the Stark law, they have their own civil monetary penalties per claim, and they range from 15 to 20,000 or something like that. But that’s not where the big dollars are. The big dollars really come from a potential of a False Claims Act case where those claims are anywhere from 11 to $22,000 per claim. And on top of that, a potential for treble damages. And what the government says is that every claim with that physician during the time period where you did not meet an exception is what is at stake. So you’re looking at millions and millions of dollars of potential liability.

In addition to that, you also are liable for returning any money that you charged the government potentially. And then under the Anti-Kickback Statute, there is a potential for criminal penalties. So you could get up to 10 years in prison. Added to that, in 2015 through the Yates Memo that came out, the government has had a heightened focus on individual liability. And if you read what has come out of the government since 2015, which is so hard to believe that that was six years ago, they said, “Well, we’ve always cared about individuals, and we’ve always cared about those bad actors within an organization who might have been putting forth the scheme or the arrangement that doesn’t comply with the law.” But what came out in 2015 was that these individuals could no longer be indemnified by their organization and that individuals would have to pay and be held accountable on their own.

And so I think, don’t want to quote the number because I haven’t looked at it in a couple of months, or maybe even since last year, but I think there were over 50 or 60 individual liability cases since 2015. The first one came out in 2016, one year later after the memo came out. So you’re looking at even individuals facing issues where their company, their organization can not protect them as well.

Chris Eades: So significant consequences obviously, and the need to avoid those scenarios. Let’s maybe talk more generally about actions that should be taken by providers to avoid those scenarios. I mean the False Claims Act, Stark, Anti-Kickback, broader concepts, of course, than just virtual care. So let’s start more generally, Ritu. What does a healthcare organization or provider need to have in place to assist, to avoid a fraud and abuse scenario?

Ritu Cooper: So the biggest thing that the government looks at is whether an organization has a compliance program in place. So what the government feels is that if you have a compliance program in place and you’ve instructed the entire organization that compliance is important to you and educated on that, then you will be able to protect the organization.

So the OIG came out with guidance starting in 1998, and now I think there’s 13 different documents out there, but all of them center around the seven elements of an effective compliance program. So you need to have compliance administration. So someone in charge of the compliance program, maybe a committee that helps them, that represents a cross section of the organization, as well as the board that understands that they have compliance oversight over the organization.

Number two is to have policies and procedures in place specific to compliance in general, and then also specific to the various areas within the organization that might be impacted that have requirements from the government. The third is to have a hotline so that if any issues come forward, then the employees within the organization can bring them forward in the compliance department can follow through.

Number four is education and training, and is making sure that people are educated and understand the policies that they need to follow, as well as the laws externally. Number five is there is a robust auditing and monitoring program in place, and what that means is conducting a risk assessment, putting together a work plan where you’re focusing on the areas that you need to. We know that there is no organization that can look at 100 things in a year. So you really need to focus and narrow in on, “What are we doing that could be high risk?” And then paying attention to that throughout the year.

Number six is having appropriate disciplinary policies that state that, “We take compliance seriously and if you do not comply, or you do not help with internal investigations or bring things forward that we know that you’re aware of, then there will be consequences.” And those consequences are equal no matter what your level is, whether you’re the CEO of the organization or you’re working in the filing room. And last but not least is once you’ve conducted investigation and you’ve conducted it promptly, you’ve put corrective actions in place to make sure that your corrective actions are working as well.

Chris Eades: Ritu, thanks for that. I think that’s helpful information and probably a good segue into then discussing legal compliance more specifically in the virtual care arena. And I’ll just speak just for a moment here in terms of what I’ve seen. And what I’ve seen, I think was much of the obvious, which is the majority of providers out there needed to ramp up very quickly with respect to virtual care. When the pandemic hit we needed a different way to provide services, virtual care was available. And so the focus necessarily was converting to that modality in terms of the provision of services.

We’re at a point now as we ease out of the pandemic where the focus is more on, “Where do we go next? Do we want to continue to provide all of the same services through virtual care that we have been? Can we do that? And then how do we do that?” Because the regulatory landscape is quite complex and always changing. And so that seems to be most of the focus, at least in terms of what I see.

What I have not seen a lot of is what is our structure for legal compliance specific to virtual care? You had mentioned the core elements of a compliance plan, and one of those elements involves an audit function, a work plan for, “How do we ensure that we are avoiding these fraud and abuse scenarios, and we are vetting for ongoing legal compliance?” And so, I do see this as an area that has been lacking. And understandably so, again, the focus needed to be on, “Let’s get through this pandemic and provide the necessary services.” But we are at a point where I think it’s very important, as we look the next steps, to ensure legal compliance with respect to virtual care services. And I am seeing that there’s a delta there, that we need to play some catch up, and wrap our arms around this. What have you seen, Ritu? Are you seeing the same? Have you seen different?

Ritu Cooper: No, I think you’re exactly right. I mean, I think anyone who had telehealth before the pandemic, they were thinking about it, but it was very, very few. Now we’ve seen… I can’t think of a client or a provider that isn’t providing some kind of telehealth services, but I will tell you, I rarely see that coming through the compliance department or being something that’s evaluated.

Chris Eades: So let’s focus on that piece then, Ritu. So recognizing kind of the general concepts that you outlined for a viable compliance plan, what more specifically should be considered as part of a plan to avoid fraud and abuse in the virtual care arena?

Ritu Cooper: No, that’s a really good question. So I think the first thing is that compliance can not help with anything if compliance is not aware of what is going on. And that’s why number one, in that element number one where you have someone who’s in charge of the program but there’s also a committee, you want to make sure that that committee really does represent the cross-functional departments of the organization. And you need to have high level folks that are on that committee.

Compliance may not be aware of that all of a sudden we’re providing telehealth services, or we’re providing telehealth services at an exponential level before the pandemic. So those ideas or that information would come through compliance through that committee. And then let’s say that the person who is in charge of the telehealth program is not there on the committee, well, you always can add people to the committee. So that would be number one, is to make sure that we have the right people who are thinking about it.

The second thing would be, is let’s put together some kind of policy, or procedure, or something that describes the program that’s being put into place and describes all of the little areas where we might need to audit, or monitor, or check. The third thing would be the work plan and the risk assessment. So, one thing if you’re not familiar with risk assessments is what a lots of organizations do is they throw out surveys to a cross section of the organization, asking them questions about different areas to see if they are compliant.

So, for example, you might send a survey out to your real estate group asking them questions that track the real estate exception under Stark and Kickback. So do you enter into arrangements with physicians? Are they in writing? Do you have a fair market value assessment, et cetera. Telehealth is not one of those risk assessments that we normally see because it’s something that was rare pre pandemic.

So I would suggest working with the operational individuals who have put together the telehealth program to understand all the elements of the program, put a risk assessment together, and then put a risk assessment questionnaire together, and then send that out to the folks that are actually implementing the telehealth program to get their take on, “Are we meeting all of those requirements that we need to be meeting?” You might even need to have legal involved in putting that together as well because there could be other requirements that maybe even the operations folks might not be aware of.

And then once you get the answers back from that, and then you see how much telehealth you’re providing, more likely than not you’re going to identify that as a potential risk, not that we’re saying that you do anything wrong, but in an area that you might need to have more auditing and monitoring, you put that on the work plan, and then in the next year, you audit and monitor that.

And then all of the other elements kind of fall into line. So if you have a policy, you educate on the policy, you may see questions come in through the hotline, then you want to know how to answer those questions. If you conduct an investigation, you may want to put corrective actions to place if you realize that you’re not doing something accurately, and put those in place fairly quickly. So all seven of the elements can be touched on, but those three would probably be my main ones to focus on.

Chris Eades: Thanks Ritu. That’s really helpful. And it dovetails with my own observations with respect to virtual care. And I’m glad you mentioned the structure and the way that you did because one of the challenges here seems to be being in a position to vet the different angles here. And to be in a position to hear from providers maybe that want to offer new services through virtual care. As I view it, you need your kind of legal piece to this, your compliance piece. There’s certainly the business element to this in terms of what we want to do with virtual care. And then there’s the clinical piece to this. We can’t use virtual care for everything, we’ve got to be able to meet the standard of care that would be applicable to an in-person service.

And so to your point, I think your structure that needs to be in place does need to include a composition that hits on all of those elements and communication among those individuals will be key. And then I think that structure then is in place not only to vet for what’s happening today, but where do we want to go tomorrow? Where can we go tomorrow? And then going back to the elements you mentioned, really incorporating education as a component here. We’re providing the same clinical services maybe, but we’re doing it in a very different way, or at least virtually, so we’re delivering care in a different way. And there are different rules in play than would otherwise be applicable to an in-person service. And so, education of providers is really going to be important here.

As to your point on the compliance plan, I agree. We need to have a work plan that’s specific to virtual care. That work plan itself may not capture everything, but minimally, depending upon the size scope of the care you’re providing, but minimally should establish guardrails in terms of the core components, where are we providing these services? In what states? Where’s everyone located? What do the medical record requirements look like in each of those jurisdictions? What are the consent requirements? What are we comfortable prescribing or not prescribing through virtual care? The compliance work plan, we should be able to nail down some of those essential guard rails even if maybe we’re going to develop this through our structure more specifically in service lines or within departments, et cetera.

And then lastly, to your point on the audit functions, I think there too we’ve got to think about this a little bit differently. We may want to do the same type of oversight and audit that we may need to, but it may look a little different and there may be some different considerations. If we’re going to observe providers for example, or retrospectively review or audit records for billing compliance, there will be different rules in play. And we may need to go about doing this a little differently. I mean, in terms of proctoring a physician, for example, maybe a new physician for ongoing quality review, that’s going to have to happen differently because it’s a virtual encounter.

And so I think some of the same concepts, but being deliberate in terms of how are we going to get that done? And then are there any other related consequences? If we’re going to use a video recording of a patient interaction, for example, and we’re going to audit that video recording, what does that mean from a medical record standpoint? Do we need to maintain that recording go forward? Does it become part of the designated record set somehow? Do we need a particular patient consent to use the recording?

So I think there are a lot of same concepts in play in terms of what we need to do, but we need to think about those a little differently in terms of, A, there are different rules that may be applicable, and B, there may be some consequences there in terms of what we need to accomplish. So Ritu, I think great thoughts and certainly what I’m seeing, like I said, dovetails, I think, very much with what you mentioned.

Let me kick it back to you, Ritu, do you have final thoughts maybe, or any additional thoughts for those providers out there or entities in terms of what they need to be thinking or doing from a fraud and abuse standpoint with respect to virtual care?

Ritu Cooper: I think, Chris, the biggest thing is making sure that you have the right players involved as you are starting the program and then developing the program. I think that if you have compliance and legal at the table as you’re putting it together, you can probably catch some of those issues that you’ve just discussed before they might be problematic. And I think also then if those two departments are involved at the outset, they will be able to better help with the development of policies and procedures and those risk areas and auditing plans because they’ll understand the structure at the beginning as opposed to being tossed at the end.

So I think for those who may not have done that, all is not lost. But as you said now we’re talking about, “Okay, this is what we’ve done in the pandemic.” Kind of fast and dirty, but now we’re going forward and trying to set up this long-term plan, and if we could make sure that we’re thinking about the different issues that might come up from a Stark and Kickback perspective, and make sure that there’s also other issues, there’s licensure issues. I mean, there’s so many things beyond just Stark and Kickback that we need to think about, and our e-prescribing, our medical record, just like you mentioned, if we’re thinking about those at the beginning, we might even be pulling other people in place, we might need to be talking to our it vendor as well, or a medical records vendor, or whoever we’re working with also to make sure that we’re protecting the entire program.

Chris Eades: Ritu, thank you for your time and insight today. To our audience, thanks for joining us today. If you or your organization have any questions or topics you would like to share with us, please certainly contact us. You can do so via our website at hallrender.com. Certainly reach out to me at ceades@hallrender.com. Or Ritu, particularly if you have questions regarding legal compliance or fraud or abuse issues, please reach out to Ritu at rcooper@hallrender.com. Either Ritu or one of the other attorneys in that practice group will be happy to assist. Please remember, as always the views expressed in this podcast are those of the participants only and do not constitute legal advice. Thanks so much for joining us today.

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Considerations for “Start-Ups” and New Service Lines in Virtual Care

June 30, 2021 Chris Eades Practical Solutions in Health Care 00:25:17 Comments Off on Considerations for “Start-Ups” and New Service Lines in Virtual Care

Considerations for “Start-Ups” and New Service Lines in Virtual Care

Health care providers of all types are increasingly interested in exploring the idea of expanding or adding virtual care services. Hall Render Shareholders Chris Eades and Colleen Powers discuss what considerations should be made before adding virtual care to your business.

Podcast Participants

Chris Eades

Attorney, Hall Render

Colleen Powers

Attorney, Hall Render

Chris Eades: Hello. Welcome to Hall Render’s virtual care podcast series. Today’s focus will be on virtual care startups, whether a new virtual care enterprise or perhaps an expansion of virtual care services. My name is Chris Eades. I’m a shareholder here at Hall Render and a member of our firm’s virtual care team. I’m joined today by one of my fellow shareholders, Colleen Powers, who’s a member of our health transactions group and who has particular experience with startup entities, applicable business structures, and healthcare-related transactions.

Welcome, Colleen. Maybe before we dive in, could you tell us a little more about your individual practice?

Colleen Powers: Sure. Thanks, Chris. I’m glad to join you today. My practice is, as Chris mentioned, primarily focused on healthcare business transactions and also working with startup entities, whether that’s kind of figuring out the developmental stages of what do you want the business to ultimately achieve and then how do you determine the appropriate corporate structure and form that that should take to achieve those aims? I work with hospitals, health systems, physician, physician groups, and other entities that are kind of ancillary service providers in the healthcare space.

Chris Eades: Great. Well, Colleen, on the point of startups, we are increasingly contacted by healthcare providers and other types of business entities that are interested in providing virtual care services or perhaps expanding virtual care services. These entities often want to roll out these ventures in multiple states, if not all states, right? It’s, at this point in time, typically a more expansive business plan.

There are always a host of virtual care-specific professional practice rules and payer rules that we need to assist to navigate. But more fundamentally, there are a number of business-specific requirements and considerations that come into play. I appreciate you taking some time today maybe to highlight those considerations. Let’s start with the type of entity. When a healthcare provider or other individual wants to start down this road to providing virtual care service or services, what are the primary options available in terms of the type of entity?

Colleen Powers: Sure. There are, I would say, two that are really commonly in play here. One is an LLC, or a limited liability company. Then, the other is a corporation. The corporation can really take two different forms. You can either be treated as an S corporation or a C corporation. With respect to the S corporation, there are some more restrictions around that. There’s some limitations around the number of shareholders. There are certain parameters around who can be a shareholder. There’s restrictions on the types of classes of shares that may be had. That being that there can only be one class. There’s also some restrictions around profit allocation. However, if you look then at the other side of the corporation structure, you have your C corps. Those are ultimately going to be subject to double taxation. In those cases, the profits of the corporation are taxed at the entity level. Then also there’s taxation that occurs when dividends are distributed to shareholders.

The other form, and the one that we see put in play most often, is the limited liability company. With that, there’s a lot more flexibility from a tax standpoint. There’s also a lot more flexibility with respect to what states tend to require of a limited liability company, kind of everything from filings to what needs to be in place from a governance standpoint. For example, an LLC or a limited liability company will allow the owner, owners to say whether it’s going to be member-managed or managed by a board of directors. LLCs tend to be certainly the most favored form of corporate entity, just because of all the flexibilities that come with that corporate structure.

Chris Eades: Let’s maybe then focus on LLCs a bit more. Can you speak to what’s involved generally in creating an LLC? You just mentioned some of the documents that may come into play, but maybe highlight what’s involved to establish an LLC and some of the most relevant documents that will come into play and the basic timeline for accomplishing all of this.

Colleen Powers: Sure. With an LLC, and this holds true for corporations as well, your first step is going to be filing your articles with the applicable state that you’re going to essentially set up that operation in. For LLCs, they are referred to as articles of organization. Generally, corporations are articles of incorporation. Every state is going to have these days, fortunately, a pretty simple form that many of them will allow you to do it online. You have to plug in some basic information such as the name of the entity, address where it’s going to conduct business. You need to have a registered agent and address where any mailings can be sent to. Some states will require you to have a physical location beyond a PO box in that state where you’re conducting business. Ultimately, once you file those articles, it can really take anywhere from, we’ve seen less than 24 hours for it to be approved by the secretary of state, to really up to a few weeks. It’s very state-dependent.

Chris Eades: Maybe before we move on to the next question here, you had mentioned that with respect to certain states, and it does sound like this is state-specific, that there may be requirements to have an actual brick and mortar presence in a particular state as opposed to just a PO box. Is that correct?

Colleen Powers: Yes, some states will require that. There are not many these days that do require that, but some do. The other thing to keep in mind is that there’s a lot of services, or business entities, I should say, that serve as a registered agent or registered address in that area. You can pay a third-party to kind of stand in the shoes in that way and serve in that capacity.

Chris Eades: Gotcha. Yeah, and I thank you for that. I just want to highlight that point, I guess, for the audience. We talk a lot in the context of virtual care about the barriers to virtual care. One of the barriers is the regulatory complexity in terms of trying to offer these services in multiple different states. But one thing it certainly sounds like that startups and other entities need to be mindful of as they move into these different states, is it’s not just the virtual care-specific rules that may come into play, but also some of these just business-specific rules in terms of establishing these entities.

For example, in terms of what you mentioned, and I’m aware of the same, that there are some states out there that actually require on their books per their regs, a brick and mortar presence to establish a legal entity in that state. That certainly could be a factor when your business model is to not be there physically, but instead be there virtually.

Colleen Powers: Yeah, that’s right, Chris. Some of them kind of go beyond the needing to have the registered agent there to have an actual brick and mortar in a particular state. That’s generally to establish the entity. As you’re thinking about your virtual startup, you might think about where one or more of the owners actually has a home. That can be your registered office. But then, if you think about all the other states in which you want to conduct operations, that’s where you then need to consider the need to file with each of those additional states where you’re conducting business as an entity that is doing business in their state. That’s an additional filing that you need to be mindful of any time you’re conducting business in another state that you’re then registering that entity with those respective secretary of states as well.

Chris Eades: Colleen, what are some of the other more basic business issues that a newly-created entity should consider? Once we’ve established here what type of entity and we’ve gone through those initial steps to create the entity, what are some of the other more essential considerations that immediately come into play?

Colleen Powers: Sure. I think then you want to start thinking about the activities that you’re conducting and what additional filings need to occur with respect to the various federal and state agencies. One that’s going to be applicable across the board is you’re going to need to obtain a tax identification number, a TIN, also referred to as a employer identification number, or EIN. Those terms tend to be used interchangeably. That needs to be obtained from the IRS. That process is really pretty straight forward. That’s kind of step two once you’ve actually formed the entity.

Other considerations are if you’re going to have employees, then you’ll want to file with the State Department of Workforce Development, or whatever that equivalent is, to indicate that you do have employees on your books. Any states where you’re conducting operations you’ll also want to consider do you need to register with those local or state department of revenues as well? I think it’s kind of sitting down and mapping out any of those other agencies that might be in play and that you might have some reporting obligation to.

Another thing to think about that’s kind of just outside of the legal realm, but you’ll want to sit down with a broker and sort through what is the scope of your services and what sort of insurance coverages do you need to appropriately protect your business. At a minimum, I think about directors and officers, insurance and coverage that’s going to provide any of the owners and officers with some protection.

Then finally, I would say ensuring that you along the way are following appropriate corporate formalities to ensure that you preserve the integrity of the business. By that, I mean that there’s a clear distinction between what you were doing as an individual and what you were doing as a business. That means ensuring that you have meetings. Those are documented by minutes and you show those actions that are being taken as the corporate entity separate from yourself. That allows you to ensure that if there’s a third-party claim, that third-party claimant would come to and look at the business entity as the party to pursue some recourse against and not you as an individual personally.

Chris Eades: That’s a really important point. I’m glad that you mentioned it. We tend to talk about insurance in this realm more in the context of professional liability insurance, which is also, of course, important. But I think these other types of insurance that you mentioned, certainly business entities want to be familiar with. To your point, want to not only have the coverage, but establish their entity in a way that will end up affording them the protections that they intended to have. We will no doubt see, as we get further into virtual care, more litigation involving these providers. It’s just so very important I think as a provider to recognize that even though you may be physically located in one state, if you are offering the service in another state, maybe across the country, that you can very easily then be sued in that other state, right? It’s not just a matter of will you prevail in that litigation? It’s a matter of needing to actually be there in that state to deal with that litigation, which in and of itself is a huge concern. I think that’s a good point.

Let’s segue maybe into corporate practice of medicine. This is an issue that is increasingly coming up in the virtual care arena, particularly when an entity wants to provide services in different states. Corporate practice of medicine, or CPOM, not a new concept, obviously. CPOM exists in general, of course, to prevent corporations or other business entities from actually practicing medicine or other healthcare specialties. Or put differently, the concern here is that we want to make sure that only licensed individual providers who are trained to do so are practicing medicine, or these other specialties, and that these individuals are not being unduly influenced by corporations or other business structures.

Again, not a new concept. Most states have a CPOM rule, probably about two thirds of the states, I would say. But CPOM state to state is highly variable, much like all the rest of this stuff that we ended up talking about in the context of virtual care. Very few states actually have just a very simple, straightforward CPOM statute. Quite often it’s a collection of maybe some cases, sometimes really old case law statutes and rules that kind of collectively you have to piece together to establish what the CPOM structure is for a state.

Then even then, you have this really significant variability. Some states are highly restrictive, for example. California is probably the best example. New York has some fairly restrictive CPOM rules. Other states are restrictive, but has some pretty expansive exceptions. Many states, for example, have exceptions that allow hospitals to employ providers, things along those lines. Some states have these rules, but haven’t enforced them in years. Then you have variability in terms of application. Do these rules apply only to physicians? Or do they apply to other types of healthcare practitioners, maybe behavioral health or pick your other specialty?

Highly variable, many would say CPOM is an outdated concept just given what we’ve seen with the employment of practitioners across the board and contracting, et cetera, but it’s still something that exists and that we have to pay attention to. And as I mentioned at the outset, is increasingly a concern here, right, because it’s so easier now for us to be in different states to practice through virtual care. It means that as an entity, if that’s who we are to provide these services or that’s who we want to be, we’ve got to consider whether we’re going to violate the CPOM rules state to state.

With all of that said, Colleen, in those states where CPOM is a pretty significant issue and there’s no viable exception that would exist, what type of business structure do you see commonly employed to navigate or be in compliance, I should say, with the CPOM rules?

Colleen Powers: Sure. Yeah, that’s a good point and something that tends to come up a fair amount. What we tend to see is the deployment of what we commonly refer to as a friendly PC or a friendly physician model. With that, we’ll look to establish an entity that is ultimately owned by a licensed professional, tends to be a physician or a dentist or whatever field you’re operating in at the moment and whatever that state requires. Then, we’ll just kind of categorize them all as a licensed professional.

That licensed professional will then ultimately own a corporate entity. That corporate entity then holds any of the assets or decision points, I should say, that are required to be held by a licensed professional pursuant to that state’s regulations. It tends to involve and require that entity to then hold the medical records or ensure that it indicates that that entity is responsible for anything related to a clinical decision or patient care policies and procedures. As you mentioned, Chris, I mean, every state is completely unique and so is the subspecialty of the services that are ultimately contemplated to be provided. There needs to be a careful analysis of what the state laws say.

Then, so once you kind of craft that friendly PC and give that friendly PC the requisite control and assets that needs to be managed by a licensed professional. Then we look to put some other related documents in place, which ultimately then tend to move the financial proceeds of that entity over to another. It tends to be an MSO or management services organization-like entity. Then that MSO entity essentially is the sister to the friendly PC. That entity is then going to manage and hold everything else that is not required to be managed by the licensed provider under applicable law.

Chris Eades: Probably, Colleen, a good segue into mentioning state-specific fee-splitting provisions. Again like CPOM, some states have them, some states do not. Some states may have one, but not the other. But the point being that the state may have specific fee-splitting prohibitions that disallow a provider from apportioning some percentage of fees to a business entity and really for the same essential reason that we see the CPOM rule. We don’t want undue, or the state does not want undue influence or control over what the practitioner is ultimately doing.

I think the takeaway here on that point, from my perspective anyway, would be A, recognize that those fee-splitting rules may be out there, B, recognize that if you do create a friendly PC structure where there is this management concept in play, be sure that whatever the payment structure is from friendly PC to back the sister entity for those management services does not run afoul of those fee-splitting provisions. In other words, you may not be able to structure that relationship based upon a percentage of fees or some sort of an apportionment directly from those fees. It may need to be another payment structure that is consistent with those fee-splitting provisions.

Colleen, are there any other, you mentioned I think a lot, but in recognizing that it is state-specific, but are there other considerations for establishing a friendly PC?

Colleen Powers: Just as you dig into that sister structure that I mentioned, there tends to be some additional agreements that are in place between those two entities. For example, the licensed professional that ultimately owns the friendly PC will generally sign some form of an agreement which outlines the scope of the arrangement. That does have some restrictions tied to their ownership. It tends to include some provisions about the succession plan. If that licensed professional is no longer practicing there, then they agree and commit to transition that to another licensed healthcare professional that is someone that the MSO entity might support, for example. There’s kind of a mix of other documents that are in play to ultimately dot the I’s and cross the T’s and pull the arrangement together.

Chris Eades: Colleen, beyond the creation of new entities, you’re heavily involved in healthcare-related acquisitions and mergers. Do you see the potential for these types of transactions in the context of virtual care?

Colleen Powers: Yeah, I mean, absolutely. We’re seeing a lot of consolidation right now that’s built around the notion that scale really allows for increased efficiencies and results in healthier companies, both from a care delivery and a profitability standpoint. I think about in the virtual care environment, if you can do one of the few things, whether it’s building a comprehensive network of providers that’s attractive to a potential buyer, you have the best practices in place for that platform or you’ve developed some unique software that really causes that virtual care environment to run really well, I think each of those are very interesting pieces that a virtual care provider can bring to the table and ultimately be the basis for an even larger platform. I think if you do that, that makes you a very attractive target too. For example, we’re seeing private equity in the healthcare space increasingly. This just seems like an area that is right for that.

Chris Eades: When an entity is considering a potential transaction along these lines, what initial steps or considerations do you usually recommend?

Colleen Powers: Yeah, I would think about, as an owner of the organization or officer, what do you want for that entity one day? What do you want it to evolve into? Then, how long do the key stakeholders in the arrangement want to ultimately be in this game? Because once you move into a sale, I think one of the key questions is what role do the individuals want to play? Do you want to preserve some level of control? Do you want to be in a president or officer’s seat and involved intimately in the growth and development of the organization? Or are you looking for something where you’ve kind of built something and you want to sell it off and move on to something completely different?

I think answering that question is really the first step to figuring out who is going to be an attractive potential partner for you. Then the other thing I’d say is, it’s important to keep a close eye on the market. A lot of times being one of the first ones to the table with a very solid platform is going to yield the biggest return on your investment. I think watching market forces is another key factor. Then ultimately figuring out who’s out there as a potential buyer and starting to feel out what opportunities might be available.

Chris Eades: Well, great, Colleen. Thanks for your insight. To our audience, thanks for joining us today. If you or your organization have any questions or topics that you would like to share with us, certainly feel free to contact us via our website at hallrender.com. Feel free to reach out to me at ceades@hallrender.com or certainly Colleen at cpowers@hallrender.com. Thanks again.

Health Care Real Estate Growth Strategies in Mergers and Acquisitions or Joint Ventures

June 24, 2021 Hall Render Health Care Real Estate Advisor 00:59:30 Comments Off on Health Care Real Estate Growth Strategies in Mergers and Acquisitions or Joint Ventures

Health Care Real Estate Growth Strategies in Mergers and Acquisitions or Joint Ventures

Hall Render Advisory Services’ advisor John Marshall talks with Victor McConnell of VMG Health, Matt Robbins of Kaufman Hall and Clayton Mitchell of Thomas Jefferson University Hospitals. Their discussion highlights several real estate factors that implicate the overall JV or M&A transaction: Fair Market Value (“FMV”); facility compliance (regulatory and use); property taxes; facility ownership options; asset disposition or acquisition; new facility development; licensure; and other issues.

Podcast Participants

John Marshall

Hall Render Advisory Services

Clayton Mitchell

Thomas Jefferson University Hospitals

Victor McConnell

VMG Health

Matt Robbins

Kaufman Hall

– Coming Soon –

Celebrating and Commemorating Juneteenth

June 13, 2021 John Ryan Practical Solutions in Health Care 00:14:09 Comments Off on Celebrating and Commemorating Juneteenth

Educating and Commemorating Juneteenth 

Hall Render’s Former President and Managing Partner, John Ryan, speaks with shareholder and DEI committee chairperson, Charise Frazier, about Juneteenth and how Hall Render as an organization is educating employees and commemorating this important holiday.

Podcast Participants

John Ryan

Former President & Managing Partner, Hall Render

Charise Frazier

Shareholder & DEI Committee Chair, Hall Render

John Ryan: Hello, and welcome to Hall Render’s Practical Solutions in Health Care podcast. I’m John Ryan, [former] president and managing partner at Hall Render, largest health care focused law firm in the country. Today, I’ll be talking with Hall Render shareholder, our DEI committee chairperson, Charise Frazier, about Juneteenth and what we’re doing internally as an organization to educate and commemorate this holiday. So, Charise, hello. Welcome to the podcast.

Charise Frazier: Good afternoon, John. It’s great to be here.

John Ryan: So, maybe to kick things off, you could tell us a little bit about your role as it relates to the diversity, equity, and inclusion initiatives here at Hall Render and the work of our DEI committee. Maybe discuss your role a bit, how long you’ve served in this capacity and the core areas where you and the committee have been focused.

Charise Frazier: Yeah, absolutely. So, as you mentioned, I’m the chair of the DEI committee, which is Diversity Equity Inclusion here. I’ve served in that capacity for over four years now and have served on the committee for about seven years now. And really, most recently … Late last year we spent some time developing a diversity equity and strategic plan for the firm. So based on that, we have three main goals that the committee would like to steer the organization in, and that’s focusing on creating a diverse workforce, and that’s going to be both through recruitment and retention. We also want to create and cultivate an inclusive and engaged environment where everyone can come and feel as if they belong and bring their best self and do their best work. And then finally we want to hold ourselves accountable for the work that we are doing and making sure that the goals that we are setting for ourselves and the metrics that we are looking at are consistent with achieving those goals.

Charise Frazier: So with that, we’re also now in the process of trying to develop a work plan, which will serve as a roadmap to helping us accomplish those three main goals. So the committee has been spending some time with that along with leadership within the organization, just trying to figure out what’s going to be the best roadmap for Hall Render.

John Ryan: Well, thank you. It’s been, having sat in the chair that I have and watched the work of the committee and you in leading that committee, I certainly, for one, have enjoyed the exercises that we’ve gone through over these last several months and the work product that’s starting to take shape and guide the firm.

John Ryan: Let’s turn a little bit more specific. I’d like to talk a little bit about the upcoming Juneteenth. I’ll admit, this is a day of significance that I was not very knowledgeable on until the last 12 months or so. I’m wondering if you might share with me and our listeners a bit about the history of Juneteenth and what the holiday commemorates. Maybe also why you believe it’s becoming a more celebrated event in the last year or so, or at least has gotten more recognition than it had in years past.

Charise Frazier: Yep. So, here’s what I will say. I think, you know, you pointed it out, it has been one of those little-known holidays, I would say, for years. I think among the African-American community, Juneteenth has been celebrated, certainly, since I was a child. It is a holiday that we celebrate and look to for … Very similar to Independence Day, right? So, for the 4th of July, Juneteenth is very much like that in the African-American community.

Charise Frazier: And just to give a little bit of history behind it, it really serves as the actual day of freedom of the ending of slavery for all African-Americans. And I think what’s interesting about the story of June 19th and I guess, first, why it’s called June 19th. So, that just represents the month of June and then the 19th today. 

Charise Frazier:  In 1865, in Texas, after the emancipation proclamation, and this is more than two and a half years later, there are a group of slaves, over 200,000 slaves, in Texas, had not been freed and they had not gotten the word that slavery had ended.

Charise Frazier: I think this marks the day where really all Americans became free, right? While we look at the emancipation proclamation as that date, because there were so many that were still in slavery, we look at Juneteenth to be the actual day and the day that celebrated as a day of independence and a day of freedom where our country was moving away from enslavement.

Charise Frazier: I think it remains very remarkable and relevant today. It serves as a celebration of the progress we’ve obtained throughout the generations. But it also serves as a reminder of the work that is yet still to come. As we do those celebrations, it’s always about kind of highlight where we’ve been and where we’re going in this fight for equality and justice in America and making certain that everyone have the freedoms that we all believe we should have in the States.

John Ryan: Great. Well, thanks for that answer. That was a good history lesson and also an opportunity for me to better understand, and I suspect our listeners as well, not just about the history, but also about the significance of that date and why we would be celebrating June 19th.

John Ryan: Talk a little bit about the focus more recently, the added notoriety that this holiday has gotten, particularly in my instance, in the last year or so, I suspect for many as well. Just interested in your thinking. I suspect a lot of it has to do with the events of the last 12 months and the result in added significance in a holiday that just didn’t get that notoriety that it had in the past. Anything that you can add relative to kind of the increased notoriety with respect to June 19th?

Charise Frazier: You know what, I think it’s just awareness and education, right? Like, as you mentioned, learning the American history and understanding American history has given individuals a new appreciation of the importance of recognizing the significance of this holiday. But so many didn’t even know why it was a holiday or why people were celebrating. I think most people believe that slavery ended with the emancipation proclamation. And once folks became aware and realize that celebrations were happening, I saw lots of people wanting to join in or better understand it. I think, really, the notoriety is also recognizing the work that we have to still do in this country.

Charise Frazier: I think, as you pointed out, you know, over the last 12 months, the amount of injustices that still plagues the African-American community was just something that I don’t think that a lot of people recognize was still happening in this day and age. A lot of people saw that as being history and not modern-day.

Charise Frazier: So I think as people began to be enlightened about not what happened 400 years ago, but what’s actually still happening today in many different forms. I think folks started to want to have a better understanding of it. And then, like I said, I think here and now it promotes kind of the continued fight for freedoms and equality and rights. And I think lots of people thought we were living in a world that was equal but have learned over the time that there’s a lot of inequalities that still exist. And now we are seeing kind of some movement and momentum to kind of make that change and push towards the quality. I think this holiday is one that gives people an opportunity to do just that, celebrate it, join the in in the challenges, and kind of move this thing forward.

John Ryan: Focusing on the last point you made about joining in, I’d be interested in your thoughts on what can those individuals, our listeners, others, myself, who are interested do to commemorate the holiday?

Charise Frazier: Certainly I think the first thing is just learning more about the holiday. I think, again, as I mentioned early on, Juneteenth is something that I’ve celebrated as a child. However, I too have taken the time to learn more about the history of this holiday and the fact that the first Juneteenth happened in 1866, so the year after the order was entered and taking the time to actually read the order in Texas from Granger that says, “Okay, this is what’s happening,” and kind of everything that had gone around that.

Charise Frazier: I think one of the best things you can do is educate yourself, right? Look at the information, learn as much as you can, recognize the importance and the significance, and then just take some time to reflect on how that may be impacting you, your life, friends or families or any of those things just so, because I think part of it is just understanding. I think allyship comes with making an effort to understand, and once you get that understanding, then I think you’re able to contribute in a meaningful way to the cause.

John Ryan: Great. I’ve got a final question for you. I promise it’s an easy one.

John Ryan: But I’d be really interested in your thoughts on, really, how do all these efforts and these activities that you’ve mentioned, and I love your comments on education and awareness and the value of that as well, but if you kind of wrap all that together, how do all these efforts and activities tie into a larger DEI strategy for our firm and really for our communities.

Charise Frazier: I think one of the things that is important in DEI is developing cultural competencies, right? And cultural competencies, again, goes back to education piece, and that is learning the norms and the backgrounds and the understandings of cultures that are different from. So we here at the firm, on a monthly basis, we highlight various different holidays from different cultures or different lifestyles that individuals may have. And the point of that is to educate our sales around what are some of the norms that are not normal to me but are everyday norms for someone else. And then how can I better understand that so that when I am interacting with someone who’s different or have a different background from me, we can have a positive interaction.

Charise Frazier: I think highlighting something like Juneteenth is an opportunity to introduce a lot of people to a cultural activity that they have not been aware of or, frankly, never been involved in. And so helping to develop this cultural competency also allows individuals to become more comfortable because we’re all human. So as I better understand who you are, your likes and dislikes, the reason you do things or don’t do things, that helps me develop a better relationship with you.

Charise Frazier: I think, both within Hall Render and for anyone who’s developing their DEI plans or processes that you want to help develop cultural competency by constantly introducing your workforce to information and celebrations and cultures that they may not have been introduced to, this will then allow them to be able to interact with folks.

Charise Frazier: I think one of our models is, from a DEI’s perspective, is take the opportunity to learn something new and do something different. And when you’re constantly taking that opportunity to do that, you are oftentimes pushing yourself out of your comfort zone, but as with anything, once you’ve did it once, the second time is so much easier and then it becomes second nature. And that’s what we’re trying to get these things to do, that we celebrate everyone. And those celebrations are very comfortable to all because it’s just second nature kind of deal.

John Ryan: Charise, we’re in good hands with your leadership and that of the DEI committee. I really thank you for what you shared today and the very informative discussion.

John Ryan: Thanks to everybody for listening in today. If you or your organization have thoughts or DEI programs that you’d like to share with us or ideas, please contact us on our website at hallrender.com, or reach out to me or Charise, we’d be happy to chat as well.

John Ryan: Thanks again, and everyone have a great day. Thanks, Charise.

Charise Frazier: Thanks, John.

Implementing Virtual Care as part of a Value Based Enterprise

June 9, 2021 Chris Eades Practical Solutions in Health Care 00:16:46 Comments Off on Implementing Virtual Care as part of a Value Based Enterprise

Implementing Virtual Care as part of a Value Based Enterprise

Virtual care offers many benefits, such as better and increased care coordination, better means of patient follow-up, remote patient monitoring and other general efficiencies, that align with value-based purpose. Hall Render Shareholders Chris Eades and Alyssa James discuss the intersection between value based enterprises and virtual care.

Podcast Participants

Chris Eades

Attorney, Hall Render

Alyssa James

Attorney, Hall Render

Chris Eades: Hello, and welcome to Hall Render’s Virtual Care podcast series. Today’s focus will be value-based enterprise more specifically, how and where value-based enterprise or VBE intersects with the concept of virtual care. My name is Chris Eades. I’m a shareholder here at Hall Render and a member of our firm’s virtual care team. I’m joined today by my fellow shareholder, Alyssa James, who has particular knowledge and experience with value-based enterprise. So Alyssa, before we dive in, why don’t you tell us a little more about you and your practice?

Alyssa James: Thanks, Chris. As Chris mentioned, my name is Alyssa James. I’m a shareholder in Hall Render’s Indianapolis office. My practice focuses primarily on fraud and abuse and regulatory compliance type matters. I work primarily with hospitals and health systems, as well as other types of healthcare organizations on various provider contracting matters, transactions amongst various healthcare organizations, and more complex Stark Law, Anti-Kickback Statute and civil monetary penalty, beneficiary inducement related analysis. In the current value-based landscape, I also work with clients to help them navigate these regulatory frameworks when implementing value-based, risk sharing, and other related arrangements.

Chris Eades: Great. Thanks, Alyssa. So when I look at and think about value-based enterprise at a very high level, 10,000 foot view, to me, there seems to be some clear overlap with the potential advantages of virtual care. We’ve certainly seen those advantages unfold over the pandemic. I think it started with the most obvious, which is the fact that virtual care allows distance in between provider and patient, which has had some obvious advantages during the state of emergency, but we’re also starting to realize, I think some of the other advantages of virtual care such as a better and increased care coordination, better means of patient follow-up, even following up with a patient in the patient’s home, remote patient monitoring, general efficiencies to be gained, and really all of these benefits strike me as very much in line with the operative definition for value-based purpose.

And so I do think it makes sense to really talk about VBE in the context of virtual care. And with that in mind, maybe we could start with you providing just a, kind of a general understanding or giving us a general understanding of what we even mean when we’re talking about value-based enterprise.

Alyssa James: Of course. So when we’re looking at a potential value-based opportunity, I like to frame the various definitions in terms of a who, what, when, where, why, how. Under this type of analysis, the VBE or value-based enterprise itself is the who. VBEs must consist of at least two participants. Those participants can be either an individual or an entity that engages in at least one value-based purpose and collaborate with each other to achieve those value-based purposes. When we’re talking about value-based purposes, those can be one of four things: coordinating and managing care for a target patient population, improving the quality of care for a target patient population, appropriately reducing costs and payer expenditures without reducing the quality of care to the target patient population, and/or transitioning from a volume-based care delivery system and payment mechanism to value-based.

You all may also be wondering what a target patient population is, and I know I jumped sort of from value-based enterprise to value-based participant. When we begin to scratch the surface of the relevant value-based frameworks, the definitions get a bit cyclical because each definition refers to other terms that are defined by the regulation. So bear with me here a little bit as we kind of get into this. But as I was saying, the value-based enterprise has to be engaged in trying to achieve at least one of those value-based purposes that I just mentioned. So in essence the VBE is a consortium of individuals (such as physicians or others) and/or entities (for example, hospitals, physician practices, or other healthcare organizations).

A VBE does not have to be a separate legal entity, but it does need to have an accountable body that’s in control of the VBE. So you don’t have to go out and form a new legal entity or a true joint venture, so to speak. But you do have to kind of come together through a contractual arrangement and allocate who is going to be responsible kind of for governing matters of that value-based enterprise as it works to achieve its goals.

Chris Eades: So, Alyssa, if we distill that down a bit, how would you summarize the general steps required to establish a VBE?

Alyssa James: So at a high level, when we’re looking at this in order to form a VBE, you need to identify the following and who the players are going to be…who your value-based participants are in that VBE. You need to identify the target patient population for which the VBE wants to focus its efforts. So a target patient population can be very broad. It could be all the patients in your health system or all the patients that are discharged from a particular hospital, or it can be very narrowly tailored to a certain diagnosis, a certain zip code, that sort of thing. And when we’re looking at that in that “who, what, when, where” framework the target patient population is the where. So, where are we focusing our efforts?

The “why” would be those value-based purposes that the VBE is going to strive to achieve. The “how” is what activities will the VBE engage in in order to try to move that ball forward, to have that impact on the care coordination or other value-based activities for that patient population. Once you identify all those things, the “who, what, when, where, why” then the parties need to enter into one or more value-based arrangements that spell out those goals of the VBE, any compensation that’s going to flow between the parties and other details of the arrangement to show how it’s structured and how it’s going to be implemented.

Chris Eades: So VBE is obviously a relatively new concept. At this point have you seen health systems, hospitals, or other healthcare providers actively pursuing VBEs or otherwise engaging this process?

Alyssa James: Yes. We’ve been fielding numerous inquiries from clients who are looking to what I’ll call exploring the art of the possible with respect to the VBE framework. I think folks are very excited about it. They’re wanting to kind of see what this framework allows them to do as far as a care coordination collaboration standpoint and how they can really focus in on some of these target patient populations that are applicable to their organization and improve care coordination and patient outcomes. In addition to the creation of VBEs more specifically, I think that these applicable Stark Law exceptions and AKS Safe Harbors that have been implemented under this construct are leading providers and other health care organizations to just generally evaluate other types of risk sharing arrangements or patient incentives that may or may not require the formal formation of a VBE, but fit within that same spirit and framework as care continues to shift from a more volume-based to a value-based model.

Chris Eades: So if we take really that piece of the conversation in terms of what you’ve seen and we talk maybe a little more about where this intersects with virtual care, I know that I’ve seen as part of my practice, the concept of VBE come into play potentially in relation to, or at least a precursor to the provision of telemedicine equipment and platforms by maybe a distant site telemedicine provider to an originating site, location that’s going to be receiving those services. Can you maybe speak to kind of how you might see that come into play in the context of a VBE or maybe some of the potential benefits there?

Alyssa James: Sure. So in addition to the compensation arrangements that may be directly associated of with that VBE’s value-based arrangements, there are certain AKS safe harbors outside of that VBE framework that do lend themselves, I think, to various virtual health activities. For example, there’s a new AKS Safe Harbor for care coordination arrangements that improve quality, health outcomes, and efficiencies. This safe harbor allows for the provision of in kind remuneration. So not monetary compensation, but in kind remuneration amongst VBE participants. So you do still have to form a VBE in order to utilize this AKS Safe Harbor, but under this safe harbor, the recipient of this in kind remuneration can receive something from another VBE participant in the VBE.

The recipient is required to pay at least 15% of the offerors costs for that remuneration, but even so, I think this safe harbor may provide significant flexibility for the provision of virtual health or telemedicine equipment or software, or even staff, maybe for that originating site. If they need a technician or a nurse or something to that effect to help the virtual health platform operate, I think those are all options here under this safe harbor for this VBE to lend some of those things to other participants.

Chris Eades: Alyssa, do you see other potential intersections between VBE and virtual care?

Alyssa James: I do. So I think the intersection here is ripe for opportunity. I think as we’re beginning to scratch the VBE surface, we’re also sort of beginning to just unravel what opportunities are available. But in addition to opportunities amongst VBE participants, which Chris, I know you and I have touched on a little bit already, I think there are other increased opportunities for providing items and services to increase patient engagement. This of course is a very important component of care coordination. We can coordinate as much as we want, but if the patients aren’t buying in or aren’t able to access care, it doesn’t get us very far. And so, for example, there’s another new AKS Safe Harbor for arrangements for patient engagement specifically, this safe harbor is also only available to VBE participants, but it allows the VBE participants to provide in kind items, goods, and services to patients that are valued up to $500 per patient per year, for various patient engagement activities.

So typically when we’re talking about items or services that you can provide to patients, specifically Medicare or Medicaid beneficiaries, the Civil Monetary Penalties Law is much more limiting than that from a dollar value standpoint. But this AKS Safe Harbor allows VBE participants to provide items or services up to $500 per patient, which is huge, I think. And I think that these items and services, although they’re required to have a direct connection to the coordination and management of care of that target patient population that we talked about a little bit earlier, I think it can be a great way to provide maybe necessary technology to patients in order to facilitate their ability to access these virtual care platforms, whether that’s a tablet or increase Wi-Fi in their home, or something to that effect too. I think there’s a lot of opportunities here to make sure that not just that the providers have what they need for this virtual healthcare platform, but that the patients that we’re trying to reach do too.

These safe harbors give a lot of flexibility to VBEs beyond just what’s within the four corners of their value-based arrangements amongst each other.

Chris Eades: That’s a great thought and that will no doubt increasingly come into play. So I appreciate that information. So really at this point, Alyssa, if a health system or a hospital or other type of healthcare provider is interested in pursuing a value-based enterprise, what initial steps would you recommend?

Alyssa James: So I think the first steps are really to think critically about who you want to include, both as fellow participants in your value-based enterprise, as well as what patient populations do you really want to target? Do you want to have some sort of broadly defined target patient population? Do you want to at the outset at least, just focus on a couple of more specific subgroups of patients, whether that’s by disease state or comorbidity or something to that effect? The other thing to keep in mind is an organization or individual can enter into multiple VBEs and value-based arrangements. And so maybe it makes sense to partner with a few folks on one patient population, but then for a different patient population, maybe it makes sense to strategically partner with others. So something to keep in mind there, just kind of really brainstorming who you want to be involved and what patient population you want to target.

And from there, I think developing a plan for the actual arrangement construct and corresponding incentives that will follow, more of your contract terms and things like that. Depending upon the nature of the arrangement, there are different Stark Law exceptions and or AKS Safe Harbors that will be applicable, and each have their own specific set of, as you may imagine, criteria that must be met in order to meet the exception or safe harbor. So once you kind of get that general idea of what the goals are and what you’re trying to achieve, really then putting pen to paper and cross checking that with the applicable exceptions or safe harbors, to make sure that this arrangement is going to be in compliance with this new framework.

Generally speaking, the more significant the downside financial risk that each participant has, the fewer restrictions or burdens there are on the VBE and its participants. Value-based arrangements that don’t have a lot of downside financial risk are going to have a lot more obligations put on the participants, such as monitoring, documenting what is required to be in writing, and annual re-evaluations of whether you’re meeting those metrics. And that sort of goes without saying, right? That the less the downside risks, the more the government is going to make you have to do to prove that you’re not abusing any sort of relationship there. So, just something to keep in mind to make sure that you’re hitting all of those elements that are required for compliance purposes.

Chris Eades: Thank you, Alyssa. That’s helpful information. To our audience, I think we’ll conclude there for today. Thanks for joining us. If you or your organization have questions or topics you would like to share with us, please contact us on our website at hallrender.com or certainly feel free to reach out to me at ceades@hallrender.com or Alyssa at ajames@hallrender.com. As always, please remember that the views expressed in this podcast are those of the participants only and do not constitute legal advice. Thanks so much.

Alyssa James: Thank you everyone.

The Importance of DEI Programs at Service Driven Organizations

April 27, 2021 Ritu Kaur Cooper Practical Solutions in Health Care 00:34:41 Comments Off on The Importance of DEI Programs at Service Driven Organizations

The Importance of DEI Programs at Service Driven Organizations

In this interview, Ritu Kaur Cooper sits down with John Mariano, SVP and General Counsel at Precision Medicine Group to talk about the great work that Precision is doing in the area of Diversity, Equity and Inclusion at their organization.

Podcast Participants

Ritu Kaur Cooper

Shareholder, Hall Render

John Mariano

Senior Vice President and General Counsel, Precision Medicine Group

Ritu Kaur Cooper: Welcome everyone. Today. I am talking to John Mariano, Senior Vice President and General Counsel at Precision Medicine Group. And we are talking about the great work that they’re doing in the diversity, inclusion and equity space. John, so before you start talking about all the great work you’re doing in DEI, I’d love for you to introduce yourself and Precision to our audience.

John Mariano: Thank you. And it’s really my pleasure to be here. It’s always a pleasure to see you, of course, but it’s my pleasure to be here and to speak about some of the initiatives that obviously have gained a tremendous amount of momentum in a little less than a year, particularly in Precision. Precision is a global life sciences service business that concentrates in accelerating the delivery of life-changing treatments and profoundly improving health outcomes. Precision has been around for 10 years now, we’re in our 11th year. We have approximately 2,500 employees worldwide, about 500 of those are in Europe, Canada, and Australia and the remaining 2,000 are in the United States. I’ve been general counsel of Precision since it started, in fact, I’ve been general counsel with the founders going back to 2003, and that was three companies ago we’re on our third business now and this is a very exciting one. And not just because we’re able to make, I think, a big impact on this diversity, inclusion initiative that we’ll discuss today.

Ritu Kaur Cooper: That’s great, John. So, and I’ll tell you I’m not just saying this, I thoroughly enjoy working with you and your team. You can tell that people love working at Precision and they do really love the atmosphere and the culture. I think that’s attributed to the tone that you all are setting at the top. So with that, John, why don’t you tell us about your DEI initiatives that you have at Precision?

John Mariano: Sure. Look as a service-driven organization, our greatest asset is our people. No doubt, that’s the bottom line. We felt after the events of last summer, that we wanted to really now develop a clear vision that respects and celebrates diversity within our organization and the communities we serve. Our vision is to recognize that diversity, promote equity, and elevate a culture of belonging. And we started with a variety of committees, employee-driven and executive-driven committees to try to develop a roadmap to build out these initiatives and we’ve landed on a three-year plan. The plan is largely modeled on the global diversity and inclusion maturity model. And that is kind of composed of four elements, purpose, strategy, initiatives and the fourth element is something that we have, which is our human relations guiding principles. And I’m going to start with the fourth one because that’s important for any organization, including a law firm like Hall Render or any organization.

John Mariano: When you have those guiding principles, I think all roads can lead back to them when you’re talking about your people, your assets, your initiatives like this. And our guiding principles are client service, purpose, accountability, mutual respect, and collaboration. So we want to take those guiding principles, apply them through our purpose in business, and then lay them out in the strategy that goes across three areas, talent, culture, and community. And then we have a number of initiatives under each of those three areas. For example, in talent, we have recruitment programs, talent development, talent, promotion, employer brand, talent metrics. In culture, we have D&I awareness and D&I training, employee committees, listen and learn circles, which I want to talk about a little later, that’s important, I think, and communications and messaging. And then finally in the community, we’re trying to develop philanthropic support in our communities, a sense of volunteerism amongst our employees, a commitment to that, and supplier diversity. For example, we just launched within the last two weeks, I think it was announced last week actually, that we now have a company-wide volunteer time off program, a VTO program, which, obviously aims to encourage and promote employee volunteerism within our communities.

John Mariano: So that we think, this three-year plan will be able to help us develop and sustain an immersive culture of diversity and inclusion and ensure that diversity and inclusion are demonstrated through tangible actions and align our corporate social responsibility to identify opportunities and partnerships that materially impact the industries and populations that we serve.

John Mariano: Finally, one quick note, which you know, is as a privately held company and as largely a service provider to pharmaceutical biotechnology companies, our client base is looking at us to ensure that we are following these D&I initiatives. That we have best practices, that we are really pushing out these kinds of initiatives across the organization. And we are almost always asked about what those initiatives are and what we’re doing by the clients when they do preparations for an RFP or incline audits as well.

Ritu Kaur Cooper: So goodness, John you’ve shared a lot. I mean, it’s incredible. I mean, you can tell that a lot of work has been put into that.

Ritu Kaur Cooper: So of these initiatives that you have, whether they’re recent or you’ve had them for a while, which ones of them do you feel are having the greatest impact on your organization?

John Mariano: I would say that there’s probably three or four. The employee-led committees that we formed early on were extremely powerful and had a great impact in developing the course of action we wanted to take. And it came right from our employees, we had volunteers, we had a number of committees set up, they all worked together collaboratively and created a roadmap that was ultimately developed into our three-year plan.

John Mariano: One other thing is we’ve established partnerships with several nonprofit organizations that we feel you will help us provide internships, sponsorship donations within the communities we serve, where our offices are located to create a bigger impact in that regard. And the third one actually is probably the volunteer time off, like I said, that was announced last week and it really had a great reception amongst the employees and I think it really shows, we’ll talk about this from the leadership standpoint, but that leadership is behind this initiative. That they’re supporting the workforce’s ability to take time away from work and contribute back to the communities and the volunteer causes that you may feel are important to you and that align with the D&I initiative. So those probably are the biggest ones so for.

John Mariano: The final one that I kind of want to mention, at least here, it wasn’t necessarily an initiative, but last summer when so many of our communities were turmoil, and many of us were personally at turmoil about what we were seeing and what had happened with George Floyd, kind of obviously there’s just so many other incidents that we could mention that proceeded that. We had a series of Zoom calls, you know our business lines and the Zoom calls were largely within the business lines. But as general counsel, I was able to kind of sit in on some of those in addition to the corporate call. And those calls were so powerful Ritu, I can’t even begin to describe the impact that they had on me. And I think the impact they had on propelling or turbocharging the momentum for these initiatives to be adopted and enacted. The emotion, the raw emotions from some of our employees who have experienced discrimination, injustice, inequality was eye-opening. I was on one call where a senior executive was literally in tears on the call hearing stories from some of our younger employees who face this every day, who confront this inequity in terms of it being singled out. One person said, “Walking while black.” You just can’t fully understand it, probably ever. But, when you hear it and see it and listen to it on a Zoom like that, obviously, the best we could do was a Zoom because of the pandemic. But, it had a tremendous amount of power. And the additional thing in that was a lot of the young mothers that worked for us or mothers with young kids, I should say, perhaps. They talked about the struggle of teaching their kids right and wrong.

John Mariano: Teaching their kids equality. Teaching their kids freedom. Teaching their kids about a non-racist society or a non-racist basis. And, literally, just getting smacked in the head over and over again when they see these events happen. And when they have to explain things like this to their kids. And the frustration that they had. That was really a very, very powerful initiative. It had a tremendous impact. If that’s something that an organization can do, I would strongly encourage that they do it. Because that’s the listening and learning that needs to happen to really see the impact that some of these initiatives can have in the real world.

Ritu Kaur Cooper: John, I couldn’t agree with you more. And actually, I’m getting probably a little emotional hearing you say that. But we did a similar thing, John. We did some town hall meetings. I was one of the facilitators. I did not expect to become emotional when I talked about myself and my family. Just thinking about it right now… I don’t know if you know John, but my husband is black. I’m married to a black man. I’m raising two black boys as well as Indian boys. They’re black and Indian. And I will be honest. I’ve always been a worrywart and never really felt totally comfortable until Tony has come home or he calls me when he gets to his location. But in the last few years, if I go four or five hours and not hear from him, I wonder. I do. I’m sorry. I didn’t mean to…

John Mariano: No apologies necessary. You are reminding me exactly of the force of impact that those discussions had. To hear that really brings home the challenges that we have ahead of us. I can only say that from my standpoint, one of the things that I felt that came out of it best was, you know our chairman, Ethan Leader and our CEO, Mark Klein, they are our co-founders. Our ability to hear this, but then encourage these mothers, to tell them you have to stay strong, you have to continue to teach these pillars of equality, justice, diversity, inclusion, those kinds of things to your kids. Because that’s what we’re counting on.

John Mariano: It all happens at the ground level. It all happens. It takes a village. I think that helped some of these moms on the calls, to hear that coming from Ethan and Mark and Chad and me and some others, obviously that you know. I can say that it probably would be good if we moved on because your emotion is also getting me emotional, too. That’s exactly the way I felt. It was really, really powerful stuff.

Ritu Kaur Cooper: Then I’ll switch to a funny story. I don’t know if Tony and I are doing right or wrong. When all of these issues have been occurring in the last couple of years, we asked our older son, who is now seven. I think at the time he might’ve been five or six. We asked him, “Shaan, you know that you’re black and Indian, right? That makes you Blindian.” And he looked at me and he goes, “What mommy?” He said, “No, I’m not. I’m peach with cream on the inside.” And he’s looking at his hand as he’s saying that. And Tony and I look at each other like, oh my God, are we doing something wrong? I said, “No, you’re black and Indian because your daddy is black and your mommy is Indian.”

Ritu Kaur Cooper: And he said, “Mommy, daddy’s not black. His skin is brown.” And then I repeated, “No, your father is black.” He’s like, “Do you mean because he’s wearing a black shirt?” Honestly, John, Tony, and I looked at each other and we’re like, oh no, either we’re doing something right or we’re not doing something right. You’re seeing the world through a five, six-year old’s eyes. For him, we’re very, very fortunate to have a very mixed group of friends and family. In our culture, we call anyone who is your parents’ friends, auntie, and uncle. They call someone who is white auntie. They call someone who’s white uncle. They call somebody who’s black auntie. Asian, Indian. For them, once we tell them that they’re part of our extended family, that’s their response. I’m hoping that you’re right, that if we’re teaching that to these children and that when they see everyone, they notice that they’re different. I don’t want them not to notice the differences. But, that they all look at them and they all look at everyone as equal.

John Mariano: I think the younger generation, I’m a little more senior than you. I have a 26-year-old, a 24-year-old, and a 22-year-old. And the extent to which their interactions are colorblind, amaze me. This is my own personal viewpoint. But, there has been a seismic shift in that from a generational standpoint. I’m hoping that that is also a foundation for our ability to move on past some of these things that have really been a drag on the country, our culture, and so many other things. I’m optimistic in that regard. I really am. When you hear stories like that from you, when you hear stories from the moms with young kids and how they teach these kids and how they’re committed to teaching them about equality, justice, right and wrong. And then you see it when they get a little older like mine and how it translates into the real world and their lives. It’s pretty powerful stuff. Yeah. It’s pretty good.

Ritu Kaur Cooper: Well, that’s great. But John also, that’s a tribute to you and your wife. Raising them. It’s not just to their world, but it’s also to what you see at home because kids repeat what they hear at home also.

John Mariano: And that’s really one of the big takeaways. Not just the listening and learning and the eye-opening aspect of hearing these stories directly from some of our people. But, that created an opportunity for us to encourage those same people to continue those kinds of lessons and molding and building of your kids. And it is. It’s vitally important.

Ritu Kaur Cooper: That’s amazing. With the initiative that you have, John, how are you capturing any of your DEI metrics or ensuring that they’re working or evaluating them?

John Mariano: Probably no different than you guys would. In an analytical world, as we get more and more into metrics, controlling everything we do. Again, we have three elements here. The first is engagement. We wanted to engage our employees in these kinds of things. We created interactive presentations on our intranet, as well as we have something called Precision Pulse, which is a newsletter that goes out every week. For example, one of the early things we did was we launched a company-wide voluntary training.

John Mariano: We went out and licensed a video called the History of Race in America by Jeffrey Robinson. And we built that into an initial, internal DNI curriculum. If you can get your hands on it, it was relatively inexpensive, the license arrangement. In fact, they were thrilled that it was being used for this purpose. that’s a great and powerful presentation that we launched early on. And that attracted people in to make them understand what we needed to do here. The second element would be the metrics, the numbers. We hired a consultant, like most businesses would, in an area that we want to learn about and understand and get ideas in terms of how to address, no different than a law firm getting a Management Consultant or a consultant on how to run the business or a consultant on how to train your associates, or whatever the topic may be, how to train your partners maybe even. That consultant helped us map out the kind of industry-wide benchmarks that we needed to look at. Now, coming back to three’s here, but three aspects there were total US workforce percentages, our industry, biotech, and then our company and how our numbers matched up to see where we need to improve and where we need to target further inclusion and diversity.

John Mariano: We were fairly pleased, at least at first glance. We exceed the biotech industries metrics for percentage of employees that are black and Hispanic, so we were happy to see that. Without the framework of the initiative that we have going on now, we had at least created a workforce that we felt was balanced and moving towards more diversity and inclusion. We were surprised we were very low on Asian employees. We were well below the biotech industry percentages, but we were well above the overall US workforce. So we’ve got some work to do there, but that was great to kind of look at a roadmap basically, kind of a map of everything that we can figure out where we needed to put some attention to.

John Mariano: And finally, again something else that is just recent, we have hired a Head of Diversity Inclusion in Corporate Social Responsibility. Her name is Temi Adonja. We were able to steal her from Price Waterhouse, which we were very happy about. She just started about a month ago and she’s obviously on a listening and learning tour now to kind of absorb a little bit more about what we want to do, understand our plan better and we are all really really excited about that that’s for sure.

Ritu Kaur Cooper: That’s incredible. John, quick question because you mentioned US-based and you guys are global, do you have initiatives outside of the US and if so, are they different? What do they look like?

John Mariano: We have included Canada and Europe in these initiates and they’re not very different at all. The interesting thing from the European standpoint is the challenge there was translating the initiative out of a stereotypical understanding of America and racism, frankly, and into cultures that actually very very open to diversity. Many of our European, notwithstanding the rivalries within European countries or nationalities, many of them were all like, “Well, that’s what we do here. We don’t look at people as black or Indian or Asian or white. It’s the person.” And so, they were very receptive to all these initiatives, and I think uniquely interested to see how they could participate alongside an American company to help improve diversity and inclusion. So that’s been a big plus. We have HR Directors in Europe who help work with that and Temi will help be a global enterprise-wide leader of the diversity and inclusion initiative, too.

Ritu Kaur Cooper: That’s great. I definitely would love to connect with her in six or nine months to see what she’s learned. I think that would be a really great perspective. It’s like you said right now her job is to just listen and to learn and then assess. Well, congratulations on that. That’s a big deal. That’s a really big deal. We’re trying to walk the walk. Exactly.

John Mariano: We can talk all about it all you want, but until you start dedicating resources and time and talent to this initiative, that’s all it is, just talk of the talk. We’re really excited about Temi coming on board. I think it’s a huge addition. Again, supported at the highest levels of the company. This has been a priority for Mark and Ethan from day one. My hats off to them because it starts at the top. You’ve got to set that tone at the top. Like any service organization like or anywhere, you need it to come from the top.

John Mariano: You know Mark Klein a little bit. He tends to look at of our leadership and our dynamic duo, Mark tends to look at the bottom line a little more so it’s a big accomplishment to get him to dedicate the resources, anything beyond the basics here. I think that speaks volumes as to how important it is, and even he recognizes that, too.

Ritu Kaur Cooper: Absolutely. I think you’re touching right now on my next thought, which is leadership. Obviously, you’ve put the resources in, you’ve hired someone to be the global head of diversity for your organization. You’ve put all these other new initiatives or reinvigorated old initiatives throughout the organization. Tell me from your perspective, why is it so important for that tone at the top, to have leadership understand the diversity and inclusion initiatives?

John Mariano: It should not be as glib as walking the walk or as glib as it starts at the top, but let’s face it, it does. Leadership is critical in effecting real change. When leadership cultivates a culture of respect, education, and dialogue we know that our teams will do the rest. When you tie that into our guiding principles and having a common theme that leadership can embrace and then push down within the context of a DNI initiative like this it has tremendous importance and impact on our people. We have phenomenal people. You’re kind enough to say how much you like working with us and our teams. We really have phenomenal people. When they were offered the opportunity to identify challenges and encouraged to design the solutions we got progress. We put those employee committees together and that was really a big big step in the right direction early, an important step in the right direction.

John Mariano: Now, leaderships role is really, we’ve got to insure that we’re offering support, constantly supporting these initiatives. Whatever the forms are, developing the right forms so that we advance diversity and inclusion and advance it within our culture of the guiding principles I mentioned earlier. That’s really important. Like I said, it’s been embraced by our chairman and our CEO and I don’t know if I mentioned this to you before, but my little sacrifice as a somewhat of a leader was that my assistant Donnea McClinton who has been with me for quite awhile and is really invaluable to me, asked that she be given a new opportunity to expand her professional career and to be a leader and work hand in hand with Temi, our new Diversity and Inclusion Officer, to help push out and roll out these initiates across precision.

John Mariano: I had to give up Donnea to something much more important than my daily whims and eccentricities and whatever else you would call them, but that I think shows how there are all kinds of little opportunities to help someone really grow professionally within this kind of diversity and inclusion model. Donnea is black, she’s African American and she has embraced this new role and it’s just really really satisfying for me to see her want to do that and then to start on a path of success for that. You talk about getting emotional before, that gets me a little emotional now. I’m really proud of her. So that’s kind of the support. That’s kind of a real-world example. You got to get out of your comfort zone. I got to make my Zoom calls now and I got to do some calendaring on my own and things like that, but it’s all for the better. It’s for the better for someone like Donnea and it’s for the better for the organization.

Ritu Kaur Cooper: That is a huge sacrifice, John. Since I’ve known you, Donnea has always been there and is incredible. I think she knows what you’re doing before you know what you’re doing. But just like you said, that is amazing to recognize. I actually think it’s amazing that she felt comfortable to ask, which also then goes to your organization being a place that is supportive open because she could have been in an organization where she would have felt reluctant to even ask, to want to pursue and expand her professional prowess. So I think that’s … Kudos on both sides, but oh my goodness. I am so sorry.

John Mariano: Yeah. So far, so good. She’s been keeping an eye on me. I’m just really, really proud of her that she want to expand, obviously her professional career, but at the same time she wanted to play a leadership role in this initiative. She saw it as something important to Precision, and in her role as my executive assistant, or I’m not quite sure what her official title was, but my right hand basically, she’s a gatekeeper. She sees so many people interact with the legal department across the entire organization, across the entire world. And I think that she was able to take this broad-based knowledge of the organization and say, “Hey, this is something I can help with. I know these people, I know the players, I know people all across the organization. I know how they operate.” And it’s really just a great opportunity for her. It was a no-brainer. It was a no-brainer.

Ritu Kaur Cooper: That’s great. Well look, John, I could probably talk to you for hours. I do. I absolutely love talking to you. So I know I could.

John Mariano: The feeling is mutual.

Ritu Kaur Cooper: But our audience may not want to talk to us or hear us talk all day. So could you give our audience just maybe some best practices or lessons learned or something, just as a parting thought for them to think about as people go about their initiatives that they’re doing for their own organizations?

John Mariano: I’m afraid this is going to be a little repetitive, but I still love this whole idea of empowering your employees to create a structure to how this should move ahead, how an initiative like this should move ahead. That’s number one. And number two really, I think were these town halls, these Zooms. I learned so much. The lessons I learned in that were so powerful personally, professionally. I know we had internal meetings amongst the executive management group afterwards, after sitting through all of these. We had a number of meetings. And we were all blown away at the power of these stories, of these personal challenges that people have. You just get so comfortable in that work mode.

John Mariano: You are a longtime friend of a young lawyer who has worked with me for almost 20 years now. And I know her in this work context, but I don’t know those challenges she’s dealing with, with her kids at home and what they confronted and what they see and how it impacts her personal life. And to have this 360-degree view and to really understand the challenges that mothers with young children are dealing with and the challenges that some of our younger members of the workforce are dealing with. Again, eye-popping. That had an incredible impact on all of us in the leadership group, as well as you just learned a lot of lessons about how challenging it is to raise kids, as you noted, the challenges that you yourself personally deal with. To hear that just creates a whole new perspective, I think.

John Mariano: One other thing was really interesting, which I guess maybe a simplistic way of looking at where we are in the arc of time in this challenge that our country’s had. So many of our minority younger employees, when they would tell stories about being picked out, being pulled over by police over and over again, by being afraid to walk home because if they’re walking through a white neighborhood or something, I mean, just all kinds of stories that they told us. It came back to something that I think is really driving a lot of this today in our culture and in our country. And it’s very simple, enough is enough. Enough is enough. And to hear this from some of these younger kids, that had a big impact on me too. They’ve seen it with the parents. They’ve probably seen it with their grandparents, and now they’re living it. And their viewpoint is enough is enough.

John Mariano: And I think that really, we took away from that saying, it’s now or never. We can’t just let this float along or just let this slide. We need to take concrete action to put in place a real diversity and inclusion program for Precision that really works. And I think that was a big, big lesson that we learned to help propel us to that point. So we rolled into these town halls, whatever you want to call them, in June and July, and they were a really great way to let people talk, let people hear, listen, understand and learn. And it was really, really helpful.

Ritu Kaur Cooper: And because you love threes, if you want to say a third, I’m okay with it.

John Mariano: No, I think I’ll stick with two on that one.

Ritu Kaur Cooper: All right. No problem at all. Well John, thank you so much for sitting with me today, and if it is okay, I would love to be able to check in on you guys in six to nine months, and to see the work that Temi and Donnea are doing, and to see maybe where your program is.

John Mariano: That would be great. I’d love to do that.

Ritu Kaur Cooper: Awesome.

John Mariano: It’s always good to see you and get to do something fun like this. I almost feel like this is a kind of a Francesca Mariano podcast. That’s an inside joke for our audience, but Ritu can tell you if you want to ask about it.

Ritu Kaur Cooper: Well, hopefully, she approves.

John Mariano: Yeah, it’s not as much fun as she’s having right now talking about the Oscars last night, I’m sure, but this is still a really important topic. I am so pleased you asked me to share this with Hall Render and your colleagues. It’s been a great relationship that we’ve built over the last five years or so as a client of the firm’s. You guys have done great work, and I’m looking forward to a little up on this too. It’ll be interesting.

Ritu Kaur Cooper: Well, great. Thank you. Thank you, thank you. And I hope you have a great day. And to our audience, thank you so much for tuning in.

A Look at the Evolution of Health Care Delivery

March 29, 2021 Brian Betner Practical Solutions in Health Care 00:54:59 Comments Off on A Look at the Evolution of Health Care Delivery

A Look at the Evolution of Health Care Delivery

Join Hall Render attorney Brian Betner, along with Jacob Bregman of Everside Health, Meg Duffy of DispatchHealth and Chad Knight of Encompass Health – Home Health & Hospice, for a discussion exploring how health care delivery is evolving with an emphasis on patient access, meeting patients where care is needed and the importance of integrated post-acute care. From the perspective of industry innovators, the panel will discuss the opportunities and challenges in navigating health care status quo and their thoughts what tomorrow holds.

Podcast Participants

Brian Betner

Attorney, Hall Render

Jacob Bregman

Everside Health

Meg Duffy

DispatchHealth

Chad Knight

Encompass Health

Brian Betner: Good afternoon everybody. Thank you so much for investing your time with us on what hopefully is a beautiful afternoon to you somewhere. My name is Brian Betner again, I’m an attorney with Hall Render.

Today we have an impressive panel on the whole notion and concept of the evolution of healthcare delivery. We’ll be talking about trends and opportunities and challenges in navigating the healthcare status quo, from the perspective of a few organizations making a splash in their respective areas, and hopefully touch some expectations and predictions for the future.

But before we dive into the panel introductions, I want to provide an overview for our panel of who we have participating today, and there’s a number of us across the country, whether as a participant, you’re a hospital or health system representative or multi-specialty group practice or home health or hospice, we have a broad array of individuals on the phone or on Zoom with us now and I’m sure you also have interesting insight experiences that may guide questions during the next hour or just short of that. So please use the Q&A feature to pose those as we proceed here over the next, like I said about an hour.

Our goal today is that whatever your role is in the industry, you’ll come away with something, a new idea, a fresh perspective, a new strategy that you can apply to your organization or your role as you navigate this evolving healthcare landscape. So to give you an idea of what to expect, we’re going to take a few minutes for each of the panels to briefly introduce themselves, tell a little bit about their background and the industry and their respective organizations.

I will then kick off our conversation with a very brief overview of what we mean by the evolution of healthcare, and then ask some questions that draw out some of the high-level themes that we hope to be talking about here over the next hour and gets you thinking.

And then toward the tail end of our hour today, we’ll open up the Q&A to give you an opportunity to ask specific questions that you’ve been thinking about or to help you navigate some of the issues that have been challenging for you. So with that, again, we’re grateful for your time today, unless you have any initial questions, let’s get started with a few introductions. And so now I’m going to turn to Meg Duffy with DispatchHealth. Meg, thank you for being with us today.

Meg Duffy:    Thank you, Brian. I’m happy to be here. I’m going to just as part of my intro cover three things. Who am I? What do I do? And what is DispatchHealth? So my name is Meg Duffy, I’m the VP of Strategy at DispatchHealth. I joined Dispatch in August of 2020 in the midst of the pandemic. And prior to joining DispatchHealth, I spent about a decade on the health system side working for various health systems in the industry, always in a strategy role.

And that brings me to my second thing. What is strategy? What do I do? Because often I get that question, what is strategy? And I would describe it as, the way that a mentor that was very important to me did years ago, strategy is watching what’s happening on the fringes of the world that we live in and how it’s going to impact how we deliver care in the future. So it’s exactly I’m aligned with, I believe the topic here, the evolution of health care delivery.

And then what does Dispatch do? DispatchHealth really as a tech-enabled provider, a company that partners with health systems and payer groups across the country, to deliver medical care in the home to hopefully avoid unnecessary urgent care emergency room visits and hospital admissions. So in a nutshell, that’s me, what I do in strategy and DispatchHealth.

Brian Betner:  Thank you so much, Meg, I really appreciate it. Chad, thanks for being with us today, tell us about yourself.

Chad Knight: Thanks Brian. And legal is not as interesting of an introduction as Meg’s in Strategy, but I’ll try and share a little bit about the company too. My name’s Chad and I’m general counsel, Encompass health, Home Health and Hospice. Our Home Health side is the nation’s fourth-largest provider of skilled Home Health services by revenue.

Our hospice side is the eighth largest provider, we operate in 31 States with the concentration in the Southern half of the US. And then just Home Health patients are frequently referred to us following a stay in acute care or inpatient, rehab hospital or other facility. And we also have many patients referred from primary care settings and specialty physicians without a hospital stay.

Our patients are typically older adults with three or more chronic conditions, significant functional limitations, and may require a number of medications. We also provide Hospice services to terminally ill patients. And look forward to sharing more through this panel. Thanks.

Brian Betner:  Oh, that’s great, that’s great. Thanks so much, Chad. Jacob, so it looks like we’re interrupting your mountain retreat, so sorry for that, we really appreciate you giving us time here this Thursday afternoon.

Jacob Bregman: Well, thanks Brian. Good afternoon everyone, and thank you for having me. My name is Jacob Bregman and my role is the market president for the West side of the United States for Everside Health. So in that role, I’m responsible for operations and client relationships operating about 50 health centers. And before working at Everside health, which I joined in 2019.

Similar to Meg, I have some background working in health systems, so I worked at university of Colorado hospital here in Denver, prior to that I worked at DaVita dialysis company. And started off in healthcare at the advisory board company in Washington, DC.

If you’re wondering what is Everside Health? So Everside Health is the country’s second-largest provider of direct primary care. And Everside Health has a new name and a new brand for us just within the past few weeks. Those on the call may know us as Paladina Health, Activate Healthcare or Healthstat. Those are the three legacy companies that merged together to become Everside Health.

And what we do in a nutshell is we partner with employers, we partner with unions and we develop onsite, near-site and virtual primary care services. So the typical challenge that we address with our clients is groups, particularly employers are seeing healthcare costs go up and up and up, but they’re not seeing necessarily the quality of the health that their employees and their dependents are receiving going up.

So our model involves really giving primary care providers a lot more time to spend with their patients, longer appointment time, smaller panel sizes. We hire providers who work at the top of their scope to fulfill potentially up to 90% of a patient’s healthcare needs inside primary care. And then we try to make the incentives aligned to ensure that we’re providing high quality and at the same time, low-cost primary care. So that’s Everside in a nutshell, and again, thanks for having me.

Brian Betner:  That was great, Jacob, thanks so much. So you touched on a number of issues, hopefully, we’ll explore here today. So let me… As I commented on a few minutes ago, before we dive into the panelist perspectives and experiences, I want to give a very brief backdrop. So we talk about the evolution of healthcare. We’ve had a bit of a level set with everybody in terms of what we mean.

So when discussing the notion of an evolving healthcare landscape, in terms of how and where care is being delivered, it’s important to have a background that speaks to what’s driving the evolution. And so here’s how I’ll tee that up for us, just so we’re coming from the same point.

We’ve had a perfect storm of sorts for the last 20 years or so, and if you want to go back to 1999 and 2001, the whole notion driving quality, that really brought at least when you’re a healthcare provider and you’re involved in policy and quality and how we deliver. The Institute of medicine [inaudible] crossing the quality chasm release Seminole papers, that started a dialogue certainly within the federal healthcare system, in terms of the return on investment that American healthcare gets in a prevalence of patient safety events, et cetera.

And then when you compound that with social security trust fund insolvency issues, CMS’s hospital quality initiatives, the joint commissions national patient safety goals, dramatic advancements in HIT. I mean, if you go to any healthcare provider from a line item standpoint, that health information, whether it be the chief technology officer or whatever the title is, they have an insatiable budget, because there’s all sorts of toys out there, that dramatic advancement in HIT are really driving things.

The advent of the triple aim, certainly increased fraud abuse compliance enforcement with additional funding, which creates scrutiny and opportunities to avoid certainly the whole notion of corporate negligence and negligent credentialing takes a very significant role. A host of market trends, patients have a greater expectation today in their experiences and their quality and their outcomes. And certainly quick-moving commercial payers.

That entire perfect storm that’s been happening the past 15 plus years feeds into what’s happening today, there’s a longstanding Axiom that continues I believe to be true, which is that reimbursement policy drives delivery system change. And we have seen that through the affordable care act, now just a hair over 11 years, two days ago, it was 11 years old, I guess.

But CMS has made its goal very clear and shifting that the largest payer in the country in terms of lives touched in relationships with healthcare providers, its goal of shifting Medicare and Medicaid away from fee for service, to being more oriented toward value-based and pay for performance, quality control, cost control, driving integration among providers, et cetera.

But this is really challenging when you consider that so much of the foundation of our healthcare infrastructure is built on or has been built on not inappropriately, but is built on acute care, and inpatient focused mindset, patients coming to providers, certainly a hospital anchored design, a hospital-sponsored and funded design, if you will. And these and other factors have contributed to a very meaningful shift in where and how care is provided.

Generally, I would say an emphasis on primary care, pre acute and post-acute, care of individuals and certainly end of life issues among other matters that are starting to become prevalent because of the costs involved in care, there’s a data point, an overwhelming percentage of Medicare’s budget is attributed to the last 180 days of life.

And we’re starting to look at that as a society and a country, and as a result of all these pressures, healthcare industry has been making efforts to improve its efficiency, access, quality, affordability of services, and lots of changes have occurred, and especially the past few years as a result of these efforts, for example, I mean, we see a tremendous, measurable, I should say, decrease in hospital admissions as more people are served throughout the outpatient care continuum, we’ll call it.

And so, there is a confluence of events and activities, and we’ve got a lot of innovators around the country, it’s really amazing. Anything is impossible in healthcare, but for some hurdles and challenges, of course, that hopefully we’ll explore today. So with this as a backdrop, we’re going to turn to our panel, and Meg I’m not picking on you, we started introductions with you.

But I want to start with you here. And here’s what I want to set aside, so that everybody understands this. The whole notion of COVID elephant in the room, this is not so much a COVID panel discussion, but we can’t avoid it. It is probably the prevailing or the dominant experience for many of us, certainly over the past 12 plus months. But the past several years have involved some common denominators for all providers in terms of them shifting the patient experience and emphasizing quality, addressing population of health issues and certainly efficiency and cost control.

So with those dominant factors, Meg I want to start with you, because in some respects, DispatchHealth it’s existence, it has to do with many of these things. So, can you describe for us Dispatch’s mindset and how it shows it has started to address these trends?

Meg Duffy: Yeah, absolutely. So, I wish I could speak firsthand to being one of the founders of Dispatch, but our co-founders started Dispatch in 2013 really after decades of working as clinicians, our CEO Dr. Mark Prather is emergency medicine Physician and the stories he tells about seeing people come into the emergency department and thinking there’s got to be a better way, I don’t know that they’re going to get their meds, I don’t know that they’ll follow up with their cardiologist.

You know what? I don’t have any context of their lives, they come in, we treat them and they’re out and he started to think there’s just got to be a better way. So he started in Denver where we’re headquartered, piloting really with EMS agencies to re-imagine the 911 response. And using a proprietary risk stratification model and some logistics engine we have within our platform. We’ve been able to prove that you can safely risk-stratify patients, determine who’s appropriate to be seen in the home and effectively take those clinical capabilities to the home.

 We have a set of providers, an emergency-trained physician assistant, or a nurse practitioner along with a medical technician that goes in the home with the clinical capabilities to be able to treat people where they are and meet them where they are and avoid unnecessary trips into the emergency department. So saving the unnecessary costs, not just in the emergency department, but also for the EMS agencies and transporting those patients.

So we quickly realized, okay, not only are we able to accomplish this at a lower cost, but over the years now, as we’ve scaled the model across the country, here to date, our NPS score is still 96, which is just phenomenal, you don’t see that very often in healthcare delivery, that high of a patient experience for our net promoter score has consistently maintained that high.

Our outcomes we believe to be superior, particularly as we branch into areas like hospital at home where our readmission rates are less than 4%, our unexpected mortality is zero. And so we’re able to say, gosh, we’ve taken care back to the home, we’ve had to do some testing,  started small, but as we scale, we continue to see lower costs, better experience and better outcomes. And our providers love it. They have more autonomy, they are able to experience a better relationship with the patients, they see their pets and their family members, and they get that context of the social determinants of health that you may not get in other care settings.

So that’s sort of, you’re exactly right, we were born out of this mentality of, there’s got to be a better way to achieve the triple or quadruple aim. And I’d say, five-plus years later operating under the Dispatch health model, we’ve been able to prove that it’s possible.

Brian Betner:  So there’s a lot to unpack there. I like that. Jacob, let’s go to you. I want to understand the direct primary care model that Everside is largely built on today in terms of its priorities and emphasis. How does… Dispatch has found a sweet spot in terms of where it’s seen a void. What is Everside’s view in terms of how direct primary care plays into that?

Jacob Bregman: Yeah, absolutely. I love what Meg said and it resonates with our philosophy of, there’s got to be a better way. And I think the niche that we fit into is people who sponsor health plans. So typically employers, Taft-Hartley union groups, some benefits trust funds. As I mentioned before, healthcare is not necessarily going up, even as costs go through the roof.

And so our approach is basically to proactively and comprehensively manage primary care. And we do that through a mix of brick-and-mortar primary care clinics, and as I’m sure we could all speak to the growth of virtual care over the past year.

So a couple of things that I think are highlights of the model, we leveraged technology a lot to risk-stratify patients. I’ll give you an example, I know Brian, you don’t want to go to COVID quite yet, but it’s pertinent in this case. A year ago when nobody really knew what was happening with the Corona Virus, we were able to leverage our analytics and stratify our patients, basically depending on their risk factors, if they were to contract the virus, the higher risk folks got a personal call from their primary care physician, the next step down, they might’ve received a call from an advanced practice provider or from medical assistant or a web message, basically letting them know, Hey, we’re here for you and getting those patients, getting their medications refill, getting them care as they need it. Sometimes just reassuring people.

So not dissimilar from DispatchHealth, a big part of our model is keeping patients away from higher-cost locations for care, such as urgent care or the emergency department, and when possible managing healthcare within primary care. There are things we can do related to dermatology is a great example, women’s health is another example, wherewith the well-trained family medicine physician, our advanced practice provider, we can take care of those needs for the patient within our model at no cost to the patient. And that voids a specialty visit that enhances coordination. And because we’re not worried about following up on referrals and records and things like that and convenience and time savings for the member.

Brian Betner:  Does the current reimbursement scheme, the major payers, governmental and commercial, do they facilitate that? I mean, I often use an expression when I talk to physicians today that a lot in advanced practice professionals a lot is required of them today, and there’s no CPT code for it, right? They’re being asked to do things in a management way that may not fully align with the reimbursement system. Is the model you just described? Does it fit well or a lot of these things don’t value adds.

Jacob Bregman: Yeah, it’s a good question. So the broad model that we fit under is direct primary care, and the direct word basically references that we view our relationship as between the provider and the patient, whereas in traditional fee for service medicine there’s the insurance carrier if it’s in there. So for the most part, we don’t bill at all. There are certain instances where the IRS requires us to bill under high deductible health plans and things like that, but for the most part, members might… You might compare your access to Everside Health is like a gym membership. We collect a flat fee or a monthly fee, and then members come in and use our care as much, or as little as they need it doesn’t matter, there’s no impact on reimbursement if it’s virtual, if it’s in person, if it’s by a text message.

So that’s one of the really nice things, and I think the providers who work in our model really enjoy that, they’re not spending time billing and coding and up charging, they’re just focused on providing the right care to the patient.

Brian Betner:  So, Chad, Jacob just described a pretty flat relationship to payers, a little more streamlined, but that’s not your experience, right?

Chad Knight:  Right. And I mean, Home Health for a long time is very much fee for service, we’re seeing, I think within the past seven years, and it’s just growing and growing is new payment models. And so things that shift more to the value-based care like we talked about earlier, right now Encompass we’re collaborating with about 140 within different payment models, so these are NXGEN, ACOs, MSSP and direct contracting is one of the newer ones coming from CMS.

So, as that landscape changes our ability to fit in and provide more value-based cares is growing too, so I think that’s just going to keep increasing as we go into the future.

Brian Betner:  Is that having to maintain competency over 140 or so different payment models, how does that… Explain to me how that works? That seems a bit minomic.

Chad Knight:  Yeah, there’s probably only a dozen or so different payment models, but I think MSSP has been around and NXGEN have been around longer, so those are pretty standard now, but as we’re working on direct contracting models, that’s new and everyone’s getting their templates together and things, so that takes more time, I think that’ll get easier as time goes on.

But even just working with the 140 different, whether it’s physician groups or hospitals or ACOs, each of them depending on the region has different things that’s important to them and drafting the contract in a way that aligns best in the patient’s interest really is I think the fun part about the new models. So that’s what we’re working through and that takes time with each relationship.

Brian Betner:  Meg, Encompass can align through recognize participating provider arrangements with commercial payers and Medicaid, Medicare, et cetera. How does that work for Dispatch?

Chad Knight:  Yeah, I mean, we are contracted with 300 plus managed care contracts across the country, we have 150 plus covered lives that have access to DispatchHealth through those contracts, and then of course we see Medicare and Medicaid, and we’re looking at how to participate with direct contracting as well. Most of our interest comes from health system partners or provider groups that are taking risk that we’re able to demonstrate the value on their different populations, not to say we’re taking the risk directly ourselves, but we’re able to enter into an arrangement with those health systems or provider groups that are at risk and partner with them to make sure that we’re, again, risk stratifying, identifying the most appropriate patients that we can be helping offset unnecessary costs.

And then one of our main things always is to tuck the patient back into whomever is their primary care or whoever is their network to make sure that right now we don’t have necessarily that longitudinal relationship with the patient, but we want to make sure that they’re taken care of and tucked right back in. So regardless of the payer, that’s always top of mind as well, but I would say that the most attention from interest from the industry is coming from those that are already taking risks today.

So, what each of you has described assumes that the whole notion of helping a patient, engaging the patient assumes that their patients understand your models, they understand how to take advantage of it, they’re engaged enough to be, I mean, there’s a competency there, proficiency or knowledge, how does it even work? I mean, how does Dispatch or Everside or Encompass meet the patient so that they’re making an informed decision? Help me understand how that works, Jacob?

Jacob Bregman: Yeah, I think that’s a big part of what we work on every day, I think there’s a little bit of feedback we get sometimes when people first hear about Everside Health thinking, one of two things, one is this too good to be true? What am I missing? The second being, huh, I am not sure how I feel about my employer, my job being connected to my personal health care.

So how do we get through those things? I think it’s really a combination of education, of transparent communication. I mean, on the employer and the privacy side, we can talk to patients about HIPAA and privacy practices around the provider, patient relationship. Quite honestly, a lot of the learning just comes by word of mouth, I’m fond of sharing my own personal story. When I first got access, when I worked at DaVita, I had access to Everside Health as a patient, and I was one of those folks who said, I have a primary care provider I’m happy with, I don’t want my work in my personal medical life.

And then what happened is I got sick and my primary care provider, I called them and they said, yeah, we can get you in the next week. And my thought was, well, I’m sick now. And then I remembered through my workplace, I had access to Everside Health, I gave them a call, they said, can you come in in an hour? And I said, yeah. And they took that opportunity not just to treat what I was facing that day, but they said, Hey, if you’d like to come back in and establish care with us, we’d be happy to take care of you. So, that’s a lot of what we do patient by patient, just explaining what we do and how we’re in their corner. And patients once they come in once or twice, they typically keep coming.

Brian Betner:  All right, that’s rational, that makes total sense. Meg how does it work from Dispatch’s perspective?

Meg Duffy: Not too dissimilar, where once they’ve experienced us they’re ready to come back, but I will say it’s similar, it’s too good to be true, wait a minute, you’ll come to me within two hours or whatever it may be. So I would say, a couple of things that we do on our onboarding process, we try to make sure that we have appropriate reading levels and things like that of the language that we’re using to describe our services and do the risk stratification. So that way it’s translating well to the mass majority of callers, we have web-based, mobile-based ways that they can request care, so hopefully we’re also hitting people whatever is the methodology to request care that’s best for them.

And then I think we have… I don’t know most of our patients are new patients, we have a lot of return repeat patients, and we also have a lot of caregivers that are calling in on behalf of, so it’s me for my mother, or it’s, I’m a caretaker for somebody. And so often they’re the ones that are recognizing, gosh, I don’t have the time or the foresight or whatever to be able to plan accordingly a half a day or a full day or whatever it may take to get somebody into an urgent care appointment, especially if they’re homebound or have transportation issues. And so, a lot of times it’s the caregivers and we also have referrals directly from our providers and payers that we partner with.

So a lot of times they’re helping with managing up the Dispatch option as a choice for their members, and then sometimes even making the direct referral to us, should it be something where they can’t handle the need appropriately, or it’d be better suited for DispatchHealth to come in and treat that patient where they are.

So a lot of different ways that hopefully we’re trying to get the message out, but once similar, I experienced DispatchHealth firsthand and I mean, and definitely, that was long before I worked for DispatchHealth, like you were saying, Jacob, and I’m a believer from that firsthand experience. So it just takes one time.

Brian Betner:  So there’s an unavoidable theme in everything each of you has said. And when I think about access, when I think about how you generate your business and a referral mindset, a lot of it has to do with convenience and experience, staffing is everything for that, right? You want to get a dermatology appointment, you’re looking at March of 2024. Providers and availability of individuals.

So I don’t understand, help me understand how you accomplish access, convenience, that experience you just described, particularly given your scale and size. Chad, the scale and size of Encompass, help me understand from a staffing standpoint, how are you able to staff it? How does it work? How do you have the providers who are available at the right level, particularly, it sounds like we might be, the whole top of the license notion that I think Meg had mentioned, how does that work?

Chad Knight:  It’s been tough especially over the past year. The biggest thing that Encompass does I think is, we’re big on best place to work, and you’ll see that just throughout the country where we have offices. So I think it’s either corporate culture or that extra feel kind of the family feel that our offices have, that makes us different from other providers, and working another provider but staffing is difficult for all health care providers across the country.

Brian Betner: Are we talking largely APNs, PAs? What’s the license mix that dominates your rosters?

Chad Knight: Yeah. Nurses and physical therapists in Home Health.

Brian Betner: Okay. Jacob, how about you?

Jacob Bregman: Yeah, for us it’s a mixture of family medicine physicians, and then family medicine and trained nurse practitioners and physician assistants. And so we’ll work with each client when we’re establishing a new health center to discuss the right staffing mix for that particular location and patient population.

We find it works really well to pair the two together, so to have a health center staff by a physician complemented by an advanced practice provider gives the patient some choice, it allows some focus as we’ve been saying for each provider to work at the top of his or her license.

And I’ll echo what Chad said, especially as we talk about these innovative models, one of the challenges we face is recruiting providers who get it and they want to practice this way. And I think in our world for a family medicine physician who’s coming from the fee for service world, where they’re seeing 20 or 30 patients a day generally generating a lot of referrals and a lot of billing codes, it’s different.

A lot of our providers tell us this is the way I want to practice medicine, but on the front end, back to this too good to be true, we sometimes struggle with that. And the other part of our model is we want our patients to be able to access us, so we ask our providers to be on call 24/7, because we’d rather get a call on a weekend or in the evening than have one of our members go to the emergency department for something that we could have helped avoid.

Brian Betner:  So that’s interesting because there are jokes [inaudible] that physicians will choose, certain specialties at a residency, because they don’t involve call, right? And now you’re telling me that your FPs and your primary care advanced practice nurses and PAs they take 24/7 call.

Jacob Bregman: They do, yeah. Meg, how is staffing for Dispatch? You’re largely because of the … it’s much more autonomous, right?

Meg Duffy: So, actually, so I’m going to try to kill two birds with one stone here. So there was a question in the chat from Lisa Brandt, and I asked a little bit about our focus. We go to the home, do we use telemedicine? And so I guess to tie that into how we staff, we’re constantly focused on how we can continue to right-size care, we’ve limited resources, there’s not necessarily parody with regard to reimbursement across all different payers, and so what we’re trying to I think do is look at our risk stratification model and make sure that we’re optimizing it all the time.

And so we started off with the business model of sending out an emergency trained nurse practitioner and physician assistant paired with a medical technician into the home. And what we’ve found is typically our patients are chronically ill, elderly, and that’s appropriate, but there’s some times that it’s a snotty nose or a sore throat or whatever, and we want to right-size care, we don’t necessarily need to send out that full team.

So instead we’ve developed a model that we call tele presentation which is basically an enhanced or assisted virtual visit where we send out the medic, they’ve got the kit, the equipment, they’ve got a moderately complex CLIA certified lab that they can run point of care testing, but they’ve got the virtual APP on the other end. So that way we’re continuously right-sizing care. And so depending on the service that we’re providing, the staffing complement might be a little bit different. So it could be anywhere from a med tech tele presenting, full tele medicine. We could go all the way then with the hospital level of care in the home where you’ve got RN coming in and doing visits.

So, anywhere from that episodic intervention to now we do post-acute visits in the home. So after they’ve been discharged from a hospital at one of our partner systems, we’ll send in a nurse or a tech to do some follow-up, and make sure that within three days there are some services wrapped around them, we’re avoiding a readmission, all the way through a seven day episode, a 14 day episode, a 30 day episode, really just based on what the patient needs. So the staffing complement is all based on that sort of right-sizing care and right-sizing the resources needed to treat them appropriately.

Brian Betner:  I was going to hold this question for diving into COVID, Jacob, I promise we’re going to get there. Diving into COVID, but this relates to all this, Meg, because you just mentioned the role that mobile technology and telemedicine plays. Is telemedicine playing, COVID aside or COVID, let’s go ahead and go there. What role is telemedicine playing in your current delivery model? Is it dominant? Is it different post COVID or not? Jacob.

Jacob Bregman: Yeah. I think it has shifted, but I think it’s here to stay. And at the beginning of the pandemic, probably in April of last year, somewhere around 80% of the appointments Everside completed were virtual. And I think that’s stabilized, I’ll use the word stabilize, who knows, but around 30 to 40% now of care is still being completed virtually. I think there’s been a lot of learning and a lot of comfort development on both sides, both patients and providers. Patients realizing that this is something that is convenient and safe and trustworthy, and I like it. And on providers really saying that, hey, there’s a lot of medicine I can practice with a video feed or even a telephone call to the members.

And then we wrap that around the physical clinics, the health centers that we have. So probably the classic example is abdominal pain, there’s certain elements of abdominal pain that the providers can evaluate virtually, but probably the patient does need a belly exam for comprehensive care. So the same provider who speaks to the patient on the video visit can then say, great, if you want to drive over, we have an appointment this afternoon, and we can complete the care that way.

Brian Betner:  Chad, is technology or telemedicine or telehealth generally, is that playing a role in Encompass’s model or has COVID changed that?

Chad Knight:  It has, there were waivers this year to allow telemedicine visits, and we found that we use them I think more so when COVID was really bad and for our patients, it seems like a lot of them still prefer in-person visits. So I think telemedicine is here to stay, but I don’t think it’s going to replace having a nurse there in person.

Meg Duffy: I can tell a little story around that if it’s relevant, if you don’t mind.

Brian Betner: Oh, please.

Meg Duffy: Because you’re right, Chad, we’ve had the same response, particularly from certain consumer segments that are just, they love seeing their provider, they want to see their doc, who they’d been going to for years or whatever. But one of our partners in the Pacific Northwest, earlier in COVID said, Hey, we’re struggling to get our patient panel in to see their primary care for health maintenance visits, how can you help us with that? You have assets in the market, you’ve got teams that are already going into homes, is there something we can pilot there?

So over the past year we’ve been piloting what we call a clinic without walls, and it’s essentially one of our medical technicians going out into the home, and then tele-presenting back to our partners primary care provider. And for being able to, again, provide point of care lab testing, and some of that hands-on stuff that otherwise you can’t do with just a virtual visit. And we’ve now since been able to survey our patients that we’ve treated through that mechanism, through clinic without walls.

And all of them say that it saved them two or three hours than a typical visit would, all of them say that they loved it and that they would do it again, but all of them also said that their preference would be a hybrid model, that they would see their providers in person sometimes, and then on the off times, or here and there they’d be able to interact with them with the clinic without walls model.

So I agree, I think it’s here to stay, but there’s going to be this blend I think in the future, and we have to think about the difference in different consumer segments and their preferences and being able to accommodate those.

Brian Betner:  Does provider or physician… the acceptance of that model, a technician going in and facilitating that, providers accepting of it. I mean, you’ve got physicians like IO and that works for me, I like it. Some of them, okay, yeah.

Meg Duffy: Some of them. So some of them been kind of like, how’s this going to work, a little… some of the provider that we’ve had, a couple of providers that we’ve had piloting that have been wonderful and they are totally bought in once they see the technology, they actually say the heart sounds, the lung sounds, the ear sounds are better through technology than they are through a stethoscope or for what they’d be hearing in the office and they have the ability to record those things, go back and document it in the chart that way. So I think they’ve really seen the value.

And then just to, also while I have the floor answer a question I saw come through at least on the panel side, around we leveraged remote patient monitoring, we leveraged personal emergency response devices. And our view is that eventually we’re going to have to be able to partner with any of those solutions, any company, because we’ve got, again, a diversity of partners from health systems and payers that may have preferences for RPM or for pers devices. And we want to make sure that we’re leveraging those so we can keep people safely in the home, but that we can not create unnecessary limitations with which devices we can be compatible with.

Jacob Bregman: And if I can add one idea onto that, talking about the acceptance of virtual health across different areas of healthcare mental health, I think it’s been remarkable and a really great thing for society to see the very quick acceptance of virtual mental health care. I think despite all of the work that we’ve done over the years, there still is a little bit of a stigma for patients going into a psychologist, psychiatrist office versus finding a comfortable, confidential space to do a virtual visit. It has done great things I think we’ve seen within our population.

Brian Betner:  Jacob, that’s interesting, because I often think about building a… in emergency situations, this doesn’t really happen as much, but building a rapport, so there’s a trusted relationship, there’s a sense it’s hard to do that in initial virtual encounters, that hasn’t appeared to be a hurdle from every side’s experience.

Jacob Bregman: It really hasn’t, I think what you just described is what all of us anticipated at the start of this. And I think we’ve seen those walls break down very quickly, and again, on both sides, both from the provider feeling as though she or he is… it’s more challenging to create that rapport without seeing the person in person. And on the other side the patient feeling comfortable to have this type of relationship across the screen.

Brian Betner:  There’s a notion, I mean, if you go to most health systems websites today, you’re going to see the words clinically integrated, we’re a clinically integrated delivery system. It’s a strategy officer’s [inaudible] love it Meg. It’s a concept, now it has legal parameters on it, if you think from antitrust issues, but at the end of the day, I mean, it’s a delivery model and it assumes that providers are collaborating with other providers and you’re sharing information. How does that work within, Chad, from Encompass’s perspective, historically there’s probably a lot of handoff situations, right?

Your post-acute managing patients in a home health setting after discharge, post-surgery that sort of thing. What is clinical integration played a role in each of your models in terms of affiliating with other providers?

Chad Knight:  Yeah, I think more and more it’s coming up and providers are asking for it, so we have contracts where we share data, share metrics, track quality at its core I think it’s the same thing we’re all doing improving results for the patients, and that’s all of our goals. So the more that we can incorporate metrics that are aligned between us for the patient and actually track those, hold each other accountable, meet and discuss, the more we’re seeing benefits.

Brian Betner:  And, are those metrics. I mean, some of this is co-management, right? You and another provider type. I mean, is metrics, is that information that’s, is it solely within Encompass providers jurisdiction or some of it because it’s the care’s being managed with a primary care provider you’re not affiliated with, I mean, are they all internal metrics to encompass providers or are they metrics that kind of measure more of that continuum or other aspects of care that you’re not exclusively responsible for?

Chad Knight:  It’s both and it depends on the metrics, right? So, some data we’ll have to share, some the provider can add data to our EMR or vice versa. But I think in most cases it’s, we need to share reports and meet and talk and [crosstalk]-

Brian Betner:  Direct primary care. What’s that?

Chad Knight:  It’s not as easy as it sounds on its face, so.

Brian Betner:  Right. Jacob, direct primary care. How does that work with specialists? How does that work with relying upon the various specialties and subspecialties that your FPs and APNs, et cetera, lean on?

Jacob Bregman: Yeah. So I think in primary care we view our role as the quarterback or the coordinator of the patient’s care. And so when we think about specialists and referral needs, we kind of think about it in three tiers. So the first tier would be, with the right time and tools and training of our own providers, can we get this done inside Everside?

Now the next would be perhaps the, maybe it’s a diabetic and the patient’s situation is on the bubble at the edge of the telemedicine providers training. We leverage an e-consult service to do basically a curbside consultation in that case with an endocrinologist to get an opinion. And then that might result in a referral to that endocrinologist.

 One of the nice things about our models, because we’re working with clients, we work with a defined number of health plans, so each of our clients typically only has one, maybe a handful of health plan options. So we get to know those pretty well, who’s in-network? Who’s going to give us great quality, great service and keep those costs low? So that’s our view of the world of specialty, we as much as possible try to keep it in house, and when we do need to be on our specialist partners, we try to use the best plan information and analytics to make sure that we’re sending patients to the best specialist.

Brian Betner:  How does your EMR work? Providing access and populating it with those providers? Do you have relationships… you have relationships where they’ve got direct access, how does that work?

Jacob Bregman: Yeah, it’s a difficult question to… because there’s not just one answer there. Certain health information exchanges in different States make it very easy for us to retrieve information. Some people might be familiar with Epic, Epic has a care everywhere functionality that is very easy to use, so the primary care provider can get records more easily. But I’ll be very honest with you, there are still instances where we’re getting faxes and other records in older ways and we’ll incorporate those so we can make sure we have everything we need.

Brian Betner:  The occasional pigeon or so. Yeah. Meg, how does DispatchHealth integrate? You probably have given the remote monitoring technology, I’m sure you’ve got direct access. You’re an extension in some cases for your hospital relationships, right? You do have direct access to the EMR?

Meg Duffy: Depends on the relationship and we’re working on further integration with Epic specifically, but I would say, what we do is digest their network, and our platform is able to refresh that and make sure that if we need to send a referral we’re sending it within network for that patient. So that’s first and foremost.

One other things though that we find with our model as it grows and evolves as we become our own referral source, so when we’re in a patient’s home for an urgent care or emergency care level visit, six to 8% of the time, somebody needs to be admitted for further observation or for a short stay, and we’re able to evaluate their home environment right then and there and say, okay, would they be eligible to be admitted in the home.

 And so when you’re doing that with our model, we have 98% acceptance rates where patients are like, sure, great, okay, yeah, you can do that right here, I can safely be admitted at home, I’ll do it. When they’re in the hospital, and this also gets to another question on the Q&A, when they’re in the hospital and they already show up either by ambulance or self or whatever, and they’re in the emergency department and a physician says, Hey, we’re going to need to admit you, but we can admit you at home, we’re partnered with Dispatch or Medically Home or others that do hospitalization in the home. The admittance rate is I think less than 2% or something, because it’s very hard for patients, once they’re already there physically to understand, wait, I got to go home now and you can actually do that at home, but I’m here. So you don’t want to take care of me or, can you just do this now?

And so our acceptance rate when we’re referring to ourselves for that next level of care, are a little bit different than a specialty consult, but for that next level of care is really high. And so we continue to see benefit with having a full continuum of options to offer patients.

And then the question also starts to ask about the decline in volume, these are patients that I don’t think health systems will be incentivized for the long haul to keep them in their four walls anyway. And it’s actually going to be a win-win a benefit to the health system and the patient to be able to treat them at an appropriate cost setting.

So, I do think there may be a decline in admissions, but hopefully a pickup in value over the course of time, and then I do think that the reliance on elective procedures in the inpatient setting is short-sighted, with the vast majority of those things moving to the outpatient space safely, hospitals are going to have to figure out another way I think to partner with folks like us who are willing to help them create opportunities to right-size care and safely care for patients where they are when appropriate.

Brian Betner:  So, the whole notion of decline in volume is a good segue to address some COVID issues here. Chad, want to go around the horn here, but I think I want to hear from each of you on two items, what was the biggest impact COVID had on your delivery model? And number two, what do you expect… is COVID changing your operations beyond, let’s assume everybody’s vaccinated in 42 days and we kill this thing and the malls are full and everything’s happening, let’s assume all that. How COVID may change if at all, or is it not changing operations post PHE? Chad, how did COVID impact volume? How did you react and is anything going to last?

Chad Knight:  Yeah. So COVID had a lot of challenges for us I think like everyone else, our patient volumes decreased a lot in Home Health, we had decreases in visits per episode, and also on the supply chain side, we had disruptions, we had trouble getting masks and other PPE, so either delays in that or price increases. And that continued for months, so I think once that’s resolved and everyone has equipment they need on time and it’s not worried about getting it, that’s big difference. And I think you’re right, COVID could go away and I don’t know that anything changes from power handling it now, I think we’ve made the adjustments that we need in our operations to handle it if it comes up again and made improvements in where we’re at. So I don’t know that we’ll have… we’re not going to flip the switch or anything and change everything [inaudible] it’s gone. So.

Brian Betner:  So, that makes sense, Jacob.

Jacob Bregman: Yeah, for us I know we’ve talked a bunch about this shift to virtual, and I think that’s here to stay, I think finding a good balance between in-person virtual visits is probably what will be the future for us. I mean, to be honest, 10 months ago I was wondering, will we continue to build primary care health centers as we continue to shift to virtual? And the answer has been a resounding yes. And when we work with employers and union groups and other trust fund groups, they’re still interested in having an onsite and near site place where their folks can go to receive care.

If I can highlight maybe one other thing that was a silver lining or something good about the pandemic is I think it got everyone thinking about health care. And when we think back to the beginning when no one really knew what to do or how to get tested or things like that, the public health guidance was, go talk to your PCP.

And I think there were a lot of folks out there who said, I don’t have a PCP and that was their motivation to say, Hey, I probably need someone in my corner, and so they got themselves into the healthcare system which I think is great for everyone.

Brian Betner:  Yeah. Great talk. Meg.

Meg Duffy: Well, so COVID kind of threw us for a loop, similar things like everybody, we had to acquire PPE and make sure we had all the right safety protocols. But we were a leading indicator of COVID volumes, we would be getting called for asymptomatic testing, we’d have people with symptoms coming into their home to do testing so they didn’t have to go out in public and either risk getting the virus or risk spreading the virus.

And so it just accelerated, we had the busiest year, of course we’ve been growing year over year, but I mean, just way more than we would’ve anticipated, with just your seasonal communicable disease, and so COVID accelerated our business model, absolutely. But it also I think highlighted some areas of opportunity for us to, like we have been doing now is evolving across the continuum.

So early days we could get out there and we could send a team, and we were doing asymptomatic or symptomatic COVID testing, and we quickly realized, gosh sometimes for example it’s a whole family that needs the testing. How does that impact our logistics engine and our predicting on-scene time and some of those things. And so it’s made us think I think a little bit differently about how we’re onboarding patients, the questions we’re asking, how we’re working them through the process as well as rightsizing care once again, so I’ve said that a few times, but if we’re just doing a point of care tests, we can send out a medic, we maybe don’t need to send out a whole team.

And so just thinking again about what are the resources that are truly needed, because in the past year we were very full in all of our markets mostly with COVID. And so that is a little bit of a concern too, for us, just from seeing volumes drop for other communicable diseases, what will seasonality look like in the future? It’s kind of a wild card, I think, but should be fun to solve whatever that challenge may present.

Brian Betner:  Said by a true strategy officer, that’ll be fun. Yeah, I love it. So, hey, so let’s close with this. I want to ask each of you, your wishlist, your one item from your delivery model, meeting the patient, outpatient, home care. What is the hurdle that you want to overcome? What’s the wishlist? Is it a reimbursement one? Is it a regulatory issue? And your perspectives are going to drive this. I mean Chad’s a lawyer, so he’s going to want, we want free-market principles. What is the one wishlist that would absolutely optimize your strategic goal, your care model, et cetera. Chad, I’ll start with you.

Chad Knight:  Yeah. I think, so right now there’s I think a lack of tele-health reimbursement throughout healthcare. And so the reimbursement model needs to catch up to the technology. So that would be my first ask.

Brian Betner:  Right. Yeah. And there’s a long list of people behind you with that one. Jacob.

Jacob Bregman:  Yeah, for me it’s a bit of a buzzword, but value-based care. And that term has been around for a while and I still don’t feel like we’re where we should be, I think the world still revolves around fee for service and the incentives are aligned to provide more healthcare as opposed to the right healthcare.

Brian Betner:  Yeah, I get it. Meg.

Meg Duffy: I second both of those notions. So I agree, but I will add just for a different flavor, that for us, the variability in scope of practice, limitations by state, really, I think inhibits our ability to innovate and think creatively about how we use the right resources for the right care at the right place. So, that would be probably my number one if not for reimbursement.

Brian Betner:  Yeah, that’s absolutely huge, the inconsistency, we have 50 States you have to navigate with those issues. Absolutely. So we are right at the 60 minute Mark. And so here’s what we’ll do. I’m going to turn it over to Julie here in about 12 seconds to make a closing statement from an admin perspective. But we’ll take a look, make sure we answered any questions. Do not hesitate to reach out to us and follow up if you have any inquiries on anything you heard here today, I am absolutely grateful, you took an afternoon here in late March to speak with us and especially want to thank each of the panelists for their expertise and experience.

Hospital Property Tax Exemptions – The New Jersey Statute and Beyond – An Interview with Neil Eicher of NJHA

March 22, 2021 Joel Swider Health Care Real Estate Advisor 00:31:54 Comments Off on Hospital Property Tax Exemptions – The New Jersey Statute and Beyond – An Interview with Neil Eicher of NJHA

Hospital Property Tax Exemptions – The New Jersey Statute and Beyond – An Interview with Neil Eicher of NJHA

In this interview, Joel Swider sits down with Neil Eicher, Vice President of Government Affairs with the New Jersey Hospital Association, to discuss a recent bill that was signed into law in New Jersey related to property tax exemptions for nonprofit hospitals. The law brings resolution after almost 6 years of uncertainty in the wake of the NJ Tax Court decision in the Morristown Medical Center case which jeopardized hospital property tax exemptions in New Jersey. The interview covers the New Jersey statute as well as strategies for protecting property tax exemptions in other states through legislative efforts.

Podcast Participants

Joel Swider

Attorney, Hall Render

Neil Eicher

Vice President of Government Affairs, New Jersey Hospital Association

Joel Swider: Hello, and welcome to the Health Care Real Estate Advisor podcast. I’m Joel Swider an attorney with Hall Render, the largest healthcare-focused law firm in the country. Our guest today is Neil Eicher, who is vice president of government affairs with the New Jersey Hospital Association. We’re going to be discussing legislation that was recently signed into law to restore property tax exemptions for nonprofit hospitals in New Jersey, but which also requires nonprofit hospitals to pay certain community service contribution payments, which we’ll get into in more detail. Neil, welcome back to the podcast.

Neil Eicher: Thank you, Joel. Thank you for having me and you guys do great work on this issue, so I appreciate being a part of it.

Joel Swider: Well, thanks Neil. So before we can understand and appreciate the text of the bill itself, that was recently signed into law, I think it would be helpful to explore some brief background of hospital tax exemptions in New Jersey. I think that there’s really a broader applicability here in other States where we’ve seen the gradual chipping away of property tax exemptions for nonprofit hospitals. And so I think the process is in some ways, just as important as the result, particularly for those who are looking at this case and who’ve been watching it as we have from other States looking to see what that’s going to look like in New Jersey in the future and how it might be translated or mistranslated in other States and other contexts. So, Neil, could you give us a little bit of a lay of the land? What did the landscape look like pre Morristown, which was the case that really sort of brought this issue to a head in 2015?

Neil Eicher: Yeah, sure thing. So the Morristown Memorial hospital tax court decision was a pivotal moment for the industry. As you said in summer of 2015, it’s sort of unexpected rolling from one tax court judge in New Jersey, challenging Morristown property tax exemption. Now, they had been in litigation for almost 10 years with a town that included, multiple mayors moving in and moving out, even a change in administration at the hospital level. So it did kind of predate when the decision was actually made. But the judge in that ruling, as I said, stated that Morristown should be paying property taxes. It wasn’t precedential, but it was certainly influential. And then it resulted in NJHA as the advocacy wing to start pushing for a legislative solution because the judge did actually make that statement.

Neil Eicher: And his court decision was that although they should be paying property taxes, the legislature needs to step in. And it’s interesting because our statute on tax exemption, property tax exemption goes back. I want to say 70 or 80 years. And in that exemption, there was no carve out for for-profit medical providers within a nonprofit hospital. So while we disagreed with the rolling for a variety of reasons, the fact that the judge said we need to step in and get a legislative solution is what changed the landscape for us.

Joel Swider: Okay. So what did happen after the Morristown Medical Center case? What has happened sort of bring us up to this current bill that was passed last month and signed what’s been happening in the intervening years. I know you guys have been working at this for a long time.

Neil Eicher: Yeah. So after the decision was rendered, we knew we had six months or so until the end of our legislative session to pass a bill. And again, this is in 2015. So we did pass a piece of legislation, very similar to what has been signed into law six years later. But unfortunately it was vetoed by the governor at the time and what we were afraid of and what actually happened was with the beginning of the tax year in 2016, we saw a flurry of litigation. In some cases, it’s the town putting the hospital on the tax rolls. And it’s the hospital that initiated the litigation. Sometimes it was the reverse, we had to deal with omitted assessments, which is just a clever way of kind of looking back at retroactive tax years up to two years prior to put entities back on the tax roll.

Neil Eicher: And then I think when we’re all said and done, we probably had 40 to 42 of our 59 nonprofit hospitals engaged in litigation. Now I should note that some of them settled, they had agreements with their towns. Ironically enough, many of those agreements were similar to the community contribution fees in this law, but they had expiration dates. Other hospitals were just involved in litigation and then some other hospitals didn’t see any lawsuits at all.

Joel Swider: So then leading up to, you mentioned there’ve been other attempts over the years, leading up to the current bill that was finally passed and signed. Even that once it was introduced in January, 2020, took over 13 months until it was finally signed. Was there more give and take at this time around as well?

Neil Eicher: Yes, absolutely. It was a very arduous legislative process. We’re happy with the result so we can kind of look back at it and figure out what worked and what didn’t, what started, having the speaker of our general assembly as the prime sponsor and only sponsors, five or six bills in a session that was a positive signal and also getting our Senate, President and Governor on board early, at least conceptually was important. What happened in practicality is as the bill started to move, we started to hear, or the legislators started to hear from very influential mayors who had problems with what this bill might mean for them, at least according to what their tax assessor told them, what they could get out of the hospital, if there was full property taxation on the facility.

Neil Eicher: So we did a lot of behind the scenes work with local mayors, local hospitals tried to resolve very territorial type of issues, but it actually worked as a benefit because what we were seeing was the creation of an adversarial relationship between the towns and the hospitals that didn’t exist prior to this Taxport decision. And having this discussion kind of helps move that smooth that over. So some of the amendments in the law dealt with, for example, walking in or grandfathering in current agreements that are in place between a town in a hospital, that would be the floor. If the legislation, or I guess the law will say, if it has to be greater, the hospitals is obligated to pay more. But that took care of a couple of towns. We made some changes to the offsite for-profit medical providers made it very crystal clear that the medical provider had to be exclusively working with the hospital for a hospital purpose.

Neil Eicher: That was an issue from some legislators previously thinking that non-profit hospitals would all of a sudden purchase a bunch of for-profit medical provider buildings, take them from tax paying entities to non tax paying entities. That was not the way we read it. And it’s obviously was not our intention, but we needed to make necessary changes. And then the last thing I’ll say, Joel, is you might may have noticed if you follow this at all, we went from $2 and 50 cents per bed, per day, contribution to the town, to $3 per bed per day contribution. That was because the governor’s office wanting to get a little bit of a higher rate from hospitals to towns. So that obviously we had to discuss that for a while, but we ultimately agreed to it. And there are other small changes, but those were the main ones.

Joel Swider: Well, Neil, let’s dive into the meat of the law a little bit, this nonprofit hospital property tax bill, or a 1135, as it’s been called, going through session, let’s start with what type of property or property owner is subject to the new law?

Neil Eicher: We first specifically to a nonprofit hospital. I’m sorry, nonprofit general acute care hospital. That’s important in case you’re a specialty hospital, rehab hospital. And according to your State’s definition of licensure for a general acute care hospital, that’s important, but for our purposes, for New Jersey’s purposes, a nonprofit general acute care hospital. So it’s that building in any other building that’s utilized by the nonprofit hospital solely for hospital purposes. As I mentioned previously, if it’s a for-profit medical provider, it has to be exclusive to that hospital who does this apply to and in all practicality, it’s your ER groups that maybe you contract with, maybe you have an anesthesiology group or wing cardiology, all the wrap services, pathology, those that may have for within your hospital, maybe it’s an attached wing of your hospital, but this is an important point of clarification because this had stalled the bill as well.

Neil Eicher: If you have, let’s say a for-profit medical provider group that is renting space or attached to the hospital or attached to the hospital and renting space, and they provide some assistance to patients from the hospital. So if it’s a cardiology group and let’s say they do 40% of services for the hospital, but they have 60% of patients come as walk-ins, they would not allow that part of that wing, that building would not receive a property tax exemption. They would still be required to pay property taxes. The normal arrangement is through the lease agreement with the hospital.

Neil Eicher: So we made it very clear. It has to be pretty much, well, it has to be a hundred percent of what that group does is for the hospital purpose. It also, if you have a McDonald’s, if you have a Starbucks within your hospital, that will remain taxed. Usually again, it’s done between the lease agreement with the facility that will not change. The cafeteria, however, would fall under the property tax exemption.

Joel Swider: Okay. So if you have an exemption, you qualify, you’re a general acute care hospital, you qualify for exemption, but there’s also this element of a community service contribution. What does that mean? And what does that look like?

Neil Eicher: So because of the statute that we were dealing with about the inability for Eddy for-profit activity to occur in a nonprofit entity to get property tax exemption, we recognize that with for-profit activity occurring in these hospitals, that we needed to modernize the law. It could be those groups that I mentioned previously, or it could be a specialist that has privileges in a hospital, whatever it may be, at least in New Jersey, there are for-profit entities working in a nonprofit entity and it puts our statute in jeopardy. So recognizing that things have changed, what we agreed to was that in exchange for, I guess, the codification or update to our property tax exemption, we would pay a fee to the town because we are also getting bigger. We are utilizing more municipal services. So as a recognition and actually just from the get-go trying to be a good player with the towns and not just try to railroad through something, we thought we would try to find that fair balance and at $2.50 at the time, the contribution will be $2 and 50 cents per bed per day, to each town.

Neil Eicher: I will note that you are, as a hospital, able to deduct any agreements that you already have. We call them voluntary agreements. Most people know them as pilots. We stayed away from the word pilot because there’s a strict definition in New Jersey statute that may have brought on issues after this became law. So we just call them voluntary agreements, voluntary arrangements. So if your obligation of now it’s up to $3 per bed per day, is $500,000 to your town. You have an agreement for $300,000 each year, maybe to pay for a public nurse in the school system, redo a park, whatever it might be, or just general money. You’re able to deduct that 300,000 from that 500,000, therefore you would owe $200,000 a year.

Neil Eicher: It would never go reverse. If your agreement is more than the requirement here, you can’t obviously deduct that. But that was again, a good faith effort by us. We just wanted to turn the spigot off of all these lawsuits, put something in there that was a fair that the towns would get something. And then we wouldn’t be spending money on legal fees. So that, that was the purpose of the community contribution that we thought it was important to be a good partner with our towns.

Joel Swider: That makes sense. And Neil, I mean, this applies to a lot of hospitals. I know you, you gave a couple of specific examples in some sort of variations of the general acute care hospital, but I mean, that’s a majority of New Jersey’s acute care hospitals will probably fall into the ambit of this statute. Is that right?

Neil Eicher: Yeah. Correct. We have 59 non-profit hospitals and 71 acute care hospitals.

Joel Swider: Okay. So are there any carve-outs from the ambit of the statute or other clarification’s that we should be aware of in terms of how this shook out?

Neil Eicher: I mean, I think it’s important to understand kind of your for-profit medical providers, the buildings associated with your nonprofit hospital, how it’s structured under your license. I think that’s very important. So I did talk about that, but I will say we did get abdication carve out. We have a specially cardiac hospital in New Jersey that doesn’t bill patients. They have a special OIG opinion from the federal government to have this exemption, not to, for example, go after Medicare patients for balanced billing. So we did insert a section in there that exempted them and that actually made it into final law.

Neil Eicher: So let’s say, other than that, no other real carve-outs, no hoodwinking that we were trying to do, we try to be as transparent as possible, where we needed the clarification, like I said on off-site for-profit medical providers and whether we’re going to buy them up and switch to property tax status, we made it very, very crystal clear that that wasn’t the intention. But it was very important to us on the for-profit medical provider to get that exemption for the emergency department. For example, if you have a for-profit medical group, if you have the third floor of your hospital has a cardiology group, that needs to be exempted. So other than that it’s pretty straightforward with, again, nonprofit general acute care hospitals.

Joel Swider: So Neil, as I read this statute and I’ve read now a number of them from other States, I find it to be pretty comprehensive in terms of, it’s pretty clear about its scope. It’s pretty clear about how it applies and how it works. There are two things that caught my eye though, as potential wrinkles, I guess you could say in terms of how this is going to be implemented, one of them is that there’s language requiring the New Jersey healthcare facilities, financing authority, and the director of the division of local government services to adopt regulations, to effectuate the bill, where do you see that going? And it sounds like it has to be done within four months following enactment and which may or may not end up taking place, but any thoughts on the regulatory aspect of this?

Neil Eicher: Sure thing. And I think it’s good for listeners to consider that in their own state. A lot of times when we have legislation going into the water, there is a requirement for the promulgation of regulations, but it’s very clear, from previous experience, that a statute is a statute. So you still have to implement it, still the letter of the law, even if the regulations don’t come. So you’re correct. There needs to be regulations within four months. I doubt that our department will meet that deadline. It’s been very difficult previously. And then of course we’re still trying to get out of COVID and a lot of other things that are affecting the work of the department. So I personally do not expect them to meet that four month deadline. However, what was important to us and maybe another consideration for your list just to make the language as specific as you can.

Neil Eicher: And even some of these provisions need further clarification. After six years, we tried our best to make it as clear as possible, but we still need some guidance on a few things from the various departments, but we did make a conscious effort to make it as specific as possible. So that once the bill was signed into law, we knew what to expect. Our members certainly knew what to expect following this for years and most of the towns as well. So I do think they’ll get to regulations eventually, but right now, we’re just kind of moving forward with our interpretation of the law until we get that guidance.

Joel Swider: So near the other wrinkle, if you will, that identified as I was reading it was, there’s a non-profit hospital community service contribution study commission, which has set up, which has as its goal, sort of looking at the financial impact, analyzing, analyzing the financial impact on effected hospitals and municipalities among other things. And I guess, again, as an observer from another State and who represents clients in additional States, I think it’s really interesting. I will really be curious to see how the study commission reports shake out and what is found, but could you give me a little bit more color to why that was in there and what the goal of it is?

Neil Eicher: Yeah. Yeah. You and me both, I’m interested to see what they come up with. We thought again, because a lot of this language was actually taken from our original bill that went forward in 2015. And the purpose of this bill, originally, I guess it still is, was to provide a stop gap, to put a pause on a lot of the legal suits because no one has really examined the role of healthcare entities, hospitals in particular, and how it relates to property taxes, New Jersey, by the way, has the highest property tax rate in the nation because we, variety of reasons. So property taxes are very, you know, interesting phrase here. So we needed, you know, some experts kind of sit down and take a view of the changing landscape of healthcare changing landscape of towns and property taxes.

Neil Eicher: So, that was the purpose. At the time the $2.50 now $3 contribution was meant as a stop gap. We knew that we needed to start paying something two minutes to Powell these, and by the way, it’s pretty much, it’s about 20 to $21 million a year annually, collectively in New Jersey. But we want this commission to review everything. And if they say, you know what, $3 is too low, we’re going to have to swallow that and accepted. Luckily, we have some good representation. One of the amendments that the governor’s office asked for some additional person from the governor’s office to sit on ex officio. So I do think this will be helpful and understanding kind of as we move forward. However, one thing I neglected to mention about the community contribution fee is that each year it goes up with an inflator of 2%.

Neil Eicher: So at minimum, it goes up 2% moving forward. So again, for the hospitals that are listening, this might sound like a good deal for the towns, even though they lobbied against it, but this bill and this law is essentially the floor of what hospitals must pay. Things will always continue to go up. So we needed to make sure the study commission was there, but at the same time, it is balanced. So it’s not swayed one way or the other, but Joel, kind of to your question about regulations, when that’s going to come, I know there are strict deadlines for this, but it’s possible that this doesn’t meet in a timeframe that the put in the bill.

Joel Swider: So Neil, let’s turn to the subject of sort of the effect or the fallout, if you will, both positive and potentially negative of the legislation. I think in some ways beauty’s in the eye of the beholder, but Kathy Bennett, who’s the president and CEO of the New Jersey Hospital Association, seemed overall positive about the new law in the news reports that I read. She said it was the right solution. And I do think that, I mean, just my personal opinion is that NJJ has done a great job of taking into account the various perspectives here and coming up with a solution that is equitable, but also puts New Jersey hospitals in your membership, in a better position than they were for the past five, six years and maybe more. Do other healthcare leaders in community organizations feel the same way about the bill or what sort of the anticipated effect?

Neil Eicher: Sure. So we were very as an association and by the way, where we represent all the hospitals in New Jersey, I know that’s somewhat unique in many States, so it’s-

Joel Swider: So it was sort of everybody

Neil Eicher: Everybody. Yeah. So we have a for-profit non-profit that adds up to 71 hospital members. We have 250 to 275 post-acute specially care type of maybe not core members, but affiliated members, business members, et cetera. So we count over 400 members in our membership, but of course our core membership is mostly general acute care hospitals for-profit and nonprofit, but we also have some behavioral health facilities and other post acutes that are core members. But to your point, everyone, all the non, all the acute care hospitals supported this, membership completely supported this. It was difficult at times going from $2.50 to $3 to make sure everyone’s comfortable with that. I should note I won’t name, but there was one health system that had four hospitals in New Jersey that had no pending litigation that wasn’t very happy with it. They were fine with MGHA pursuing and they were absolutely great partners in it, but they just made it clear that they didn’t support it.

Neil Eicher: It would mean over a million dollars to them each year that they would have to pay. There are other categories of members who may not have had lawsuits, but also knew that they could be next and we’re supportive. I think it was also supported by maybe not very publicly, but nursing home health associations, others that were nonprofits, but thought that maybe they could be next. Educational institutions also were supportive. We got the council, the center for nonprofit hospitals or sorry, center for nonprofits in New Jersey to be supportive because of kind of the snowballing effect that could happen watching what would happen to our hospital. So we did have some kind of ancillary support and really the only, the only opposition was the advocacy group that represented the towns, it kind of depends on your perspective.

Neil Eicher: They were making a case to their mayors, that hospitals needed to be taxed, a hundred percent of the market rate. We believe that we shouldn’t have need to pay anything, but at least we came up with a compromise, the pay something, again, over $20 million a year, the other side just fought it and wanted a full payment. So I think in general, just some of, I think in general, a lot of the healthcare leaders understood this was important to get this codification, even those who are advocacy groups for patients, et cetera, knew that we were spending money on legal fees. And as a nonprofit, you have to report to your board, you have certain community benefit requirements. So they knew we could put that money back into care. So I’m glad we got this done. And I think we had the right amount of support.

Joel Swider: So Neil, maybe to close here, I’m curious as well, you mentioned the towns and the advocacy against this effort, which sort of surprises me in some ways since the statute previously allowed for exemption. And it really wasn’t until Morristown, that was even in question, but what is the anticipated effect on legislation, excuse me, on litigation that was ongoing at the time that this was signed or maybe really everything that’s kind of come out since Morristown, what will happen with that litigation and what do you see there happening?

Neil Eicher: That’s a very good question. And I’m happy to be able to explain this a little bit. And again, every state’s different, but I think there might be some crossover on this statement, but with the legislation being signed into law, it codifies our property tax exemption. It refines the statute for the exemption. As I mentioned before, requires the community contribution fee. However, everyone wants to meet. Everyone must remember the separation of powers between the executive branch and the judicial branch.

Neil Eicher: So yes, the statute will go into effect, but it cannot throw out the lawsuits and the litigation that’s currently taking place between towns and hospitals. That’s the legal interpretation from our council. However, in all practical sense, since we only have three or four tax court judges, and our counsel has been the ones representing those, the hospitals, she has told us that every judge has been looking at the progress of the legislation and art, and they are going to point to the legislation as kind of the solution.

Neil Eicher: So for those of you, or you may maybe council or are looking at from a legal sense, it’s important to understand that just because you pass a law, doesn’t necessarily mean it overturns a tax court decision, but it will be very influential and making their decisions. So if you’re thinking about going our route and trying to make a lemonade out of lemons and just kind of dealing with a bad situation that was put in front of us, I would encourage you as you go through the legislative process to also think about how you can make sure the judicial branch is aware of what you’re trying to do before moving forward.

Joel Swider: Well, thanks so much for your time and expertise, Neil, and congratulations on getting this bill finally negotiated and signed into law. Where can our listeners go to learn more about the law or about your work at NJHA?

Neil Eicher: Sure. No. And, and thank you for having me. njha.com. Please visit us. We have a lot of different things that are available for non-members a non password protected that you can visit. My email is an eicher@njha.com always feel free to send me a note. Again, it’s eicher@njha.com. I’m happy to talk about this. This was six years in the making happiness done, still more to do, but yeah, I’d be happy to talk to anyone who wants to learn more about this.

Joel Swider: Great. Well, thanks again, Neil, and thanks to our listeners for joining us today. If you liked this podcast, then please subscribe and leave feedback for us using your Apple or Android device. And if you’re interested in more content on healthcare real estate, we also publish a newsletter called the Health Care Real Estate Advisor. If you’d like to be added to the list, please email me at jswider@hallrender.com.

An interview with Kevin Jones, Managing Director and Real Estate Practice Leader, ZRG Partners

March 16, 2021 Andrew Dick Health Care Real Estate Advisor 00:40:22 Comments Off on An interview with Kevin Jones, Managing Director and Real Estate Practice Leader, ZRG Partners

An interview with Kevin Jones, Managing Director and Real Estate Practice Leader, ZRG Partners

In this interview, Andrew Dick sits down with Kevin Jones, Managing Director and Real Estate Practice Leader with ZRG Partners to talk about professional development and executive recruiting in the healthcare real estate industry. 

Podcast Participants

Andrew Dick

Hall Render

Kevin Jones

ZRG Partners

Andrew Dick: Hello, and welcome to the Healthcare Real Estate Advisor Podcast. I’m Andrew Dick, an attorney with Hall Render, the largest healthcare focused law firm in the country. Today, we will be speaking with Kevin Jones, a managing director and real estate practice leader with ZRG Partners. Kevin helps real estate and healthcare companies with executive searches. We’re going to talk about Kevin’s background, the healthcare real estate industry and what he looks for when recruiting for executive positions within the real estate industry. Kevin, thanks for joining me.

Kevin Jones: Thank you, Andrew. Always a pleasure.

Andrew Dick: Kevin, before we talk about your role at ZRG Partners, let’s talk about your background. Tell us where you’re from, where you went to school and what you aspired to be.

Kevin Jones: Sure. Well, the first part of my career, if you will, is largely uninspiring. I went to Indiana University in Pennsylvania, which spent the rest of my life explaining that’s actually in Pennsylvania and not Indiana. However, I actually joined a recruitment firm right out of school, so I had no industry sector experience. And if I think about my career and my background, it really boils down to three to four significant decisions and changes that I made. The first one is leaving the firm that I started with after nine years to join as one of the partners at Crown Advisors. And crown was only a few months old at that point.

Kevin Jones: And I have a 13 year run to really effectively build that firm, helped build that firm from the ground up. Although at the time, the plan was just to stay there for the next 20 years, I couldn’t see it. The firm, it topped out. And my timing there was that I wanted to do a lot more in the firm, became a lifestyle business, which is great. But it was just focused on the partnership and the lifestyle that the business created. That was the second big risk that I took, is I left just to start the Jones Group. And that’s when I doubled down on my commitment to healthcare real estate.

Kevin Jones: For the next eight years, I focused on becoming a subject matter expert in the healthcare real estate sector, became embedded in the business in that community. That’s where I really understood the value of becoming a specialist. As an insider, you could build meaningful relationships versus just somebody that, who calls into the sector, if you will. So, that was a great run on my own. And I established relationships that I believe will be with me the rest of my career. About three and a half years ago, I was actually approached by a search firm to build a global real estate executive search practice at ZRG.

Kevin Jones: And so frankly, that’s been a heavy lift. But the nice part about ZRG is we have a robust healthcare executive search practice across the board. So I bolted into the healthcare group when I started. And our roots and healthcare as a search firm, we actually have a partner that’s a medical doctor. We focus on clinical academic medical centers and of course health systems, as well as PE backed healthcare firms. So within that group, I was able to use that as leverage to build the global real estate practice. And now, though the real estate practice is anchored in the US, we have outposts in Brazil, London and Dubai and it gives us a legitimate global reach.

Kevin Jones: I still do largely healthcare real estate, but as a practice, we’re doing probably 60, 50 or 60% in commercial real estate. And then I do the balance in healthcare real estate.

Andrew Dick: So Kevin, how did you at some point, and it sounds like many years ago, you identified healthcare real estate as a niche that you wanted to pursue. How did you end up working on searches in the healthcare real estate industry? That’s a pretty narrow niche.

Kevin Jones: Yeah. Yeah. It goes back a while. I was actually at the first BOMA Healthcare Conference in San Francisco. There might’ve been 45 people there. You’d have to, Laurie Damon would have to fact check me on that, but it was very small. And like a lot of people in this sector, Andrew, I had a personal experience that just drew me to healthcare and hospital real estate. So it became an interest. Once I discovered it, it became an interest. And like you build a practice anywhere, you get some companies that are growing and you work really hard to satisfy them and as they grow, your practice grows. And I had done that with a couple of pioneering firms in the sector, where I’d worked closely with their founder.

Kevin Jones: And as they grew market to market, they just tapped me on the shoulder and I helped them open. They went from a local brand to a national brand and I did all those searches. So through that process, that’s how I just became embedded in the business when it was much smaller than it is today. It was an easier effort because when people start to recognize you specialize in their startup sector, if you will, they recognize you. So it was easy to make my way around the block with all the players and as the sector grew, my practice grew. It was really more serendipity than, I did something spot on to make it grow.

Andrew Dick: Sure. So Kevin, give us an idea of the type of assignments you’ve had over the years in the industry. Would this be C-Suite executives or give us some examples?

Kevin Jones: Sure. Yeah. And focusing on the sector, I would say I do C-Suite, as well as the people reporting into the C-Suite. That’s really my strikes zone. And I’ve done some board advisory work, as well. I would say a typical search, it involves… I had done a search for a senior managing director for a group that does healthcare real estate consulting. And the leader of that group, somewhat of a legendary person in the sector frankly, was retiring. So, they engaged us to find that replacement and that’s always tricky to find somebody that’s been embedded and worked with the team for decades to bring a new leader in. And we did just that. It was a very successful search. It took us probably eight months, which was three months too long, frankly.

Kevin Jones: But when you work at that level, you’ve got to work around non-competes, you’ve got to work around other competitive covenants to try to get the timing right. Nobody wants to go against that. But that’s a typical search. And what I see when people come to me often, they’re looking for more than a plug and play person. They want somebody that has deep experience in the sector, but also they have that ability to be the face of the franchise. Somebody that knows how to sell and lead and execute. I see that a lot and I get that a lot. So that’s probably the type of role that I see, because they’re just so hard to find. You really need to know those people first, just to get their attention to consider something because they’re generally well paid, well taken care of because they bring such, three components of value to the organization.

Andrew Dick: Let’s talk about that, Kevin. We have quite a few young professionals who have been in the business maybe a couple of years, the healthcare real estate business. Or young professionals who are looking at getting into the healthcare real estate business. Let’s talk about the skills that you look for and your clients look for when trying to identify talent. You hit on a couple things, the ability to sell, interact well with others, et cetera. Talk more about that. What advice would you give to someone who’s really trying to make a name for themselves in the industry?

Kevin Jones: Sure. And that’s a great question. I actually have kids in that same period in their lives. This is something I’ve thought about. I think it’s, the thing is, it’s not new, right? It’s a generational to generational piece of advice. But I think the first thing is for most people, they need to redefine what sales is to them. Everybody carries around this baggage of what sales is and what it isn’t and the immediate cliches and imagery that comes with it. That’s obviously so old fashioned. I challenge people to, that they really need to just look at that. Do some self discovery and understand really, what’s your hang up on that word and what that means. They need to redefine it because every business is driven by sales and top line revenue.

Kevin Jones: There’s no way around that. And the more you can impact that, the more value you bring to an organization. I think most people, some of the conversations I’ve had with people, they just will tell me, “Well, I won’t sell.” And I think, “All right. Well then, good luck and stay where you are and nestle in, because that takes away a lot of your growth opportunities.” So that’s a little bit of personal work. You really need to evaluate what it is, what your hangups are around it. You need to read on the subject, very contemporary material on what it is, because that really is going to be a game changer. And once you’re able to embrace that and put your talents to use around it, that’s going to change your value to the market. And that changes everything.

Andrew Dick: That’s a great point, Kevin. We have on the team I lead, we have a number of young professionals and we talk a lot about building a personal brand and getting your name out in the industry. And in other words, even as lawyers, we have to sell. We sell a little differently maybe than other industries and we’re subject to ethical rules that prohibit us from doing certain things. But I think you’re spot on, Kevin. I think that in certain circles, when you talk about sales and those types of skills, it can turn people off. But in my experience, individuals who master the art of developing relationships and building a personal brand, tend to rise to the top. And I think that’s what you’re saying.

Kevin Jones: You’re exactly right. That’s what you see across the board. You bring up something else too, is networking is a large part of that. And networking, frankly, networking was real work for me. I mean, I obviously love what I do and it’s a cool business, frankly. But when I would go to a conference, networking would be so challenging. And I probably still haven’t been to a conference in a while, but I still get nervous and feel like I’m intruding. You’ve got to get over all those hangups and networking is an amazing skillset. It’s just that, and it’s like a skillset. You have to practice. You have to do some of the corny role playing. You have to really get outside of your comfort zone and become effective.

Kevin Jones: And that takes, more than anything, the things that I hear now is self-awareness, social and professional awareness, C-Suite and board presence. Those are really important elements and that’s communication skills. That’s style. That’s how you carry yourself, to a T. So you need to keep that in mind. If you want to be in the C-Suite, you really need that self-awareness and social awareness. And if it doesn’t come naturally, even if it does come naturally, it’s something that you need to work on and practice so you’re prepared. I’ve always, I’m going to butcher it, but I’ve always kind of hung on the Abe Lincoln quote. Prepare yourself, for one day, your chance will come. It’s one of those things where you need to be prepared. You need to practice beforehand. And when you find yourself in that situation, you’re ready.

Kevin Jones: Networking’s a big part of that and it’s going to be again. You’ve been in this space for a while too, Andrew. We went from one conference a year to maybe two a month. It is a business in and of itself, or it will be, and that’s fine. That’s a great opportunity to meet people, to sell yourself, to create that personal brand. The opportunities exist and the more you embrace that, the more you get comfortable with it and dive into it versus shy away and just try to back away from conversation… When people talk about coming out of their comfort zone, that’s a perfect example. It really is. And then, that’s when you’d need to develop a self-awareness and have a ready list of conversation points or topics or trends that you’re seeing.

Kevin Jones: Asking questions is always the way to engage conversation. Ask important questions. In those situations, you can start personal, but you really want to be able to learn how to leverage that into business. What do you want to ask about your legal needs, about your recruitment needs and your growth strategies? That’s when you have those conversations. Everybody’s at ease and disarmed, and it really is just a conversation. We both know everybody loves to talk about that. Nobody doesn’t want to talk about their growth plans or their growth strategy or their troubling situations professionally. So, develop a strong list of questions to ask, and that makes it a lot easier.

Andrew Dick: Great advice, Kevin. Let’s dig just a little deeper for the folks who are starting out in the industry. Talk about in your experience. I mean, you hit on a couple things about some individuals are maybe introverted or are uncomfortable networking and putting themselves out there a little bit. What tips do you have in terms of, do those individuals, should they seek out mentors who can help them or coaches? We live in a world where there’s an awful lot of coaching going on, which I find really interesting. What tips would you give? Do you see executives or young professionals seeking out mentorships with more senior level professionals to help them through that journey?

Kevin Jones: Yeah. Obviously, mentoring works, but it often doesn’t work. It’s not like you can be assigned or go up and approach somebody and say, “Be my mentor.” Right? And you might pick the wrong person. You really might. My advice, my approach to that is, and it’s think of it more of not like the old way of I’ve got one mentor and I do whatever that person tells me and I follow them around. But maybe target three people, three types of mentors and define what they are. Somebody that’s just amazing in sales and networking. Somebody that technically has a lot of depth, and somebody that you respect from an integrity standpoint, that seems to have the, I’m not going to use the word balance because I’m not a fan of that approach. It’s somebody that has balanced a career and a family or healthy relationships outside of work, is a better way to put it.

Kevin Jones: You don’t just walk up to the person and ask, but again, you develop your list of questions. And when you are around people like that, whether it’s a cocktail party or a conference, you have your line of questions. So, how did you get into what? Just like we’re engaged in here, right? Where are you from? What do you do? What do you do outside of work? Those are easy questions to answer, and then you feel yourself out. You’re going to resonate with somebody or not, and then you just latch on. And a mentor, that’s not a lifetime relationship, right? Somebody might just, it might be a five-year gig if you will, of where you need that help, and then you maintain those relationships. And they’re meaningful relationships, that you don’t have to just find one person that you follow around for 30 years. That’s an old fashioned way, in my opinion. And I think you can get a lot of value from different perspectives.

Andrew Dick: Good advice. Before we talk about some trends in the healthcare real estate industry, let me just ask one more general question, Kevin. When you’re undertaking a search, I know ZRG has a number of different tools to help find the right person. Maybe talk about how that search process works when you narrow the list of candidates and what metrics are you looking at? I think you’ve hit on some of them, sales and ability to work well with others. But how does that work when you narrow the field?

Kevin Jones: That’s a good question. Well, and look, that’s the reason I joined ZRG. I’ve always been in smaller boutique, real estate focused companies, whether my own or at Crown and when I started. And ZRG is very different. We’re actually the fastest growing search firm, maybe two out of the last three years. Through the pandemic, we’ve added maybe 10 plus managing directors where everybody else was shrinking. So it’s a very contrarian minded search firm and our approach and our thinking is to be the biggest search firm outside of the top five. We’re not looking to then become public or the size of a Korn Ferry or Heidrick because when we compete against those firms, we’re more nimble. We’re more flexible. Our culture is genuinely collaborative and that makes us better as a firm, as we approach these searches.

Kevin Jones: And like any sector, people grow tired of the old guard, of the way they’ve always done things and they want to do something different. And search is no different. And I agree, I’m glad you noticed our tools because they really are unique. It’s more than just a prop that we can set up. The assessments we do, and really, it’s the skills and attributes grid that our CEOs developed and we’ve refined over years. But it weights key skills and attributes, and we’re able to then create data points along the lines for each candidate. So you can rank them, frankly. Let’s say you create a batting order, but we’re very clear that doesn’t make your decision for you. It just gives you data points. You’re still having to hire the person.

Kevin Jones: This creates a very interesting dialogue because some people might score people differently or differently from us. You’re able to pick out what those points are. I think the strongest aspect of using our dashboard of tools, it keeps everybody on the same page where everybody’s interviewing, say on the seven same skills and attributes and what we’ve determined to be keys. In real estate, I find the interviewing technique is click and close. Once somebody clicks with somebody, they try to close them on either side of the table. And this process, it really forces the team because you’ve got to answer back to your team in terms of, this is how I ranked this person on all of these attributes. You can’t just then drift off into sports or family or politics, whatever you might be off topic. It forces everybody on the team to interview from the same criteria.

Kevin Jones: So everybody’s evaluating that candidate. I always think the value of a search firm is we continue evaluation. We’re doing a search right now for a chief revenue officer. There’s a lot of likeability around, say the two lead candidates, but from our process, we’re still in market talking to people. We’re also continuing to evaluate these candidates. We’re not just assuming, this is the person that we’re going to go through and hire. We’re continuing to critique and evaluate and share that with our client. That’s valuable because that’s where mistakes in hiring are made. You have that good first interview, and then you just glide to the finish line versus the continuing conversation, digging deeper. You’ve got this.

Kevin Jones: And I’ll go through frankly, through a process and I’ll re-rank my skills and attributes. The deeper you get to know somebody in the process, they might go from a four to four and a half or four to three, because as you dig and you talk to that person, I might talk to somebody 15 times through the course of a search candidate. You’re continuing to revisit and ask questions and that really helps in our clients just getting that right person in the seat. Does that answer your question?

Andrew Dick: It does. Just one follow up, Kevin. You talked about one search that took approximately eight months. When you’re hiring, I mean that was a special search, you’re replacing a leader of a group. On average, how long does the process take when you’re going, hiring maybe a C-Suite executive? Is it five months, six months? Or how long can someone expect to take, to go through a process?

Kevin Jones: It’s a three month process to identify and get commitment, and then you’ve got to work through the final piece of resignation. But yeah, within three to four months, the heavy lifting will be done and you’ve got one candidate that you’re finalizing. You should have somebody warming up in the bullpen as well, just in case.

Andrew Dick: Okay. And one more follow up, Kevin, because I enjoy this discussion. I find when I talk with professionals in the real estate industry, sometimes I feel like there are folks who are focused on the salary offered by a position. But in my opinion, that seems shortsighted. What are you seeing in terms of individuals looking for growth and opportunity? What’s your advice to a young person? It seems to me that they shouldn’t be focused just on salary or the location of the opportunity, but really, is there an opportunity to grow, to learn, to be mentored? What advice would you give there when an individual’s kind of considering a couple of different opportunities? What do you think is important?

Kevin Jones: Sure. Again, a very good question. It goes back to the advice you’d give. The other piece I would give to somebody that’s looking at a career is, re-examine what work means to you. So many people get hung up on work-life balance and whether they’ll be home and what their commute will look like. I really look at it is don’t even use the word work. You’re just spending your time. You can build a foundation, a professional foundation and a personal foundation to grow and merge those two. There’s a bridge between that. It’s not one or the other. So, I do. And work’s one of those things where we have these concepts that we’ve never questioned. They just kind of come up through our upbringing and we never reevaluate these things that we learned from a young age. Sales and work are two things that I think are worth reexamining throughout your life.

Kevin Jones: But the question is, to go back to your question, Andrew, I would say this, is you’re exactly right. People get hung up on salary and they get hung up on title and things like that. When you’re at that pivot point, and I’d mentioned mine. There were three to four really that were pivotal in my career. I think you need to recognize when those periods are in terms of, this is a pivot move and this is an opportunity. And then don’t ask yourself, what will I make in the next 12 months? But you need to sit and who am I going to be in the next three to five years? How can I grow? Who can I transform into being with this experience? And we see that with our private equity clients all the time, of when you join a growing private equity operating company and take that through a cycle, you’re a different person.

Kevin Jones: You’ve got a merit badge after that because of your experience there. So think about who you can become in this role versus what you’re going to make in 12 months. I think if you step back and take that process, that’s going to be very clear and that helps your answer. Now, comp always comes into play. It’s why we do it, certainly. But if the comp is close and one just has something more exciting to it, then you should certainly take that risk. It’s not a risk-free professional life that we live in, and you need to make smart risks and you need to make sure that the return isn’t so much in 12 months. I’ve made several moves where I actually had to take a step back. What I’ve learned through that process has been, the return is extraordinary. That’s what I would switch around and reconsider when people are looking at that.

Andrew Dick: Good advice. Thanks, Kevin. Let’s switch gears. Let’s talk about the healthcare real estate industry. The industry has grown tremendously. As you mentioned, you were at, I think the first BOMA MOB Conference, a small conference pre-COVID. It’s turned into what I would consider to be a mega conference, thousands of people. And then I think through COVID, we’ve seen even more growth in demand for healthcare real estate assets. Give us your perspective on the industry today.

Kevin Jones: Yeah. Well, it’s certainly different. There’s a couple things. If you recall, Andrew, I remember when the Affordable Care Act was a game changer the first time it came through. And the industry stood still waiting for some sign to act, a green light or red light to have certainty to go forward. And now, healthcare needs to be as nimble and decisive as any other sector. The old school bureaucracy, this is how we’ve always done things. It doesn’t translate into 2021. And we’re seeing a lot of that, frankly. We are seeing that old guard, that old way of thinking, it doesn’t translate and it’s not going to transform into future success, even if its worked in the past.

Kevin Jones: And frankly, I feel it’s an exciting time to be in healthcare if you’re prepared to be part of the change. If you’re clinging to what is, and that’s obviously always scary, regardless of what you’re doing. I’m seeing it. If you look at trends, I would be remiss not to say the words, proptech or data science. Those elements are becoming embedded in every sector, the technology efficiencies and data science. So I’m not minimizing that, but I don’t think that’s an insightful trend right now. That’s an obvious trend. I’m working with some firms that are leveraging machine learning and AI in terms of investment strategy and thesis, in terms of underwriting. It’s really a remarkable, if not scary, the depth that machine learning is coming into real estate from a decision making standpoint.

Kevin Jones: So I think that’s really interesting, where it just takes a more global picture, demographics, returns, all the things you want to put into the pot of stew. And it’s coming out with really smart and insightful answers. That’s really where I’m seeing in terms of technology, the proptech, the data, that’s really important. But there’s more to come and there’s even more forward thinking when it comes to applying technology within commercial real estate. In residential, for that matter.

Andrew Dick: I would agree. I think that there is. I’ve seen an awful lot of growth in site selection technology that’s really interesting. We’ve seen an awful lot of growth in telehealth and retail healthcare. And when you see a lot of private equity firms, as you mentioned, getting into this business, the healthcare business and the healthcare real estate business, I think we’re going to see more and more change. They’re typically very aggressive in trying to implement new models, so it’s exciting.

Kevin Jones: It’s exciting and it is different. The evolution is important. It goes back to my business in executive search. I mean, certainly that’s my day job, but with the changes and the speed of change right now, as a practice, my services have evolved into further introductory services. Whether it’s capital markets, joint ventures, project and pipeline introductions, mergers, team carve-outs. So, people are coming to me less with, “Hey, I need to hire this individual,” though that’s still the business. But more, “This is my larger problem of what I’m trying to solve. How can you help me solve that larger problem?” And it isn’t necessarily… A great example is this. We’re seeing more chief revenue officer searches right now. I think you could quickly just say, “Oh, that’s a head of sales,” but it really isn’t.

Kevin Jones: As you know, so many people that are trying to grow, they’ll hire a VP of business development and stick them in a region and say, “Grow the region.” Market facing people. The chief revenue officer role is transformative because this is a person that comes in that’s part of the C-Suite, and they’re really creating that repeatable systematic revenue process. If you have the right person, they’re not only looking at driving growth in revenue, but they’re creating systems and procedures to work with the sales team. And really, they should be strong assessors of talent to recognize this is the model. This is the model of person that we need to plug into this role, not just a VP of business development to go knock on doors.

Kevin Jones: And then the other component is identifying your client base. And how do you build more revenue from that in a very creative way? And then, how is that sustainable? How do we create revenue when the development market dips? How do we still keep cashflow and revenue expanding? That’s a strategy role, but the skill set really is in sales and marketing. But more so than just being a savvy client facing sales pro, the person brings a next level strategy to the business that frankly, the CEO, COO and CFO, they generally don’t have that background, that technical background. They also are not devoting the time to do that because they’ve got other full-time jobs.

Kevin Jones: So that’s been another trend that we’re seeing of people bringing in that transformative CRO. And that goes to the point, really part of the thing that we’re discussing here is the business is changing quickly. It’s exciting if you’re out in front of it. The problem I’ve seen is so many firms think they’re out in front of it. They feel like, yeah, we’ve got this. We’ve been through this before. But it’s a different, this, it’s a different scenario than it has been historically.

Andrew Dick: So Kevin, I have one more question as we wrap up. We’ve seen a lot of articles in the real estate industry about work from home and what that’s going to mean post COVID. What’s your take? Are we going to see organizations ask their teams to come back to the office? What will that look like? Any predictions?

Kevin Jones: That’s a big one. And this is just my opinion. I’m not an expert in that world. That involves sociology, psychology. The people that think everybody’s, everything’s going to go back to work from the office, largely have large office portfolios. So they can’t afford to even think anything different. I do see people coming back, but in a very different manner and a more effective manner, not just for Face Time. I have got clients and I know firms are looking to bring everybody back full time. I think that goes the way of the tie, right? Once you stop wearing a tie, it’s hard to put one back on. I think we’ve got a great experience on how to do this, but the real factor is having the right person.

Kevin Jones: If you’ve got the right person, they could work from anywhere and be productive. And if you have the wrong person, they can be in the office every day and still not quite get it and get it done. I don’t see office going away. If you look at your office, I think our own personal experiences play to it. I’m in a role where I can effectively work from home, but I’m very excited to get back on the road and work face to face. I still go into my office twice a week right now because I crave that interaction and you can’t create, or even have a culture if everybody’s working from home. I think everybody’s grown tired of the video conferences.

Kevin Jones: They’re very effective and they’ll play a greater role going forward. But I think we all know as a society that Face Time, personal interaction, it’s not healthy to do away with that in any, whether it’s professional or personal. You need to build that into your business plan, frankly, and make sure it’s effective.

Andrew Dick: Well, Kevin, I’ve enjoyed this conversation and I’ve enjoyed getting to know you over the past 12 months or so. Where can our audience learn more about you and ZRG Partners?

Kevin Jones: Sure. Easy to find, ZRGPartners.com is our website. My email’s KJones@ZRGPartners.com. So those are two very easy ways to find me. I’m all over LinkedIn as well, so I’m easy to get to.

Andrew Dick: Well, thanks again, Kevin. Thanks to our audience for listening to the podcast on your Apple or Android device. Please subscribe to the podcast and leave feedback for us. We also publish a newsletter called The Healthcare Real Estate Advisor. To be added to the list, please email me at adick@hallrender.com.