Daniel Williams 0:02
Well, hi everyone. I am Daniel Williams, senior editor at MGMA and host of the MGMA Podcast Network, and we're welcoming someone I like to call a friend here at MGMA that is Les Jepson. We have connected on webinars, panels, all kinds of different ways, but I'm not sure that we've ever had les on the podcast, and I don't know how that happened, but wow, let me just give a quick update, and then I'm going to let les jump in and tell even more. But Les and I connected when he was still in Texas, and he has since moved to South Carolina, but he's currently Regional Administrator At PRISMA health. He also is a fellow with MGMA in the American College of Healthcare Executives. And I'll just say this, I'm going to put a plug in here for less one. We both are huge college sports fans and sports fans in general, but we've had vested in investments, in with family members, in doing things in college sports recently, and that's been really cool to catch up on that. So without further ado, Les, welcome to the show. Good to see you, brother. Good to be here. Yeah. So we won't stay here too long, but just tell us what your connection is to college sports currently,
Les Jebson 1:23
yeah, well, I've, I've gotten probably one of the best jobs in America. I work in the Orpheus Sports Medicine Service line for Prisma health out in South Carolina, and so I work for close to 200 advanced practice providers and and positions across the state, and we care for pretty much all of the high schools, colleges and professional programs outside of Charleston. You know, everything else we care for ourselves. Clemson athletics in the ACC and University of South Carolina, and athletics and in the SEC we back to triple A Boston Red Sox. We got the Kansas City Royals clubs and golf tournaments and teams and everything in between. So it's a wonderful job. I'm very blessed to have it.
Daniel Williams 2:14
That is so neat. And now, if you were bashful about this, but you may have a progeny that is doing something in college sports right now. Is this correct, or am I making this up?
Les Jebson 2:26
No, you're right, yeah. So I've been blessed as well with some great athletes. My daughter was an NCAA volleyball player, and she's graduated, and my son was football player Texas A&M, and he's transferred. And then my daughter is a senior in high school, and she won the South Carolina state volleyball title. So wow, I take 100% credit for having just being the pillar of health and fitness and elite athletes. I m just very lucky to be honest with you. I didn t know anything about volleyball before my girls got into it.
Daniel Williams 3:02
What a blessing. What a blessing. Well, that is so exciting. I know as big a sports fan as you are, that's been so neat to get to experience that also through those children as well. So that's really cool. So the reason, yeah, I love catching up with you and you and I literally could talk sports for a couple of podcasts, but we won't bore our audience with that, so we'll move on. You are going to be speaking on a really interesting topic. You're going to be speaking, you correct me, if I'm wrong, you're going to be speaking at the MGMA financial conference coming up. Is that correct? And then you're also going to be speaking in our digital event, our MGMA Summit, that'll be in June. The topic, I believe, is the same. It's new medical equipment by or not, to buy. So tell us a little bit about that. Where did this particular presentation come from? Where did that kernel come from?
Les Jebson 3:58
Well, believe me, that is not necessarily the sexiest of topics, historically, when we're all you know much with money and financial constraints, where it is as challenging, you know you didn't really think that much about it. And as I've been fortunate to work and travel, you know, all over the country professionally and work with colleagues in small to large medical groups and independent groups to large health system hospital employed groups. And there's always been sort of a graveyard of equipment that has been put into a exam room or storage room or down the hallways of the or what have you, and we came out of the pandemic, we're all cash strained, and so I just wanted to share some of the lessons I've learned. So I'm not any financial guru and medical equipment, but, you know, I've learned some hard lessons along the way, and that's what I want to do in this in this session, is. Go, look, I'm going to give you, objectively, all of the things you really need to be thinking about if you're going to buy lease or rent a piece of medical equipment. There's a lot of things to think about. And here's some of that. And one of the other things I like to do is, after the presentation is done, just put some toolkit I call them toolkit, links and resources inside the talk, so participants can, you know, have those resources well beyond what the conference in April. So yeah, looking forward to going out and spending an hour with friends and colleagues who MGMA and hopefully share some insight.
Daniel Williams 5:37
That is so exciting. So let's break that down you talked about just the finances in general is an immediate challenge. But what are some of those other challenges a practice administrator or decision maker might face when deciding on whether to invest in new medical equipment or not?
Les Jebson 5:57
Well it starts with the big takeaway is, what is the value proposition of the piece of equipment you're looking at, and is it going to become so anytime? Or is a change in employees and the knowledge base that companies have, or change in your clinicians or physicians that may utilize that piece of equipment? Are they apt to change at all in a short period of time. Now, when I say short period of time, I'm saying, you know, one to three years. And you know, so those are some of the initial things to think about. When I say the value proposition, are we? Are we looking at getting a piece of equipment that is clinically necessary we have to get this as part of the type of care that we're providing in our medical practice, is it a revenue generating opportunity, an ancillary revenue generating opportunity, and, you know, how long do we plan on using it before it becomes obsolete? I've seen physicians who they pressed the medical practice to get a piece of equipment, and they either leave themselves, or if they don't leave, they decide they don't want to use it anymore, and it ends up in the proverbial medical exam room graveyard. And so, you know, I just, I just want to share with colleagues ways that we can mitigate that together. You know, objective one.
Daniel Williams 7:13
Let's talk about that. Then I don't want to give away the entire session, because we're not going to be here for an hour. So, but some of the high level stuff, what are some of those strategic decisions that that decision maker needs to be looking at before deciding we're going to buy this, we're going to lease this? I mean, what are some of those boxes to tick to really set things straight for them?
Les Jebson 7:40
Yeah, well,with our limited time, I will tell you that really ... I run through a checklist of considerations. What qualifies as a capital piece of equipment is variable from organization to organization, so let's agree on what is defined as a piece of capital equipment, and then benefits, the pros and cons of outright purchasing. Once you purchase that asset, you own it outright, you don't have any payments on it. There are slew of benefits by purchasing a piece of capital equipment, or is it better to lease that piece of equipment? And what are the implications the pros and cons for leasing that piece of equipment? And then finally, I talk about the emergence of capital consumable agreements, which can be fairly complicated and have compliance implications associated with them, but seem to be fairly in vogue with with many medical practices coming out of the pandemic and and wanting to preserve capital, you know. So I lastly go into detail on the capital gains still in Bowling Green.
Daniel Williams 8:42
When we talk about some of the software and the AI tools that are out there, those are progressing and evolving rapidly. When we're talking about that physical equipment that you're talking about, I mean is, is there a chance, I mean, that you're going to buy it and then it's obsolete in a year or two. What is kind of the lifespan of the equipment that we're talking about here? So you feel really good about buying it, and then you're going to be using it for several years and get your money back there.
Les Jebson 9:11
So I think I'm going to become a bit of a dinosaur with this mindset. And that is the general role of style I've enjoyed, is four years on those pieces of equipment. So if we're looking at just the computers for the medical practice, for the front desk, and then the staff on a four year replacement cycle is probably a safe bed or partial you know, maybe if you've got 10 or 20 computers in the clinic, you're going to try and replace a rotating group of four or five. Once you get that four year mark, software is you can get yourself a few years off of it. As you know from Microsoft Office and the various versions that come out, we know that when health system go towards different browsers right across the enterprise, it's a very careful move to do. Yeah, so I like four years. That's an awfully broad statement. It depends on the on the technology. But if you're looking at lasers, arthroscopy, surgical equipment, you know things of that nature, dialysis machines, you know you're looking at a three to five year window. If you're looking at MRIs, larger piece of equipment. You're probably going to try and extend that life through the sudden, to 10 year mark, even. But that that is, hinges on the ability for the software to be updated without the actual physical equipment. We also talk about the the lifespan of a warranty, and what really falls under the warranty, what's really covered during the life, whether it's a lease or a purchase. How do you address the warranty considerations? What happens if that piece of equipment goes down, whether it's leased or purchased? How do you minimize disruption to patient care and so we get into all of that in the presentation.
Daniel Williams 11:00
Okay,now you mentioned the term compliance previously, so let's look at that. What are some of those potential compliance risks, and how do you safeguard against it?
Les Jebson 11:12
Yeah, great question, definitely a hot topic right now with companies that are associating. So, you know, the the consumable agreements aren't necessarily that new, they just become a little bit more prolific. And the challenge you have is that you have to make sure so a consumable agreement, let's just, let's just make it very generic, and let's just say we have a piece of equipment that we utilize, supplies in which to operate it, right? If we're using an MRI, we use contrast and other supplies and IV supplies and things like that too, as part of the so those are consumable items. What will happen is, is under consumable agreement, they'll say, Okay, maybe we'll give you the piece of equipment at a discounted price or at an aggressively lower lease, as long as you are using our consumable products and use more of them, right? There's the keyword, if you use more of them. Now, what we're looking at is an inducement, right? We're saying, hey, we'll give you a great deal if you'll use more supplies and so that's where you get to run into some compliance issues. For me, I use a general rule of thumb that, over the past 36 months, what have they consumed? But consumable trends be so if a medical practices buys $50,000 with a consumable product, and it was 52 the year before 49 the year before that. And the new consumable agreement says our expectation is that you consume $50,000 worth of product again. Then you know anything you do should be obviously legal, compliant and defendable based on fair market value, right? So those are some of the touchy points over, the compliance considerations and then, you know, you just need to run it by there's actually the concern is on both sides of the fence, right? The vendors are large, often very large corporations themselves now, and the McKesson and all of those, you know, types of companies. So they want to do things the right way as well, but you just got to be cognizant of that to make sure that any consignment agreement or it's a local agreement, has been vetted by your attorneys.
Daniel Williams 13:33
Let's talk about those smaller or independent practices. They may not have the same capital that some of their other practices, those larger practices, or corporate owned practices, might be. So how can they be strategic and make sure that they have the necessary technology and equipment in place to serve their patient population?
Les Jebson 13:58
Yeah, well, believe it or not, I'll state that you'd be surprised that large integrated healthcare systems with large medical growth, right? Even though they have a strong financial position on paper, they're often very aggressive in managing their expenses as well, right? So in the independent practice, the smaller practices, the five receipts primary care network practice in a community which I'm a huge fan of and staunch supporter of, they are going to have access to, necessarily have access to the large amount of capital of as bigger system, as you just said. In that case, I'm a fan of the leasable agreements, or I'm a fan of limited lease agreements that can, they can with a lease to buy, and that they can purchase that equipment or own it at the at the end of my of the lease, 567, year leases. I mean, just strongly shy away from, you know, I. It is like leasing a car, right? I mean, after, after three years, it's probably become, you know, not as in vogue or got enough miles on it, and it's probably time to either trade it in, or, you sure hope he got some residual value for it. And, you know, so for medical practices that are that are more capital constrained on the sand of very limited leases that that have extended coverage on them from a warranty and service standpoint, and then anticipate what your needs will be max. Is it time for an updated piece of technology or equipment associated with that? Or is it works fine, and now you can either keep keep it. You will pay it off for $1 and you own it. So really, on a case by case basis, you can examine each one right.
Daniel Williams 15:44
You have a lot of variety in the experience that you've had. You've been in both private and academic healthcare settings. Does the strategy change at all? What does that look like?
Les Jebson 15:57
Well, you know, I would submit to them my experiences in private practice and in non teaching settings seem to get very little bit more nimble. They can move a little bit more efficiently. But there's something very gratifying to be in. There's a large tertiary quantity, quaternary hospital where you've you're surrounded by nursing students, physical therapy students, in you know, radiology technology, students, medical students, resident physicians and training. There's just a great buzz and energy that goes with being at a large academic center. But it's more complicated as well, right? Because in that case, if you really fulfilling your mission of being a teacher a teaching institution, then you have an obligation to try and expose those students and those healthcare professionals in training to a broad array of technologies, right? And that comes with expensive price tag as well. So, for example, in my current employer, we have teaching programs in two different markets, very robust, big teaching programs. And one of our interests is on surgical robotics, which are typically very expensive, Da Vinci robots, Corey robots, Rosa robots. And so what we do is, rather than just have one, we have a series of those robots so that the physicians in training get exposure as much as possible to a wide array of medical equipment.
Daniel Williams 17:32
Okay, last question, then, if you just had one takeaway you want our medical practice leaders to take away, regarding medical practice, you know, equipment, acquisition. What would that be?
Les Jebson 17:45
Objectivity and value proposition? I would be disingenuous if I didn't tell you I've made some bad purchases in my day, and they've been driven by emotion, wanting to have the latest and greatest technology, you know, or what have you, or influenced by a physician who wanted a new handheld ultrasound machine. And then, you know, it clearly is not in our best interest to do it. So for me, it's take some of the tools that I've learned from my colleagues that I'll incorporate into the presentation, but really meticulously look through all of the key components of whether or not to buy or not to buy a piece of medical equipment, and make sure that it's consensus driven, and not just you, that you've got a good consensus of the constituents in your medical practice, and then you're making the most informed decision possible. So that would be my point.
Daniel Williams 18:43
All right. Well, Les Jebson, it has been such a pleasure to get you on the MGMA podcast.
Les Jebson 18:48
Dan, always good to see you. Thanks so much for your time.