Making the Pick Three Work

Oct 18, 2022 at 05:45 pm by pj


The Central Florida Healthcare Circle of Excellence

A brain trust of experienced healthcare business professionals addressing the full spectrum of medical and dental health services. This vetted consortium brings the highest quality medical and dental practice consulting services to the table, empowering each member with the confidence that their area of expertise will be supported across all verticals of the healthcare environment.


By Tony Cowan 

The Central Florida Healthcare Circle of Excellence grapples with the quintessential challenge in health care today; how to have all three! Quality Healthcare, Regulatory Compliance, and Profitability. In 2017 the American Hospital Association produced a report on the regulatory overload on health care facilities.

In this study, they show how excessive regulatory compliance was crushing the ability of healthcare facilities to keep their doors open. The ongoing exodus of the independent physician group is evidence that the challenges of implementing the "pick three" trickle down to all medical facilities, not just large hospital networks. While we know health care is the most regulated industry in the country, hold on tight because it is about to get worse. The Office of Inspector General is getting ready to recoup billions as they send a new army of auditors out to demand compliance to even the most obscure rules. The first step in maintaining compliance is understanding where to find the rules you must follow. Next is how to implement them into a quality care program and, finally, how to do that profitably. Today we will start by looking at an area that accrediting bodies have already outlined as a hot topic and address Compliance and Ethics as it is laid out in the Code of Federal Regulations.

Implement compliant vendor management now, or pay the fines later.

Fines are being handed out for failure to comply with the rules articulated in the code of federal regulations. The Compliance and Ethics program represents a critical aspect of health care governance and tragically if health care facilities had been following these rules during the most challenging days of COVID-19 response, much of the fraudulent damage done by profiteers and counterfeiters could have been avoided. Read the rules for yourself here:

Addressing the logic behind the surveyor’s new rigor to demand compliance and levy fines from failures to comply, requires understanding both the health care organization’s side of buying and the vendor’s side of selling. One of the things that exacerbated the challenges of effective COVID-19 response was the shortage of proper NIOSH approved Personal Protective Equipment (PPE). This produced significant financial costs and health risks as price gouging and counterfeiting became rampant. When standard supply chains failed, brokers came out of the woodwork - some honestly trying to secure inventory helping facilities stay open, and some seeking profits as demand allowed for excessive margins. Most damaging was the unscrupulous who were willing to accept payment for supplies that were fake or did not exist at all. The failure that allowed the misguided and the unscrupulous into the medical supply chain was the lack of proper implementation of Title 42 chapter IV/ subchapter-G part 483 of the Code of Federal Regulations. This section calls for a compliance and ethics program. Proper implementation of this program would include:

· A vetting system for each and every vendor

· Ensuring all vendors are treated equally and with full transparency.

· Contract tracking and monitoring to secure vendors maintain the standards set by the health care organizations.

· Integrating the approved vendors program with the facilities security system thus avoiding admittance of unapproved visitors into the facility.

· Ongoing training of all staff into the program.

· Ongoing auditing of program utilization.

While Medicare fines the facility for using vendors that have committed fraud, surveyors have their eye on the health care organization, not the vendors. They do not watch the vendors that a facility may or may not use. It is the health care organization’s responsibility to set the standards that will protect the facility from fraud and the liability of using vendors that are fraudulent.

Since 2007, when the first rules about vendor compliance programs were posted, vendor credentialing bodies have been trying to meet the needs of health care organizations. They charge the individual vendor to join their portal and provide the health care organization with the documented proof showing the vendor is qualified to conduct business professionally. The PPE fiasco demonstrated how vendor credentialing companies cannot act as a substitute for a proper vendor compliance program. Health care organizations, or more specifically any facility including physician practices, ambulatory surgery centers, assisted living facilities and hospitals that accepts Medicare and maintain Medicare certification must implement and maintain a vendor compliance program. The program must meet all of the outlined parameters listed in 483 of the Code of Federal Regulations. This will require an asserted effort from the facility administration to conduct a top-down assessment of what they are doing to address compliance and identify the gaps where they are falling short.

While COVID-19 showed the weak links in the supply chain, the true danger goes much deeper than just PPE. Think about all contracted services health care organizations use: ambulances, billing, banking, cleaning, printing, SAAS, just to name a few. These service industries are absolutely vendors to health care but usually not part of typical vendor credentialing programs. This is a warning to all Medicare certified health care organizations to get in line with the rules now, or pay the fines later.

Tony Cowan is Cofounder of the Central Florida Healthcare Circle of Excellence, with members including medical and dental vendors, consultants, and professional organizations. Contact Founders Jeff Holt at or Tony Cowan at for more information.