Sensus Healthcare, Inc. (SRTS) Earnings Call Transcript & Summary

So if it's okay with everybody, welcome to our Zoom presentation today. I want to thank everybody for being on board and registering. My name is Joe Sardano. I'm with Sensus Healthcare. And before we begin, before I introduce our guest speaker today, I would like to again extend our gratitude and our thanks to all the frontline workers during this pandemic. They deserve a lot of credit, and I wish that we can do more for them, but we thank them for their service in doing all of the great things that they've done so far for the many needy people who've contracted this virus. With that being said, coming from the epicenter of where this virus has had a huge impact is a very, very good friend and our special guest, Dr. David Goldberg. David, I want to thank you for being here with us today.

Thanks so much, Joe. So yes, I am speaking to you from the heart of what was the epicenter, New York City. I'm right smack in the middle of it. We're going to turn the epicenter to the protest, all the devastating break-ins. But the epicenter seems to have left us where you now have one of the lowest incidents of virus in the country. But having said that, we're all dealing with COVID-19 issues in our practices. And in my capacity as a physician, a dermatologist and SRT user and as an attorney, I'm going to focus this talk on medical legal issues in the era of COVID-19.

Well, with that, David, we thank you for being here, taking part in this. And as David mentioned, he's a very unique individual. First of all, he's got personality plus. I can assure you that, very, very great guy to know and to work with. But to have the dual function of not just being an MD but also an attorney can provide you with some different perspectives and views on things. And this is something that I think is important to everybody these days, and I think you're going to provide us with some insight as to what your thoughts are regarding this. So take it away, David. We appreciate it. Thank you.

All right. Pass on the screen to me, and I'll get going here. All right. So I have no relevant disclosures here at all, except for the fact, as I said, I'm an attorney, I'm a physician and I'm a SRT Sensus user. And so I'm going to focus on 3 areas. One of them will be medical malpractice; two will be employment issues; and three, teledermatology. And so in each of these categories, I will discuss sort of standard issues for medical malpractice. And since this talk does relate to superficial radiation therapy, I'll talk about that a little bit. And then the second part of each of these 3 segments, I'll deal with COVID-19 issues. So when I teach law students about negligence and why we -- and I said we because I'm a physician like everybody else on this call, or at least a provider, why we get sued is because we have breached our duty. That is when we practice medicine, we have to do pretty much what everybody else does. And if you do that and something goes wrong, that's a complication. It's not necessarily a breach of your duty. So if you breach the duty, if you do something wrong, and it's not in accordance with what other people do, and there's a connection, and that connection is known as causation, and there's a connection between their breach of duty and some sort of damages, usually, it's economic, then you may lose a lawsuit. So that's the standard 4 elements and the cause of action for negligence. So let's talk about a situation that might occur. Nonmelanoma skin cancer, typically what we use SRT for. So a patient comes in to see me, and wants to talk to me as they like to do about SRT versus other modalities. And I am a surgeon, I run the nurse fellowship, and so that's the most typical discussion I have. Interestingly enough, with all that, we're doing more and more SRT as time goes on and people know more about it. And so this patient decided to choose SRT because she had heard and perhaps it was told by me that she would get no scar. And so that's what she was told. So here's her classic basal cell carcinoma on the forehead. She's an older woman, but she's very vain. She wants this removed, she doesn't want a scar at all. And what better way to do it then with SRT certainly compared to the standard surgical techniques, which are guaranteed to give her a large scar. So there we are. We're starting treatment. And those of you who use this technology know this is pretty standard. And we're 4 months out and pretty much standard results, and I think she looks terrific at the bottom right of the screen. Is there a little bit of a scar? Perhaps, not even be from the biopsy side. But I think that looks great. She is not happy. She, in her legal terms, had a breach of standard of care because I told her there would be no scar. So duty breach or duty causation damages, if I in fact told her, there would be no scar and she ends up with a scar, that is damages, and there's economic value to that scar. In theory, she could bring a lawsuit. In practicality, probably not likely, but in theory she could. All right. So let's switch from the standard negligence issue to something that's COVID-19 related. And all of us are going to have this happen eventually. I can almost promise you. It's like I tell physicians and PAs and nurses. If you get to your entire career and you've never been sued in negligence, then you didn't practice. It's going to happen. And this is going to happen eventually too. There's going to be a known employee to test positive COVID-19. And let's get real here. It's going to be a long time before this era ends. And so this known employee tests positive for COVID-19. The physician in the office becomes aware of this and does not close the office, does not clean it out, doesn't tell any other employees about it. Multiple other employees become sick. Multiple patients become sick. This is a total disaster. And obviously, there's a chance of somebody dying. So in a lawsuit, what is going to happen? Well, where's the breach of duty there? The breach of duty is obvious. The physician did not tell the other employees or even any of the patients in the area that this patient -- this employee was COVID-19 positive, this is the whole idea behind contact tracing. And you can see the damages are going to result from this. Now there is no such cases thus far, but I can promise you over the course of the next year, this is bound to happen. So there's the breach of duty there. So there are examples of negligence that can occur in the setting of SRT and negligence that can occur in the setting of the COVID-19 pandemic. Let's talk about employment law, something that's the bane of our existence, also in the era of COVID-19. And a lot of this gets to some of the standard things that occur and how things have changed a little bit, starting the middle of March when the disaster hit all of us economically. And so when we think about our employees, of course, we're thinking about their status and the nature of their employment. What do I mean by that? Well, true employee, and I think the classic examples of this are medical assistants, receptionists, secretaries, they generally have defined benefits, they get a W-2, and they have to perform within the scope of their employment. They're usually at will, and I'll get the contract employees soon enough, but they're usually at will, which means you can hire and fire them as long as you're nondiscriminatory for whatever reason you want. So that will employee has employment and termination at will, and they're given an hourly salary. That's in contrast to a contracted employee that is your higher level administrative people. They could be your PAs, your doctors, your COO, your CFO. They are generally bound by terms of the contract, and they're given an annual salary. And in terms of those contracts, particularly when it comes to providers, relates to the salary, the benefits, the basis for how they can be terminated and restrictive covenants. Restrictive covenants is usually the most common cause of litigation in these contractual employment situations, and which -- and I'm sure pretty much everybody who's listening on this has seen some of these restrictive covenants. They simply stipulate that the relationship with the company is one of trust and confidence. It relates to all records, trade secrets, referral sources, always focuses in on time and distance, and in theory, says money damages do not adequately compensate. And so the restrictive covenant and the issues that gets sued over relate to the reasonableness of the restrictive covenant in terms of time, how long; and in terms of distance, how far. And so most of the courts in the country look at these restrictions and say they must last only as long as is necessary for the departing physician or, for that matter, other providers to be replaced and for the replacement to demonstrate effectiveness. And for the public, this is associated to departing physician from the employer's practice. So if I or any of us have hired somebody, gave them a restrictive covenant and 2 days into it, for whatever reason, fire them, that restrictive covenant is not likely to hold up. There is no black letter rule as to what time is reasonable. The courts generally say shorter is better, and the typical restrictive covenant is 2 to 3 years. The more litigating issue is how far away, and that's really to determine case by case. It depends where you are. In New Jersey where I practice, 10, 20 miles is reasonable. In Manhattan, it's all of 6 blocks. And so if you look at the country, it's anywhere from 5 to 75 miles, depending whether it's urban versus rural. And it should not exceed the drawing area, in my case, in dermatology practice or any practice. And although these contracts, I always say the monetary damages will not be enough, most courts require the breaching person to pay monetary damages. How about in the COVID-19 era? Where are we now with our employees? Well, we've furloughed plenty, so have you. We've terminated some. And the way to avoid lawsuits and all the sequelae of that is to really be able to communicate, communicate, communicate. So contracted employees and hourly employees. Contract employees are a problem because there are terms of the contract, and people are given the annual salaries, and many of us and many of corporate America have tried to renegotiate these with contracted employees because there's a problem there, because the terms of the contract stipulate what they're to be paid. Hourly employees are a little bit easier, and some of them have been laid off, they've been terminated. Some of them have taken these voluntary absences, these furloughs. In the end, no conversations on the phone, put everything in writing, e-mail it. And you simply say, you are a will employee. I don't need to give you a reason, frankly, but it's better to communicate by stating the obvious. COVID-19 is the reason and be sure that there is no discernible discrimination involved in how you terminate people. In terms of the job description, why were particular employees terminated and the labor board will look at them. They're going to be playing these, looked at over the next year or 2, why were people furloughed and terminated. They can look at their age, their gender, their race, their sexual identification and it all must be even handed. And we can simply say in these e-mails that we may ask employees to return when the company is healthier. And frankly, we've done that. We shut down our Manhattan office in March, just literally opened a week ago. New Jersey, we never totally shut down, but we really cut back. And then by early May, we brought back pretty much everybody already, and we've communicated this to them. As I said, everything, everything should be in writing. And so the process is that we've agreed that you'll be taking the next, whatever, day, week, weeks, months off because of perhaps taking care of your children, social distancing, et cetera, we both understand, both parties understand this option is without pay. We're going to revisit the situation often as we did. Again, communication is everything. And the practice is allowed and will make across-the-board cuts and would bail out because, obviously, we have no choice. We took the policy of paying employees whatever PTO time, paid time off was still left. After that PTO time was exhausted, we told them that they could file for unemployment, and they could also file a sudden attempt for FMLA and leave. In the end, the employee is still responsible for his or her contribution to health insurance, other benefits, share costs. When we furloughed our employees, we actually paid for their health insurance. You want to keep them happy, you want them back and you don't want problems. Correct. So that's the employment issues in the era of COVID-19. Now teledermatology or telemedicine, in general, and SRT, and we've used this not to treat people, but discuss SRT with our patients. Communication technology, you all know this. It's easier to conduct high-resolution video chats. We're essentially doing this webinar through Zoom, between mobile phones anywhere in the world. And so telemedicine is simply the use of telecommunication technology to deliver health care at a distance from the medical provider. It's been around for decades already in medicine and dermatology, but it's really starting to take off in dermatology. And if there's any silver lining to this pandemic, it's that telemedicine will remain part of teledermatology, no doubt about it. This is really an important way of communicating. It's been said that during the Vietnam war in the '60s that 1/3 of American lives would have been saved if we had telemedicine, which would have accounted to $100 billion per year. And it does cut cost by eliminating all kinds of record duplication. Telemedicine, at its simplest level, is a provider giving advice by telephone. And today, of course, it represents the provision of diagnosis of treatment at a distance and reliance upon technology. Telemedicine has been used extensively for decades now in primary care and radiology. And as I said, in other areas now such as dermatology, oncology, almost every area now, this has grown in this pandemic. So telemedicine, at its simplest level, is a physician providing advice by telephone to a patient. Well, what about a physician providing advice by telephone to another doctor who then tells the patient? Is there a difference? And there is. Because if you speak to another doctor about a patient but you do not communicate with that patient, and there is negligence involved, you have never established a relationship with that patient, and you actually will not be sued. If you speak to your patient directly over the phone or any other form of telemedicine, even if you do not charge them, you have established a relationship, and you can be sued. And so teledermatology and my specialty is simply the interaction of telemedicine and dermatology. Dermatology, of course, is a natural fit for telemedicine because dermatology and cutaneous oncology is uniquely visual. So the older forms of teledermatology, of course, were phones, fax machines, computer lines. And there's no question teledermatology has been shown -- and this is documented and published, has been shown to improve access to care in underserved areas, people with rare diagnoses, patients who are homebound, which we have plenty of those now, and physicians who want to deliver telemedicine with their shirt on but maybe not their pants. You can do this now. Teledermatology has been looked at, at VA hospitals. It's actually been used there for a long time. 86% of dermatologists report that teledermatology was a good addition to regular patient services in the VA system. And the same thing at the Kaiser Permanente system out west, shorter time to biopsy in more areas and improved triage methods. But this method of communication via the Internet, via phones, teledermatology, in my case, creates medical issues, social issues and legal issues. Medical issues, how accurate is the diagnosis? And for those of us who now have done this, sometimes you can see exactly what you want to see. And sometimes, it's not so easy. Well, there has been a study looking at this. Patients randomized to receive care in person versus teledermatology. And there's been no evidence of any difference in the clinical outcome at 9 months, and that's been published. How about screening tools for skin cancers? There's already been a documented paper showing a favorable effect on the initial prognosis. You can usually tell if you're looking at a squamous cell carcinoma or basal cell carcinoma, nodular, of course, being a little bit more difficult. And suffice to say, there's a correlation between the correct diagnosis and quality photograph, but with today's smartphones, the quality of those pictures is really excellent. So those are legal issues. There are also social issues. The idea of being able to talk to a patient, touch the lesion, that creates a relationship. Of course, even in the office now between the masks and nobody shaking hands anymore, we've changed that relationship, but there is an impact that occurs in the patient-physician relationship when there is no direct communication face-to-face. And so you've got these issues of support rather than replacing quality medical treatment. And of course, there are issues of informed consent and confidentiality. And HIPAA, historically, has been an issue with telemedicine. And lastly, leading into legal issues. And so when you start practicing telemedicine, or in my case, teledermatology, you have to think about who you are interacting with. State licensure varies from state to state. You potentially then deal professional disciplinary boards. Standards of care are usually the same everywhere but not exactly. And you can be sure as this telemedicine era evolves over the next year or 2, 3, 5, you're going to start seeing potential fraud and abuse and antitrust issues occurring. Most states do consider telemedicine, no surprise, as the practice of medicine. So if one practices telemedicine, teledermatology over state lines, a medical license is required in that state. And so as I've seen from my New York patients who have fled, I'm interacting with them, and they're in Kansas, in Montana, in Wyoming, Florida, in Georgia, in Maine, but I had originally seen them in my office. So that is okay. But if a new patient contacts me from Georgia, and I'm actually interacting with her from New York, and I don't have a license in Georgia, that's a problem because most states do require that the physician limit the practice to the state where he or she is licensed. So let me give you an example. A patient in an isolated Louisiana town seeks derma expertise for a pigmented lesion with a specialist in California. The specialist in California asks his staff to download patient's images, biopsies and other medical records to aid in the diagnosis and treatment. That specialist in California discovers that this patient is pregnant and notifies his staff. Well, it turns out in California, the patient's right to confidentiality has now been breached. Yet in Louisiana, the patient has no such right. When you practice telemedicine, which states confidentially loss should apply? No answer. There won't be an answer until such a lawsuit occurs. You can see the complications here. The looming factors further in telemedicine have been that historically, you have to do everything through a HIPAA-compliant system, and those HIPAA systems invariably charge physician fees. And then the patients who wanted to be at the other end of the telemedicine had to log in and pay a fee, and then physicians would try to not accept insurance if they're practicing telemedicine. So patients will be asked to sign an insurance waiver that says they're not going through the insurance, and often they didn't want to do that. And then there are all these med mal issues, as I alluded to. If it's a new patient and they're from some other state, you can have a problem with that as well. And so how we have historically minimized the risk of liability in practicing telemedicine is their broad disclaimers. I, still, to this day say that's what it looks like to me, but I'm going to get a better idea when you come into the office. We need a biopsy. See somebody, I don't tell them necessarily to see me. And I've tried to stay out of trouble by using telemedicine, for the most part only on my own patients. Although in this era, new patients are coming in through telemedicine that we've not seen in the office yet. But at least, they have to be in our state. Okay. Now how things changed in this new craziness, this new world we're living in, the world of masks and gloves? Telemedicine in the era of COVID-19 has changed tremendously. And part of it is because of the billing. And so this is an act signed by President Trump in March. It's the Coronavirus Preparedness and Response Supplemental Appropriations Act. It was signed to apply to Medicare patients, but more and more of the non-Medicare managed care programs are covering this as well. And the idea was to have the ability to interact with patients who are home, and previously home services were not eligible for telemedicine billing. It applies to physicians, PAs and NPs, physician assistance and nurse practitioners. And so here's just a classic example. So someone has a basal cell carcinoma on her left ala. I see her through telemedicine. I can't really tell what that is, and really to avoid a problem, I would say to her, you know what, could be a skin cancer, but I suggest you come in for evaluation. And so telemedicine in the era of COVID-19, billing has changed, and it's changed because the HIPAA requirements basically has been thrown out the door. And so in order to bill, and we can bill pretty much the same way we bill in the office. There is a requirement to telecommunication technology that has both audio and video capabilities. So texting, you cannot bill for, and phone calls you cannot bill for because the 2-way real-time interaction is required. So examples are FaceTime, Skype, WhatsApp, Zoom or some of the software programs now that also allow for this 2-way interaction. And the part that has helped all of us, and it's really brought in some money, frankly, at a time when nothing else was coming in, is that you can use the same coding as you do for an in-person visit. 99213 is an example, 99212. The visits are expected to be about 5 to 10 minutes. You have to document, document, document in your EMR, in your HR, because you can be certain that there will be, when the dust settles, and the dust will settle, there are going to be audits. And so we use the CLARA system, which is a software system. There's so many out there. And literally, every time I do a telemedicine business, in the chief complaint, I write CLARA teledermatology visit. It's the first thing I write, and then it's a regular visit. All penalties for HIPAA violations are removed because obviously, FaceTime, WhatsApp and these are not HIPAA-compliant systems. So HIPAA, at least for now, is gone as long as -- the HIPAA violation will be gone as long as we serve the patients in good faith. So telemedicine is now here to stay. There is no question about it. I expect it to be more federal and state government increasing oversight of this. And this increasing mobile/computer apps will lead to better performance and new technology. It's going to be a new way to evaluate patients. It's been argued from a monetary perspective that still doesn't bring enough income in to keep offices going, can't do biopsies, can't do a whole variety of things. And it may be that ultimately, we have some of our staff duties telemedicine business and not necessarily physicians. But it's here to stay. And I think it provides quality care, and it's something that we can consider. And I suspect the HIPAA issues will be dealt with now that the horse is out of the barn. In the end, I have to give you a disclaimer because I am an attorney. The cost of the health care attorney is worth it. Nobody wants to pay anything, but it is worth having. And everything I've just said is for thought and not necessarily legal advice. And with that, I complete this talk.

Dr. Goldberg, thank you so much. I think you're worth every penny and more.

Just buy me a drink. That's all.

Here we go. This is a great presentation. I think it's extremely valuable for a lot of the customers that we have out there.

I'm going to offer up any questions from anybody in the audience that they might want to ask Dr. Goldberg. Do we have any questions out there? Nobody with any questions?

Come on. Don't be shy. I guess not.

Guess not. Let me bring up some question from one of the things that we found during the pandemic when a lot of the customers, just before they closed the window, if you will, there was a lot of claims that said we were going to postpone Mohs surgery for 6 to 8 to 10 weeks. A lot of those patients that may have been in the backlog that requested, demanded or were provided with an SRT option, took a lot of those options in order to be treated. Is there any cases in that area that could erupt or could cause a problem? Or is it something that could provide a better solution?

So let's get back to the whole idea behind essential needs. Physicians' offices, by definition, provide essential needs. And the only physician offices that have taken any flak -- and I don't think it's turned out to be much legally anyway. But the only physician offices that have taken any flak during this era have been those who provide purely cosmetic treatments. Those of us who treat skin cancer -- if you speak to -- and I think everybody knows this, this is not just a physical health care issue. It's a mental issue as well. And the treatment of skin cancer, we may say to ourselves, the basal cell and squamous cell carcinoma, you can go few -- 3, 6, 9 months without treating them. But I have no guarantee when something is going to become a problem and someone is going to become affected. And so what we did find is that people did not want surgery and frankly, still don't want a lot surgery during this time period. And so even though we have very limited hours in New Jersey, the number of patients we were actually treating with SRT, superficial radiation therapy, actually increased. And I'm not surprised by that because it's a nonstressful, noninvasive treatment. And in this era, people don't want stress.

Well, I think that the numbers for suicides during this time period has shown that people were under tremendous stress. So we don't -- we certainly don't need to add to that stress. So I think that, that's an opportunity. The other thing that I think we remarked was the patient profiles for those who were mostly affected by the virus are very much the same profile that we see in skin cancer patients.

Yes. It's fascinating, isn't it? There's no doubt about that. And that did curtail some of the people coming in because they were older. The older people really didn't want to get out. But we're finding, at least in our area now, they're coming in, they're wearing masks. A lot of these older people now -- and again, I can't vouch for every state because I realize there are growing numbers in some states. But we had to, today, I saw a patient in New Jersey who's 83, I think, who had his first SRT treatment. And he actually wore a t-shirt. And his t-shirt said I survived.

Wow.

We were happy to have his treatment. Yes.

Maybe that's something that we can do for all of our customers' patients. That is quite a statement. It doesn't have to use a lot of words to hit home. One of the other things that I think that we saw was the fact that patients became more aware of the alternative. I think when you're talking to a patient about cancer, they hear the word cancer, whether it's skin cancer, breast cancer or anything else that has to do with cancer, it's very impactful to those patients, and it's impactful to their families and to their loved ones and things like that. So impacting them by saying we were going to do surgery on them mentally can be very impactful to them. But I think that it's a pressure for the doctors. I think that the -- a lot of the doctors who had the alternative of SRT, they were relieved in a lot of ways knowing that when they were closing down their centers or their offices that the bulk, if not all, of their patients who had skin cancer were being treated or have been treated. So I think it provided a lot of relief for the physicians. The question that I'm leading to is, how is this going to impact the surgical schedule when talking about Mohs surgery because we know that there are separate areas perhaps for Mohs patients and those quarters can be quite jammed, if you will.

Yes.

And that might impact the productivity of the Mohs surgeon and being able to do as many patients as they've done in the past because we're not getting slow on the number of patients, but we are increasingly alarmed with the shortage of great physicians that we have out there.

So the reality is that I think what you're alluding to is Mohs patients can be in the office all day. They're sitting there all day. And what we've done is we basically put an X on every other seat, where nobody can sit there. And so yes, it has curtailed the number of Mohs patients we can treat. Obviously, it has no impact on SRT at all. And the decisions we all have to make in this era is, do we just work more and more hours. So our office used to open at 9, now it opens at 7 in the morning. Yes, I mean it's definitely impacting on Mohs. My New Jersey office where I have my SRT unit, as Joe knows, is based at Hackensack University Medical Center. Hackensack and Teaneck, which are both in Burton County, New Jersey, were really, really at the epicenter for New Jersey. New Jersey was just hit so hard. And there were sirens coming just literally every hour into that hospital, bringing the people in who ultimately died. We're in the medical office building connected to it. And we get a reasonable number of patients that come out of the oncology unit at this hospital. And again, so to Joe's point, these people don't want surgery. They don't want to even think about it. And they don't want surgery, not that we do the surgery in the hospital, because we don't. They don't want the surgery because they're fearful they're going to have a complication that's going to require them to be hospitalized. And they're old to begin with. And so SRT gives them an alternative where they come in, they're literally in the office and the treatment because everybody knows on this call, it's a minute. And so they're in and out of the office, and they don't have those stresses.

Well, appreciate that feedback, and I'm going to provide a plug here. I think that SRT and this pandemic makes it more apparent that when treating skin cancer, whether you're Mohs surgeon or not, provides you with the productivity to be able to treat your patients that are coming to you for skin cancer treatment. And it also is going to provide you with the cash flow that you need to overcome perhaps times like these or any times. And let's face it, after 9/11, we had things that have been around with us for the last 20 years that will be with us for the next 20 years. I think this pandemic is going to do the same thing. And we're going to have a new standard. And I think a combination of providing informed consent to patients that give them choices is going to allow more patients to walk through your doors. And that's what we want. We want the patients to listen to their doctors, to have the communication with their doctors, but also be given the choices that are best for them and for the physician at that time. So I think all of this is a revelation. We're thrilled with the opportunity to continue to service our marketplace. We think we're in the best specialty in the world. And thanks to doctors and even lawyers like yourself, Dr. Goldberg.

Have to have some negatives, right?

No, no, not at all. We're very, very appreciative. Again, I'll open it up for any questions. But if there are no questions, I want to thank Dr. Goldberg for his time, and I want to wish everyone good health, and let's continue being on the other side of this, and hopefully, the entire country will heal and work together.

Great.

Thank you, everybody.