By Michael W. Goldring
By now, most physicians have lived through several major market upheavals; shifting payors, health plan and IP A bankruptcies, market consolidation, the rise and fall of PPMCs, the introduction of new and untried healthcare delivery models - and most recently, PacifiCare's shift from Saint Agnes Medical Center to Community Medical Centers. PacifiCare's recent actions have substantially impacted each health system in Fresno County and has had significant impact on surrounding counties.
Each market event has the potential to disrupt continuity of care, accessibility of care and existing physician/patient/payor relationships. In many cases, the market event tears asunder these long-term and formerly, bankable, relationships. What should a physician do? The following strategies may assist you in dealing with current and future market events.
The vacuum created after a market event creates many opportunities. Stop and consider these opportunities. Resist the emotional pressures to immediately recapture what is lost without first carefully considering each opportunity. Determine your goals (e.g. assuring patient continuity, maintaining cash flow) and then evaluate each opportunity based on achieving your goals. At that point, move purposely and decisively to achieve your goals.
Unexpected market events that impact your practice, your income and your comfort levels often engender anger and resentment. Many initial (and sometimes irrevocable) decisions are made soon after the occurrence of a market event. Such decisions are often made without fully evaluating the impact of the decision and without a full understanding of key facts and relevant options. Such decisions may foreclose opportunities and frustrate achievement of your goals.
Often, as you navigate opportunities and make decisions (i.e., sign contracts, terminate contracts), you foreclose other opportunities. As you ascend the decision tree, your course is set and fewer opportunities are available. To the maximum extent possible, make choices and pursue opportunities that preserve as many options as possible.
If you seek to maintain your options, you must know what options you have. Your options are tied to your goals. If your goals are to continue seeing your patients and fair reimbursement, you must ensure a continuing relationship with your patients' payors - or assist your patients in selecting other payors. This may require forging new relationships and/or making tough choices about terminating old relationships. Carefully evaluate each option and its financial, contractual, legal and emotional impact on existing relationships and your goals.
To effectively evaluate your options, you must obtain accurate and fact-based information. The information you seek should include relevant practice information (financials, cash flow analysis, payor mix) and market wide information (who is contracting with whom and where}. In these situations, you must know "who is on first," "what is on second," and "how he or she is going to reach home plate." Most medical practices do not have this information readily available. This is an appropriate time to seek assistance from your practice, financial and legal advisors. It would be helpful if your advisors had specific information regarding your regional healthcare market, the contacts within the market to achieve your goals and experience in dealing with the relevant issues. Finally, once your advisors provide you with this information, do not discount it based on hearsay and unsubstantiated rumors.
It is in your own best interest to understand the market and your practice's place in it. It is your advisors' job to advise you regarding the market and to prepare you for change precipitated by market events. Careful and thorough monitoring of your market will often identify small adaptations that you should implement for your practice. Resist the temptation to rely on past successes. Continued success is tied to continuous changes and adaptations. Ongoing monitoring and continuous adaptation should position you and your practice for future market events. Although the concepts discussed above are simple, they are often ignored during the turmoil following a major market event. If you are faced with such an event, stop what you are doing, objectively determine the event's impact on your practice, deal with relevant facts and be cognizant of the concepts discussed above. By doing so, you will be well positioned to make appropriate and well-informed decisions about you and your practice. Most importantly and on your terms, you will be able to provide your patients with continuity of care and accessibility to care.
This article published in the July 2001 issue of Vital Signs (FMMS)