Physician Specialist Marketing and
Centers of Excellence

by Keith Borglum

The changes occurring in managed care are having a profound impact on specialist physicians and their niche in the medical marketplace. Many specialists are seeing their practice bases erode as referrers are constrained to plan membership panels, restrictive pre-authorization protocols and the utilization impacts of capitated gate-keepers.

Health care seers and futurists predict the demand for, and utilization of, specialists will fall by half nationwide (see JAMA July 20, 1994 vol. 272 No. 3). In many attractive urban areas which are already overpopulated with specialists, demand could fall by 90% or more, with only 10% of the remaining specialists having enough patients to maintain a practice. Specialists therefore urgently need to position themselves in the marketplace in order to survive.

One approach to survival and success is through the formation of Centers of Excellence (CE). A CE approach involves creating an entity that has a regional, state, or national geographic market recognition. Obviously, not every practice can be a CE. There can only be limited room at the top of any pyramid, even though competition to be there may be fierce. Perhaps only .5-2% of physicians will be able to take and hold that ground.

Clinical ability is not the only requirement for CE status. Aggressive marketing and promotion are usually required. You can be the premier clinicians in your specialty, and if no one knows it you won't attract patients. Typical marketing budgets are in the 3-10% of gross receipts range, which can run into the millions of dollars per CE.

CEs are most often also comprised of a team of physicians, not solos. Without careful nurturing, CEs' position in a market can fluctuate with the ebb and flow of individual physicians and their egos. Your CE requires continuity and stability of staffing to succeed.

In the current managed care market, your success depends to a large degree on the contracts you obtain rather than the respect of individual referring physicians. There are successful models that can be promoted to HMOs, such as those based on the Medicare Midwest CABG CE programs, that can transferred to other specialties. Typically these involve trading price for volume, but can also be based on premium pricing, with global savings coming from reduced complications, mortality and avoidance of unnecessary procedures. Shared risk, via capitation or case rate approaches, are typical compensation structures. To take risk, you better be prepared to manage risk.

Outcome tracking and HEDIS compliance are already happening in many CEs, and will be virtually required to attract and maintain contracts in the future.

Centers of Excellence, properly structured and managed, are an excellent strategy for those few specialists in the market that can overcome the obstacles and develop a program to maturity.

Article for: Today's Health Care reprinted with permission

Author Keith Borglum is a consultant and medical practice appraiser with Professional Management and Marketing, 3468 Piner Road, Santa Rosa California 95401.

Keith is one of the few consultants in America to be accepted as a member of all of the following; the Institute of Business Appraisers, National Association of Healthcare Consultants, Society of Medical Dental Management Consultants (90-94), American Medical Association's Doctors Advisory Network, American Academy of Family Physician's Network of Consultants, and the American College of Physicians Managed Care Advisory Consultant Network.

Phone 1-800-79-CONSULT for consulting and appraisal information.

Permission is granted to reprint or quote any portion of this article provided that the author, firm, phone and city are named and two copies of the quoting journal are immediately mailed to the author at 3468 Piner Road, Santa Rosa CA 95401.