Marketing Capitated Specialists

by Keith Borglum

There are some relative certainties that can be predicted for most specialty medical practices under managed (capitated) care:

• For the vast majority of specialists, net income will drop.
• Nationwide, approximately half of all specialists will no longer have enough patients to maintain a practice. In some areas and some specialties as little as 10% of the existing specialists will be needed.
• Primary care physicians will usually control the selection and utilization of the remaining specialists.

In meetings with insurance companies, IPAs, MSOs, hospitals, medical societies, other consultants and industries, these points meet general agreement. Nobody yet has offered me an answer for what to do with the majority of excess physicians.

Bleak as these predictions appear, there is a silver lining. Half of all specialists will remain, and they will be very busy and successful in their specialties, even if at less income. A few specialists will opt out of the mainstream and into elective cash practices such as cosmetic dermatology, impotence centers, radial keratotomy, etc. whose marketing is very straight forward. A few will go into management and a few will retrain. Many will retire.

It appears to me that the prime marketing strategy right now for specialists is to be in the half that survives the shake out. Many of these strategies will bridge into the matured managed care marketplace of the future.

• Obtain, document and promote higher clinical outcomes than your peers in your community. You only have to win the race by a nose, not a mile.
• Document and promote to referrers your compliance with cost effective practice protocols within the boundaries of appropriate care. In other words, be conservative and manage your own utilization and that of your ancillary support network. Keep admits and hospital days as low as possible. Try to stick to the formularies. Track data.
• Form the dominant group in your specialty in your market, sized to fit anticipated need based on insured lives.
• Except for a few specialties, forget wide geographic single specialty networks or "centers of excellence" unless you are shown a clear market demand from a payor.
• If you are double boarded in internal medicine and a specialty, consider either moving more towards comprehensive primary care, or to what is being called a "two-fer", doing both primary care and your specialty. Internists currently are not as cost effective as a family physician in most documented studies. Those that demonstrate statistics closer to FPs will be more marketable. If you have a lot of complicated patients you do primary care for, consider the specialty route if you have a market opportunity, otherwise you could get very hurt financially taking a PCP cap on sick patients. Few plans or cap rates recognize acuity in reimbursement.
• Strategically align yourself with FP practices rather than with your specialty colleagues or the hospital. Not all your peers will survive nor will all the hospitals. They both will be viewed as cost centers rather than profit centers.

Knowledge is power. Most specialists wanting to survive must intensively study the current literature or obtain expert advice and conform to the demands of the evolving marketplace to position themselves from a marketing perspective. A knowledgeable consultant can, in a day or two, can survey your practice give you adequate strategic guidance to possible not only survive but thrive in the managed care shake-out. The market wants higher outcomes at lower cost with the ability to manage volume. It is most important to remember: the market always wins.

Reprinted with permission from CALIFORNIA MDs BUSINESS ADVISOR.

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

Member National Association of Healthcare Consultants, Society of Medical Dental Management Consultants, American Medical Association's Doctors Advisory Network, American Academy of Family Physician's Network of Consultants, California Academy of Family Physician's Consultants on Call, and the Institute of Business Appraisers. Phone 707-546-4433 for consulting information. Permission is granted to reprint or quote any portion of this article provided that both the author and publication are named and two copies or the quoting journal are immediately mailed to the publisher.

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.