“Your past success guarantees you nothing, if the rules change in the future, and if you are not careful, your successful past may block your vision to the future.”
Joel E. Barker, Futurist
What is Managed Care?
Welcome to the world of confusion and chaos. Managed Care is a world in which the players changed daily and there are no rules. The only constant is change. The term Managed Care theoretically represents the appropriate management of health care for a patient through a fragmented delivery system. Managed care is symbolic of a patient being appropriately diagnosed and treated with the appropriate resources at the appropriate time in the appropriate setting. Managed care represents lower cost and better outcomes. Summed up, managed care creates value in healthcare. (v= outcome/ cost) This value is targeted at patients, payors and physicians. The debate continues as to whether there is value created for anyone. Managed care has focused more on the financing or cost of healthcare than it has on outcomes. It is important to be aware of this difference as you evaluate the impact that managed care has on a physician practice. To be able to understand the impacts of managed care; one must first define and understand the needs of the marketplace.
How do you define a market for a practice?
There are many markets in healthcare which are important to define for a practice. There are MCO markets, provider markets, patient markets, and employer markets to name just a few. All of these target markets make up what are termed the healthcare market in a certain geographic location. A practice can also define its markets depending on the services it offers and in what locations it offers those services. Typically, a practice has a local and regional market that relates to the geographic draw of patients and or referring physicians. A practice may target oncology patients for chemotherapy and radiation, but if it offers diagnostic radiology, this group of patients could be a separate target market. If subspecialty services are provided, such as stem cell transplants, this target market could be national or international depending on the geographic location of the patient. Another target market for a physician practice is the payor market. The payor market could be local, regional and national, depending again on which payors are able to contract for services. Most of a practice’s services are contracted with local or regional payors. However, some high cost subspecialty services may be contracted only on a national level, such as transplants. It is important to identify all of the target markets of a practice.
How do you determine the level of activity of managed care contracting in a market and how does that affect the contracting efforts of a practice?
Every market in the United States is evolving at a different pace as it relates to managed care activity. There are several factors or characteristics, which a market portrays, and thus its reaction to the managed care activities taking place at that time. The stages are identified in Exhibit A. It is important to understand the market stage of the market you are considering. Once you understand the market, then you can assess the contracting strategies of the practice you are evaluating.
About the Author:
Wesley D. Millican, MBA, CEO and Physician Talent Officer of CareerPhysician Advisors, LP, and CareerPhysician, LLC, provides comprehensive talent solutions for academic children’s hospitals, colleges of medicine and academic medical centers across the nation. He possesses a longstanding passion for career development of all young physicians and serves as a go to career resource for training program directors and their residents and fellows. In continuing his commitment to the “future of medicine”, Mr. Millican speaks nationally at residency and fellowship programs. His Launch Your Career® Series is a proven resource for today’s residents and fellows and has served as a go to resource for program directors over the last 15 years.