Why is it important?
It is Friday night and your high school football team is playing in the state championship playoffs. It is imperative for your team to know:

a) the strengths and weakness of the other team
b) when to call a certain play to gain optimal yardage
c) where the ball must be to score points
d) what plays to call to score points
e) all of the above
The practice you are evaluating is much like your high school football team. The medical practice strives to be successful and to do so must compete with other providers. The practice needs a game plan to win and to develop that game plan; they need to have information about their competition and their customers. In summary, the practice needs to know “all of the above”. Market information is a very powerful tool. Exhibit B is an example of information that a practice should document and update on a regular basis.

Why are the practice goals important to the development of the contracting strategies?
You should be able to determine the practice’s strategic business goals by asking the CEO or lead physician. Dept. goals should then support these practice goals. Contracting strategies should support the practice and help it achieve its strategic plan, whether that plan calls for major growth in a certain market, or growth in a new market, or just maintaining its current market position. For example, it may be that a practice wants to maintain its strong position in its local market. The largest employer in that market has a need for services in a site outside of that local market. The employer may demand the practice fulfill that need either by subcontracting with another practice or delivering those services directly. The practice can only maintain the contractual relationship with the employer in its local market if the practice can meet the needs of the employer in the distant market.

How do I assess if the practice has contracting strategies?
Ask if the practice has a defined process to seek out contracts. If the practice only responds to the contracts, which it receives from payors, that is a bad sign. The practice should be assertive in seeking certain relationships. That does not mean that the more contracts signed the better. It does mean that the contracts a practice does have should be meaningful and represent substantial business. If a contract does not support the business goals of the practice, then the practice should not even consider it. In many markets, fewer contracts signed the better. Below are some questions a practice should pose before considering negotiating a contract:
1. How will this contract benefit the practice?
2. What will be the impact if the practice does not sign this contract?
3. Are there other ways to access these lives?

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.