ADVISORY e-ALERT      January 31, 2012
Advisory Law Group, a Professional Corporation  




As I've written before, there are three distinct types of RFPs for physician services:


1. True RFPs: These are genuine searches for the best-quality provider with a favorable ratio of quality to cost. This type of RFP is the closest in relationship to the traditional form used in industry and government. It is commonly seen in situations in which the current, or sometimes very recently former group, has "blown up" and can no longer provide coverage. It's also frequent in scenarios where the current group has completely lost the facility's trust.


2. Fictitious RFPs: These RFPs belie the fact that hospital administrators are not interested in the merits of any response; they have already decided to whom they will award the contract. Yet, for one political reason or another, they've decided to issue a phony RFP to project a patina of "fairness" to the medical staff, to the hospital's own board, to some third party-or perhaps to you.


3. Fulcrum RFPs: Consider this the weaponized RFP. As the name implies, the increasingly common fulcrum RFPs are designed to create leverage. The facility intends on renewing with the present group but uses the RFP as a tool to dictate terms by fiat and to pressure the group into negotiating against its own best interests out of fear of replacement. Nonetheless, the facility is open to competing proposals.


The problem is that from the group's perspective - any group's perspective even the one currently in place - it's difficult or impossible to know what type of RFP you're dealing with in any particular situation.


RFPs are a form of sealed bid auction; instead of potential buyers naming their highest price to acquire that heirloom diamond, potential sellers of the specialty medical service are naming their lowest price to acquire that gem of a contract.


And, no matter what their type, all RFPs come prepackaged with two significant defects:


First, just like in any auction, sealed bid or open, there's the high potential for what economists refer to as the "winners curse;" the fact that the RFP "winner" turns out to be a big loser when they realize they have under bid the necessary amount of stipend support.


Second, that gem of a contract that you just won may turn out to be not even a diamond in the rough: it might just be paste.


From the perspective of the group currently holding the exclusive contract, significant strategic and tactical work is required to reach Strategic GroupTM status and thereby create an experience monopoly, significantly reducing the chance that you'll become subject to an RFP.


However, in the event that the hospital does issue an RFP, whether you are the group in place or a group approaching from the outside, consider the fact that a complete, first-class response is time-consuming and expensive. And, on top of that, you may merely be used as a tool to negotiate someone else's stipend down, or as a tool to create window dressing for a decision already made in favor of another "bidder." Therefore, consider what your fee to participate in an RFP should be. Perhaps that fee is a credit against stipend support, perhaps not.


Last, you need to understand that some hospitals are simply looking for a commodity - the cheapest contract to provide your specialty services - that they can get. These are the bottom feeders, and they don't deserve you.


It really is a question of self-esteem.


Being The Best Group . . .  

In A Bad Location         


View Episode 37 of the Wisdom. Applied Videocast 




A few months ago I went to one of the large chain sporting goods stores to buy a new kettlebell weight. If you've never seen one, the traditional version looks like a greyish black cannon ball with a looped handle on top, all molded from iron.


As the clerk was ringing up the purchase, he asked me, just as he had asked the customer ahead of me in line who bought a heart monitor watch, if I wanted to buy an extended warranty.


At first, I thought he was kidding. I was buying what is essentially a lump of metal - no moving parts, no welded joints, no paint - what could possibly break other than my foot if I dropped it? So I asked him if he were serious. He told me that he was required to ask every customer if they wanted to buy an extended warranty on any product other than clothing. He then apologized.


Does your practice have policies like this, ones that must be applied even when they make no sense? Are you incentivizing your group's physicians and staff to apply them nonetheless? Do you penalize your employees or subcontractors or even your partners for not following them? Do you have policies that may drive away customers (patients) because they are nonsensical?


The issue is greater than simply vetting your group's policies. In a broader sense, what behavior in general are you incentivizing by way of your group's employment practices and compensation plan?


Rules, policies and practices all intersect with the provisions of your group's employment agreements, shareholders/partnership agreements and compensation plans. What message are you sending to your group's physicians and staff? What message are they sending to your group's patients, referring physicians and facility administrators?



Protecting Traditional Practice in Today's 'We' Society, published in the January 2012 issue of Pain Medicine News.

To read other recent articles, click here


Want to read past issues?

Did you delete (by mistake, of course!) a past issue of Advisory e-Alert and want another copy?
No matter the reason why, back issues of Advisory e-Alert are available from the archive.  Click here.

ADVISORY LAW GROUP, a Professional Corporation

Tel:  800-488-8014 or 310-843-2800
Fax:  877-883-0099

10940 Wilshire Blvd, 16th FL
Los Angeles, CA  90024

1227 De La Vina St
Santa Barbara, CA  93101

The materials presented in this Advisory e-Alert are educational only and are neither legal advice nor a substitute for it. Advisory e-Alert presents a general discussion which may or may not apply to your particular legal or factual circumstances. The distribution of Advisory e-Alert is not intended to create, nor does it create, an attorney-client relationship. Please do not send us confidential information without receiving explicit authorization from Advisory Law Group to do so. Do not take or avoid taking any action as a result of the materials presented in this e-Alert without first obtaining legal counsel.   
2012 Advisory Law Group, All Rights Reserved


Subscribe to the e-Alert 




How to Save Your Billing Business from Becoming Collateral Damage in the War Against Physician Independence



You've built a successful billing business by doing extraordinary work for groups in your area region or even nationally.
But as hospitals terminate your clients' contracts in favor of large national or regional physician groups and management companies, and as hospitals convert from contracting with groups to simply hiring their physicians, the market for billing and collection will consolidate, leaving many billing services without a sufficient client base.

In other words, your business is becoming collateral damage in the war against independent hospital-based medical groups.


When: February 23, 2012 

Time: 4:00 PM PST 

Length: 45 minutes

Complimentary for e-Alert readers


Click here to register today!

Because you want to be better informed than your colleagues, you're invited to connect with us on Find us on Facebook Follow us on Twitter View our profile on LinkedIn Visit our blog View our videos on YouTube to receive advance notice of my newest releases of complimentary information.


Let Us Know What Business/Legal Issues You'd Like to See Addressed in A Future Issue
Warning Sign
In This Issue
How Much Should You Charge For Responding To That RFP?
Videocast: Being The Best Group . . . In A Bad Location
All Things Personal
Recently Published Articles
The e-Alert Archive
Podcast Now On iTunes
2012 Anesthesia Business Update is Coming Soon
The Wisdom. Applied. Blog
Q & A Video Series
The Immediate Leader Experience
Mentor Program


Listen and subscribe to Mark's podcast series, Wisdom. Applied., now on iTunes.

2012 ABU
Follow this link to Mark's blog, Wisdom. Applied.


Overhear Mark's responses to medical group strategy and business questions.
Follow this link to the
Q & A video page.    


You're a physician who wants to form a medical group and, among other things, subcontract with or employ other physicians, enter into exclusive contacts, obtain significant stipend support money, create related entities to increase protection and the like. And you want to come up to speed on all of this immediately.

Or, you're the new leader of an existing group with complex practice and business operations -- you need to understand how to master the group's organizational, operational and leadership issues -- and you need to be brought up to speed immediately.


After having regularly dealt for many years with physicians in both of these contexts, we've designed a process to deliver immediate results: The Immediate Leader Experience™.


The Immediate Leader Experience™ takes place over a weekend in Santa Barbara, California and includes two nights accommodation at the Four Seasons Santa Barbara Biltmore Hotel. 


In two short days, you'll be entirely up to speed, totally prepared and confident.  You'll be armed with tools and sample documents.


Due to the nature of this program, admission is upon interview only -- there is extremely limited availability.


For further information on The Immediate Leader Experience™ follow this link.   
For information on Mark's mentor program, click on the following link:  The Advisor Program.