As more hospitals seek to cut back stipends paid to physicians and to obtain more services for less from contracting groups, they are increasingly turning to the request for proposal, or RFP, process. 

From a the standpoint of making a rational contracting decision, RFPs are a poor substitute for the intelligent selection of the best relationship with a physician group. Despite all efforts of hospitals to treat physician services as a commodity, and, quite frankly, despite many physicians' belief that they are providing a commodity service, medical services are not a commodity. Applying a commodity purchasing tool to them is counterproductive, even solely from a hospital's perspective:  "saving" several hundred thousand dollars on, for example, a hospital-based group's stipend, at the cost of destroying the hospital's economic engine when the new group cannot perform, is not saving several hundred thousand dollars at all; rather, it is wasting millions. 

Nonetheless, more facilities are using the device to force physician groups to cut their own positions or even their throats. 

 

Even more troubling is the burgeoning trend of completely fraudulent RFPs in which the hospital makes a back room deal with a favored competitor or provides the favored competitor with information gleaned from the other participants, all the while pretending as if the selection process is impartial. 

Of course, this propensity toward fraud is not limited to the healthcare setting. Recent litigation includes a dispute over an RFP for large scale copier services in which it is alleged that the entity issuing the RFP provided special information to the winning competitor and entered into a contract that varied significantly from the terms of the RFP, and a dispute over a transportation related RFP in which it's alleged that the entity that issued the RFP placed little weight on objective criteria and made the decision chiefly on subjective factors. 

Fraud in connection with an RFP is simply another reason why you need to be careful about making the decision about whether or not to participate.   If you do decide to participate, you need to understand how to conduct yourself to best guarantee fair consideration through the process, and, optimally, how to achieve victory on economic and other business terms that make sense for your group.