Grow, so they
(payors or other groups) don't outgrow you
Reading Time - 3 min
Why you should spend 3 minutes reading this:
Growing your practice strategically could be the difference between 0% vs. 20%+ improvement to your bottom line.
In the end, power is a very real thing.
Let's define power as:
an entity's ability to ask something of another entity and they must comply because they cannot replace the asking entity.
For example, at a sporting event, a hot dog and beer may go for $20. The asking entity (stadium) has power over the sports fan because the fan cannot replace the stadium as a food provider.
In a regular bar, where the customer can walk across the street, the hot dog/beer combo will rarely go for $20.
How do you gain power?
Get bigger, with an emphasis on density (the focus of this article)
Get better (for more see: So Good, You Need Me)
Insurances need coverage for their patients in specific geographic areas. In order to keep patients happy, they do not want to make them drive excessively far.
If you add offices and physicians in a specific area of a locality - with time - you can reach a point where the insurances need you to provide coverage to those patients.
Your contract rate could go from 80% of medicare allowable to +100% of medicare allowable - resulting in a +20% margin improvement to your practice/clinic.
You're the stadium now.
As physicians/care providers, you have worked extremely hard to build your own clinics. You're either in 1 of 2 positions.
You're large enough - and - with a few more locations, you may begin to gain power over insurances
You're a small practice/clinic providing great care but insurances are continuously pressuring you with lower contract rates
As care providers, we need to figure out ways to work together.
Larger groups need to create packages/merger agreements that will:
Benefit both groups financially
Support long-term operations for the groups
Small care groups need to:
Join larger groups that respect them if they cannot improve contract rates
Maintain their unique spin on care and the patients that have subscribed to it
Learn from larger groups on how to run increasingly operationally efficient locations
If you're a large group and need support growing, we can help, let us know how below.
If you're a small practice that your community needs but insurance companies are continuously making it impossible to keep your doors open, we can also help.
More on business valuations can be found here if you're wondering what you may be worth.
High-level actions you can take based on this article:
1. Align on a long-term growth strategy
2. Develop a roadmap to execute that strategy
3. Begin executing on projects that give you a competitive advantage
4. Regularly revisit and optimize your roadmap as market competitive dynamics shift
Keep Reading - Up Next:
Winner: the Data Driven Provider
I am a physician in a practice or clinic
I am looking grow my practice or clinic
I am looking to sell my practice or clinic
I am looking to provide cost-effective care