Good offensive strategy aids in merger survival
Tips for coping with consolidations
It’s almost taken a scorecard to keep up with all the changes among key players in the managed care arena over the past two years (see related story, p. 17). But physician practices don’t necessarily have to be in a defensive mode to cope with these changes effectively, consultants say.
The proposed Aetna U.S. Healthcare-Prudential HealthCare merger offers a case in point. Practices that currently contract with Prudential should walk through the following process, recommends Michael Barrett, a Winter Park, FL-based managed care consultant with Advanced Managed Care Solutions:
• Examine your current managed care contract and look for the section that addresses "assignment." This term means the payer can assign the contract to any successor it is acquired by. Some contracts require health plans to give notice of the change in ownership, while others may not. "If there is an assignment provision, your negotiation with this entity is zero. If you’ve been able to negotiate this point out, good," Barrett says. If not, go to step two.
• Perform an analysis of the competitive strengths of each of the payers in question in your market. Which plan has the strongest market share locally? What products do they offer? How are they perceived within the employer and medical communities? Which physicians and hospitals are included in their provider networks? The larger payer nationally may not necessarily dominate a given market, Barrett points out. In Orlando, FL, for example, Prudential HealthCare has a much stronger market presence than Aetna U.S. Healthcare, so Prudential will likely dominate.
• Use information from your payer analysis to determine what will happen as the merger moves forward. How is your market likely to evolve from a payer standpoint over the next 36 months to five years as this merger moves forward? A long-term strategic plan can be invaluable to a practice, Barrett says. "You have to have a Plan A and Plan B that clearly describes and articulate when you need to execute Plan B. Having these plans . . . can give you a great deal of certainty in movements, and can help you sleep better at night."
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