Managed Care Contracts Need Scrutiny

If you don't have the data to back up your claim for higher quality, the conversation might end there.

"You can reply that the other practice will be out of business soon because no one can practice that cheaply, and the managed care rep will shrug his shoulders and say, 'Okay, we'll chat when that happens,' " Shufeldt explains. "They will play hardball in this situation and there's not a lot you can do when you don't want to accept those contract terms."

Colluding with other nonaffiliated practices to agree on the terms you will accept is not legal, of course, but you can join an existing network that not only has more bargaining power for contracts but provides patients a higher quality of care and more clinical integration.

"They will pay a higher rate for that," Shufeldt says. "The managed care companies do recognize the value of that network access."

Competing with cut-rate physician practices can be avoided by operating in a community in which your specific services are needed. If your practice is the only one providing orthopedic care in the community, for instance, you will be able to differentiate yourself from the general practice clinic down the street that is accepting rock-bottom reimbursement, Shufeldt explains. "That's why it may be necessary to negotiate with the managed care companies before you sign a lease. Where you're located can be a factor in the contract terms you get. If you're already locked into a space and can't move, you're less flexible when faced with this problem."

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