In this age of increased transparency with federal business in general, and healthcare in particular, it is somewhat surprising that so much about healthcare procurement still remains unknown. Since July of this year, federal agencies have released an estimated 70 Requests for Proposal (RFPs) for a broad range of hospital, medical and related services. Many of these RFPs call for services that local providers are well-qualified to deliver, still most will go unnoticed by the local providers community.
Healthcare professionals responsible for finance, strategic planning, marketing and business development would be well-served by familiarizing themselves with the window into federal procurement. This site is the “official” Government-wide Point of Entry for virtually all of the federal governments’ contract opportunities, including those for healthcare services.
Among the hospitals and provider groups that should routinely pay particular attention to federal healthcare contracts include those that are physically close to a government installation, such as hospitals and clinics operated by the Department of Defense, the Veterans Health Administration, the Indian Health Service, or the Federal Bureau of Prisons.
These agencies typically have ongoing requirements to supplement the services they can provide “in-house”, e.g., with their own providers and in their own facilities. They frequently issue RFPs for a range of clinical services throughout their service areas that can often be performed by local providers. The scope of opportunities put up for competitive bid can range from a relatively narrow scope of services, such as, say, obstetrical services to a contract calling for a comprehensive range of hospital inpatient, outpatient and ancillary services.
Another factor to consider is that while some services acquired by agencies tend to be repetitive, new services are constantly being acquired. For example, over the last couple years, there has been a significant increase in the number, size and scope of requirements from the Veterans Health Administration for services related to behavioral health, as well as those related to traumatic brain injury and polytrauma as a result of the wars in Iraq and Afghanistan.
The kinds of healthcare opportunities available through federal agencies take all shapes and sizes. Some call for services to be provided on or at a particular installation, such as an Army or Air Force hospital, while others call for a hospital or physician group to provide services in their own facilities.
There’s also some “conventional wisdom” related to federal contracts that really needs to be clarified. For example, in many parts of the country, the VA contracts with its academic affiliates (generally, local medical schools and their associated faculty) for certain services. In many cases, the contract seems to have been in place forever, with the conventional wisdom suggesting that the affiliates will remain in place indefinitely.
While the agency may put the contract up for competitive bid, most organizations in the local area chuckle amusingly upon hearing of the competitive procurement process and assume the facility which had the long standing contract will likely win the bid, so they simply walk away without even giving it a shot. Several years ago a big contract for ophthalmology came up for competitive bid by the VA in Phoenix. Not only had the previous contract been awarded to the local VA affiliate, it was awarded as a sole source (or without competition).
Most local players simply walked away under the premise that this so-called “competition” was nothing more than a public show. Despite the odds, one local provider decided that it would submit a proposal. Much to their surprise—not to mention the surprise of the incumbent—they were awarded the contract for a three–year period. They bid on the contract when it came up for renewal and were awarded it again, this time, for a five-year period.
With an estimated value of more than $25 million over the life of the contract, it has become one of their most important sources of business. That’s not to suggest that there is a similar contract available for everyone, but it does suggest that it may be well-worth the time to do a little research and evaluate the possibilities of expanding your payor mix to include federal customers, if you haven’t already done so.
Scott Honiberg is president and Jeff Weinstein is counsel at Potomac Health Associates, Inc.. They can be reached at s.honiberg@phainc.com and j.weinstein@phainc.com, respectively.