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How Physicians Must Develop a Strategic Competitive Practice Philosophy!

Staff Writers

It is currently believed that a general medical, or even broad specialty, practice will have limited appeal to patients and buyers of healthcare services in the future. 

In its place, a doctor must philosophically decide if she or he is to become a (1) discount, (2) service or (3) value-added provider, and then aggressively pursue this business cultural and competitive strategy. 

Here is the lowdown on three strategic competitive philosophical types: 

The Service Provider:  

A provider committed to a service philosophy must be willing to do whatever it takes to satisfy the patient. 

For example, this may mean providing weekend, weeknight, or holiday office hours, instead of a routine 9-5 schedule. House calls, hospital visits, prison calls and nursing home rounds would be included in this operational model.  

In 2001, the number of physician house calls billed to Medicare in the aggregate was about 1.5 million annually, according to the American Association of Home Care Physicians. Since then it has doubled, and the national organization is getting more requests from doctors about house calls. Current membership stands at about 1,500 doctors.  The Medicare premium for home visits is about 1.5 times what it pays for office visits. 

In a real life example, Dr. Keri Miller DO, now an assistant professor of family and community medicine at the University of Georgia, School of Osteopathic Medicine, first began making house calls shortly after beginning practice, in 2003.  

In another example, high-tech companies, located in Silicon Valley and Southern California are even importing medical specialists, and mobile treatment facilities, onto their corporate campuses to care for workers. Children, elderly patients or those with mental, physical or chemically induced challenges are all fertile niches of a core service philosophy.  

Up to about 30% of all medical providers today; and slowly growing  

Think: Nordstrums, Cartier and Sak’s, etc. 

The Discount Provider:  

A discount medical provider is one who has made a conscious effort to practice low cost, but high volume medicine.   

For example, discount providers must depend on economics of scale to purchase bulk supplies, since this model is ideal for multi-doctor practices. 

Otherwise, several practitioners must establish a network, or synergy to create a virtual organization to do so.  In this manner, malpractice insurance, major equipment and other recurring purchases can be negotiated for the best price.  Para-professional, and non-professional, medical care extenders and substitutes must also be used in place of more costly medical providers.

Another major commitment must be made to computerized office automation devices, HIT, EMRs, CPOE systems, etc.  By necessity, such as offices are small, neatly but sparsely furnished, with functional and utilitarian assets.  Most all managed care contracts just be aggressively sought since patient flow and volume is the key to success in this competitive philosophical type. 

About 60% of all providers today; but the denouement has begun.  

Think: WalMart, K-Mart, Office-Deport, or Home Depot, etc. 

The Value-Added Medical Provider: 

A value-added medical provider is committed to practicing at the highest and riskiest levels of medical and surgical care and has the credentials and personality to do so.   

Value differentiation is based on such factors as: board-certification extended training, hospital privileges, subspecialty identification or other unique attributes such as fluency in a second language or acceptance into an ethnocentric locale. This brand identification must be inculcated in all you do, as you continually answer the question: What can I offer that no one else can?   

Approaching about 5-10% of all providers today; but much less for pure concierge or boutique medical practices.

Think: Nieman-Marcus, etc.  

Conclusion: 

Remember, it is better for a physician to consciously decide which competitive strategy to purse; than merely fall into one model, by unthinking default.

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