Reps face a new landscape as well
Editor’s note: The following is third in a series about changes occurring among primary care physicians.
Independent physician practices are facing competition from all sides, including health systems, retailers and insurers. Med/surg reps can help them respond to the threats, but reps have much to offer the new competitors too.
Based on data from an AMA physician survey, the American Medical Association estimates that in 2018 about 200,000 physicians worked for a medical practice that was owned or partially owned by a hospital or health system.
Nick Hernandez, CEO of ABISA, a healthcare consultancy firm in Valrico, Florida, draws a line between the Affordable Care Act and health systems’ appetite for primary care practices. The ACA encourages preventive medicine, and health systems want to tap into that revenue, he says. Furthermore, as referring physicians, primary care doctors cultivate good relationships with specialists, another valued customer base for hospitals.
Insurers such as Humana and UnitedHealth Group are formidable competitors as well. It’s true that insurers have always had an impact on physicians with whom they contract, “but to employ them, that’s the coup de grâce,” says Hernandez. When insurers employ physicians, things change – patient choice, provider compensation and the clinical behavior of primary care doctors and specialists, he says.
Outside forces aside, the wants and needs of today’s doctors are increasingly responsible for shifts in practice ownership, says Hernandez. “Some younger physicians value the comfort level and security that large employers provide,” he says. Consequently, owners of small practices are finding it difficult to recruit young physicians, making succession planning difficult.
Independent practices can still make a go of it, but not without effort, adds Hernandez. “First and foremost, they have to make sure that patient satisfaction is at its utmost.” That’s true for primary care doctors as well as specialists: When patients give high marks to their endocrinologist, cardiologist or oncologist, their primary care doctors will continue to refer patients to them.
Second, practices have the option of remaining independent by contracting with management services organizations or forming joint ventures with health systems to take care of payroll, recruiting, IT, marketing, etc. “It’s like having ‘big brother’ on your side as opposed to being out there alone.”
The role of the rep
By acquiring practices, hospital systems gain some control and predictability over referrals for inpatient care, says Michael Abrams, co-founder and managing partner, Numerof & Associates, a business management consulting firm in St. Louis.
And even though hospital systems have been expanding through mergers and acquisitions for years, COVID-19 is pushing them to truly centralize decision-making, he says. “If these systems don’t take advantage of their size, they miss one of the reasons they acquired these organizations in the first place. “Decision-making will occur at a different level, the stakes will be higher, and a different set of skills will be called for on the part of medical device and pharmaceutical sales representatives to close deals.”
Hernandez believes med/surg reps can play a role in supporting their independent practice customers. Margins on med/surg products and equipment are already low, so there’s not much room for further price cuts, he says. But suppliers can offer modified payment terms – something that has been especially important during COVID-19, as some practices have faced difficulty paying rent or meeting payroll. And when their customers do merge with other practices, distributors should proactively extend the volume discounts that the physicians seek and probably expect.
Sales reps can even play an important role with retail clinic and insurer customers, says Scott Wakser, senior vice president, Medline. “If we approach ‘selling’ as an opportunity to consult, to understand differentiating variables and to listen to individual needs, reps can recall solutions that served traditional practices and customize them according to the customers’ needs,” he says. Advising on project management, inventory management, insurance billing, specialized product knowledge, contracts and negotiations can contribute to reps’ success and value in new markets.