Bidding War

What to expect and where to turn when your hospital sends out a request for proposals.bidding war

If losing a hospital contract is like going through a divorce (an apt metaphor according to many who’ve been in this situation), then having your hospital send out a request for proposals (RFP) is similar to your significant other posting an ad on an online dating site. The emotions are all there: shock, disbelief, and betrayal.

And, according to Cynthia S. Sherry, MD, FACR, medical director of the Radiology Leadership Institute® and chair of the department of radiology at Texas Health Presbyterian Hospital Dallas and director of body MR and CT at Southwest Diagnostic Imaging Center, a growing number of groups are at risk of facing just such a situation. “Anecdotally, we have seen an increase in RFPs being sent out for radiology services, and not just for radiology but other hospital-based services too,” says Sherry. Experts point to drivers ranging from increased financial pressure in the health care marketplace to the rise of teleradiology.

Gerald M. Roth, MD, CEO of Tower Imaging Medical Group in Los Angeles, found himself on the receiving end of an RFP for his hospital contract in 2012. He remembers feeling overwhelmed at the prospect of defending his contract and anxious about what was at stake. “If we lost the contract, it probably would have meant the dissolution of the group, which meant the jobs of approximately half of our radiologists were on the line,” he says. While no tactics can guarantee success in responding to an RFP, a well-crafted response can make the difference between keeping your contract and losing it to another group.

Understand the Issues

Before you respond, Sherry points out that you must understand what led to the request for proposals in the first place. And hospitals are not always forthcoming about their real reasons for looking around.

The reason may be pretty straightforward. “It could be the hospital trying to do what it can to improve the bottom line, raise the level of service, or to generally get more bang for its buck. They want to provide patients and referring doctors with the best possible service while not negatively affecting their bottom line,” says Sherry. Sending out an RFP can also be a tactic to see what else is available or even to gain information for use in future negotiations.

Or the problem may be directly related to your group. “A hospital may honestly just want to replace the group,” says Lawrence R. Muroff, MD, FACR, professor of radiology at the University of Florida in Gainesville, Fla., and the University of South Florida College of Medicine in Tampa and president and CEO of Imaging Consultants, Inc. in Tampa, Fla. “This is particularly problematic because at this point the advantages of incumbency have suddenly been erased. If the incumbent group is to be successful, it has to convince the hospital that it is a far better group than they had thought.” No matter the reason behind the RFP, knowing exactly what you’re up against is key to responding.

Using your Network

Another important component in understanding and responding to an RFP is tapping into your network at the hospital. “Relationships are what differentiate us from our competitors. If you have the relationships with key stakeholders, referring physicians, board members, and hospital administrators, you can at least get a sense as to what they want. If you don’t have those relationships, then you may never find out,” says Muroff.

These are also the people who will fight to help you keep your contract. “If you have friends in the hospital, they’ve got to step up and be your allies,” says Frank J. Lexa, MD, MBA, vice chair of radiology at Drexel University College of Medicine, adjunct professor of marketing at the Wharton School, both in Philadelphia, and an independent consultant. “The surgeons, the ob-gyns, whoever loves you at the hospital needs to talk to the administrator and say, ‘Look, we’ve got a great relationship with these people and we don’t want another group to come in and take over.’”

Sherry’s group at Texas Health Dallas learned this firsthand when issues surfaced with their newest hospital. “We invested a lot of time and resources to be there onsite as this hospital opened. But as it got busier and busier, the ER doctors began to express some concerns,” she says, with the practice’s decision to outsource night call to a nighthawk service. “They complained to the other members of the medical staff and to the administration. Eventually, it erupted into a very big problem for us and jeopardized our contract.”

In hindsight, Sherry would have advised resolving the problems directly with the physicians involved and to prioritize maintaining positive relationships at the hospital. “We eventually found ourselves having to respond to an RFP,” she says. By this time, the hospital was no longer interested in pursuing solutions. “It didn’t really matter how we responded to the RFP. Our fate was already sealed,” she says.

Don't Make it Personal

Here’s where we leave the online dating metaphor behind. This is not personal.

“In some ways, an RFP is going to feel like a rejection. Your group may have had a contract for years and thought it was doing a good job. Then all of the sudden the hospital sends out a letter making it clear that the contract is up for grabs and that they will consider other suitors,” says Lexa. Although it may feel personal, it’s not.

"One of the most important things, you have to realize, is that you’re being judged on their perceptions of you. And those perceptions are sometimes not grounded in reality or are beyond your control,” says Roth. In his case, Roth found that unhappy referring physicians associated everything related to imaging with the radiology group, including the variables controlled by the hospital, such as scheduling, PACS support, and report distribution. It helped Roth to realize that much of the impetus behind sending out the RFP stemmed from the referring physicians’ lack of understanding about the group’s responsibility versus that of the hospital.

As personal feelings were set aside, the group was able to formulate a strategy for clarifying the facts and dealing with the internal politics involved. The game plan worked, and Tower Imaging was able to save its contract. It started a fresh chapter with a new hospital administration soon after.

No matter the situation or your personal feelings, says Lexa, “you have to see that the hospital sent out the RFP as a business decision and you need to respond to it as a business crisis.” How you choose to respond will set the tone for negotiations and, if you’re successful, your relationship with the hospital going forward.

By Lyndsee Cordes

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