Competition Fuels the Market - Part II

by Charles B. Clark, M.D.

So how does competition fuel the market? And how does all this apply to our present status and our future as medical doctors? It is a process called negotiation. Let’s see how it works.

One of our hospitals recently decided that they were not going to contract any longer with one of the larger managed care plans. This was all about reimbursement. We physicians were advised that we would not be able to admit those patients after a certain date. Managed Care had the alternative of admitting their patients to another hospital chain. After a period of negotiation, we were informed that we could admit those patients to our hospital once again. This type of negotiation explains why the hospitals accept such horrific reductions in the fees they submit to their contracted managed care organizations. However, it places an intolerable burden on the uninsured patient who does not have the advantage of a “negotiated contract.”

In terms of Dr. Average Physician, he has a practice whose reimbursement is largely controlled by managed care plans. From the beginning, the effect of managed care was to reduce the reimbursement to physicians. Most physicians passively watched this happen because so many patients were insured by these plans. “A Piece of the Pie”.

Then we began to see various specialists forming groups. Gastroenterologists and cardiologists, for example, were banding together. The stated purpose of this joining forces was to be able to compete more effectively for managed care contracts.

So the negotiations began. Group A contracts with Managed Care Plan for x dollars a unit. Group B wants a bigger share of the action so they contract with Managed Care Plan for x minus one dollar a unit. Now Group B is getting the business. Group A agrees to contract with Managed Care Plan for x minus two dollars. And so it goes on. Where will it stop? Will it stop? Why should it stop? Virtually all of us have submitted quite passively to this competitive struggle for the patients. Yes, competition fuels the market but the market may be becoming stressed to the brink of extinction in its present form.

As we float quietly down the river into the misty fog of oblivion, who is to blame for our demise? We need look no farther than the mirror.