HMOs: No longer a dirty word

MIAMI LAKES, Fla.--As changes like national competitive bidding force them to become savvier, more providers may go the way of All Med Services, industry consultants predict.

Miami Lakes, Fla.-based All Med has created a niche for itself focusing on managed care contracts. The provider has already added two new contracts to its roster in 2009, bringing its total to nine.

“It's a nice boost,” said Jose Linares, vice president of sales and marketing. “We saw the writing on the wall 15 years ago that HMOs were here to stay. We decided then that we better figure out how to work with them or we'd be just one of the many providers out there fighting for Medicare and other fee-for-service business.”

All Med's newest contracts are with Molina Healthcare and Prestige Health Choice, two Medicaid HMOs. Managed care contracts now comprise 90% of its payer mix.

In the past, some providers, especially smaller providers, have shied away from managed care contracts because of the risks. The contracts involve capitated agreements that require providers to supply equipment and services to a pool of patients for a set monthly rate.

“If you're covering 500,000 patients, you have to be able to look at their histories to see, for example, how many AIDS cases have been found in the past 10 years and determine whether or not you would still be able to make it if you get one serious case,” said Miriam Lieber, president of Sherman Oaks, Calif.-based Lieber Consulting. “Otherwise, you could blow your per-month fee on one patient. Then you're in trouble.”

Additionally, managed care contracts often require caring for a large number of patients in a large geographic area, too daunting a task for some providers.

But despite the trials and tribulations associated with changes like competitive bidding, many providers admit that they've never had a better feel for things like activity-based costing and data collection. Even smaller providers are getting into the managed care game. Attorney Amy Leopard recently helped a group of smaller providers in Cleveland create a network to bid on managed care contracts.

“A network is an alternative for those who wouldn't, otherwise, be able to participate,” said Leopard, who chairs the healthcare group at the Cleveland-based law firm Walter Haverfield.

Linares admits managed care isn't easy, but it's worth it.

“Every day, we figure out a better way to perfect what we're doing,” he said. “How to better manage the budget. How to negotiate with vendors for better pricing on equipment. How to train physician partners. We prefer this business.”