College of American Pathologists
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Reeling in outreach work: How to catch the big ones

How to appeal to MCOs

April 2004
Michelle Stephenson

If you have an outreach lab program to sell, set your sights on three "big fish": the primary care physician, the managed care organization, and the hospital outreach manager.

Paul Knoll, senior marketing manager for Park City Solutions, Ann Arbor, Mich., uses the theme of the Daniel Wallace novel Big Fish: A Story of Mythic Proportions to map out a plan to market outreach laboratory work. Speaking in February in Atlanta at the program "Achieving Outreach Leadership for Lab and Pathology Services," which was sponsored by Park City and Washington G-2 Reports, Knoll said, "I relate working with managed care to an objective of mythic proportions."

Determining which fish to try to catch and which to avoid is the first step in selling an outreach program. "You need to do your homework. There are a lot of bottom feeders out there," he said.

The prize big fish is the primary care physician. Knoll suggested targeting a friendly provider in your area. He or she should be a big player, such as the chair of a department or a practitioner in a large clinic, and the practice should be sophisticated.

"You’re looking for a nice, balanced test mix, patient mix, and billing mix. You want to have a well-managed account. You will be surprised by how many physician accounts out there are not well managed, and those are called high-maintenance accounts," he said.

Well-managed practices usually have the latest practice-management systems. The practices may be electronic, and they are well staffed and organized. It’s easy to determine whether a practice is well managed just by observing the office, he added.

Each of the three big fish has its "preferred bait," according to Knoll. The primary care physician’s preferred bait is the type of insurance a laboratory accepts. Knoll recommended using a sample insurance list to attract the physician. "Without this lure," he said, "you won’t have many bites."

The sample list should include insurance types the lab will accept and those it won’t. "Build a large insurance list and make it easy. Many of my clients customize the insurance list for the practice," Knoll said.

Patient and practice convenience are physicians’ other priorities, of course. They’ll ask: Are you a full-service laboratory? What testing do you do? Does one lab take care of everything? When do I get my results? What’s your stat turnaround time? Do you have a courier service? What time will you pick up my specimens, and how often? Do you have patient service centers? Where are they located? How convenient are you for my patients? Do you have a quality program?

Tell these physicians about the full-service programs the lab offers. Explain how the lab will take care of their complaints and their patients’ complaints. Discuss how often field-service representatives will visit. Describe how the lab will meet the practice’s needs and make life easier. Discuss a test directory—how many tests are included and where instructions can be found. Share your fee schedule. Physicians will want to know how much patients will be charged if they have insurance plans in which the lab does not participate.

Some physicians will want to know how they will be updated about changes within the laboratory or the industry. Others will want to know whether the lab has a physician office connectivity system and whether they will have electronic access to test results. They may ask if they’ll be able to generate requisitions electronically.

The hospital laboratory has a powerful in-reach program, which consists of the physicians associated with the hospital, most of whom want to support it. To convince other physicians and managed care companies of the lab’s ability to satisfy its customers, the lab can survey the hospital physicians in patient service centers. These surveys can be conducted internally and the results assembled into a booklet to show others.

"You have to have all of these lures in your tackle box when you walk in to sell," Knoll said.

The managed care organization is the second big fish. But, Knoll said, all managed care companies are not the same: "You want to look at prizewinning managed care organizations. You need to do a lot of homework here, and you’ve got to identify the trophy catches."

To identify companies worth targeting, examine their membership bases. Also important: the company’s operating history and financial health, and whether it is regional or national because companies with national programs can be a more difficult sell. "But, more and more, managed care companies are branching out into regional players, especially with the hospital outreach program bringing that more to the forefront," he added.

If the hospital in which the laboratory is located has a contract with a particular managed care company, that alone may help the lab get a contract for outreach services.

Ask physicians which managed care firms they prefer. If there are a couple they don’t look favorably upon, focus your attention on the others.

Put all the players in a lab’s marketplace on a spreadsheet, and understand the lab’s existing reimbursement arrangement with each managed care company. The lab may be considered in-network or out-of-network. If the lab submits a claim and the company denies it, know the consequences. The lab may decide to balance-bill it and then end up billing out a costly CBC to the patient—which will not make the patient or the ordering physician happy. The lab needs to take a hard look and calculate the current rate of reimbursement versus its fee schedule.

"I’ve seen fee schedules that are so low you’re leaving money on the table," he said. "You really need to look at what the reimbursement is for claims. You can usually go in and pull the top claims off your billing system and look at reimbursement by payer. Then you have to ask whether you want to contract with this managed care company."

"You need to understand what’s going on in your marketplace," Knoll added. "A lot of people don’t like the Medicare HMO programs. Keep an eye on those because with the new legislation, the federal government is starting to incentivize those HMOs for private companies to take more of those programs, and they are willing to pay for that. Hopefully that will result in a little bit better reimbursement rate."

After the laboratory has decided which companies to go after, it will need to convince them that the lab itself is a good catch. The managed care company’s preferred bait is patient and provider access. Is the lab a big fish in its market?

To illustrate your patient and provider access, plot your physicians’ locations. "Put your primary care physicians on a map. Then plot your patient service centers. Tell them you can take great care of their members. To a managed care person, that’s important because they want happy campers."

The staff at the managed care company need to know that the lab is community-based and understands the market. They want to know that the same people who answer your phones are shopping with them at Kroger, that the lab puts money back into the community and employs people from it.

Take advantage of your lab’s local setting. Many commercial labs are not nearby or subcontract work out, which can increase their turnaround time. "When you have specimens arrive in the morning, why can’t you pick those specimens up at ten o’clock and get results out by three? You can set a whole new standard," Knoll said.

The lab has to decide whether to have its own courier service or contract it out. If your lab uses a contract courier, make sure the company represents the lab well. The courier service personnel should share the laboratory staff’s views on dress, diligence, and demeanor.

Managed care companies often assume hospital labs can’t compete pricewise, so aim to have competitive fee schedules. "They think we have to charge high fees because our expenses are so high," he said.

The lab’s information technology system is another selling point. The laboratory can be a sole source provider of all lab data. "You can provide inpatient, outpatient, and ancillary service data in one program. Managed care companies are really interested in that because they can tie in outcome management."

The hospital outreach manager is the third big fish. What’s his or her favorite bait? Revenue, of course. Knoll admitted that reeling in all three is not a simple matter.

"It’s pretty complex and complicated," he said, and it can be difficult to decide where to start. You can’t catch the primary care physician without the managed care organization, you can’t catch the MCO without the primary care physician, and you can’t catch your outreach manager without both, he said.

Start with the hospital’s managed care contractors, he advised. They can explain the laboratory agreements the hospital has. But, he cautioned, they may not be able to tell you all there is to know about the laboratory contracts.

"Ask if you can attend the next meeting with the managed care contracting person [to learn more]," he said. Start with the hospital managed care contracts. Then go to the primary care physicians. These physicians can provide valuable information, such as with whom they participate and what services they’re looking for.

The hospital lab then needs to compare its services with those the physician already receives and make sure the program can compete.

After the lab understands the managed care contract and the primary care physicians are on board, the lab can go to the MCOs and tell them what progress is being made in the outreach program. Let the managed care organization know that some of its providers are coming on board.

Keep the managed care companies engaged. They want to know what the big players are doing. "Sometimes they have to chew on the bait a little bit before they bite. Then you have to keep casting. Keep going back through the process. Build from the inside out," he said.

And don’t forget to cast on both sides of the boat. "Be smart. Keep working the waters all around. Sometimes you can catch small fish and use them to catch the big fish."

Michelle Stephenson is a writer in Troutville, Va.