The Profit Center: Part 4 -- Creating an 'experience monopoly'

Jul 2, 2009

Mediocrity, n. -- med-i-oc-ri-ty. The quality of being average or lacking in exceptional quality or ability.

Healthcare business and legal affairs expert Mark F. Weiss.

I'm consistently amazed at how often, when speaking with potential new client groups, the response to my question, "What sets your group apart from other radiology groups?" is something akin to, "Nothing really. We do what most other groups do. We're all board-certified or board-eligible." With some additional prodding, the response might be kicked up a notch to something like, "Well, we are benchmarked to best practices."

But what does "benchmarked" really mean? It means that we, too, follow the leaders -- that we, too, are ... mediocre. In fact, if everyone benchmarked to best practices, there'd be no modern medicine, no radiology -- we'd just all be really good at praying for divine intervention.

To achieve a transformationally better future, it's unwise for your group to simply do what every other group does, even if it's doing what the best of everyone else does. Instead, your radiology group should be devoting significant effort to creating a monopoly in terms of the experience that the group provides to its "customers:" hospitals, referring physicians, and patients. The term I use to describe this experience monopoly is a Unique Hospital/Referral Source/Patient Experience.

What makes this so important goes far beyond the immediate, and highly valuable, impact on the individuals your group's service affects, from patients to referral sources to hospital administrators. The importance goes all the way to the relationship between your group and the facilities at which it provides services, especially to the relationship preserved by way of an exclusive contract.

In order for you to get a better understanding of what I mean, and why it's important to you, I need to share some of the secrets of exclusive contracting and stipend support negotiation.

If you were to pick up any one of the popular books on negotiation, you'd find that it's crammed full of advice, almost all of which is totally useless in connection with negotiating agreements between radiology groups and healthcare facilities.

That's because traditional negotiating strategy applies to a contractual relationship that concludes upon the transaction. I refer to those kinds of deals as Transactional Contracts. Examples would be buying a car, agreeing on a price for real estate, or coming to terms on the price of a year's supply of widgets. Each of those negotiations builds up and then culminates in a deal in which the parties exchange, say, widgets for dollars and then part ways.

But exclusive contract relationships between radiology groups and facilities are entirely different. They fall into a category that I've termed Relationship Contracts -- instead of culminating in a "closing," at which point there is an exchange of money for goods or services, and at which point the parties part ways, this second set of contracting culminates in a relationship that as of the "closing" continues forward in time.

Because of this, radiology groups need to take a different approach, both in terms of the process of obtaining an exclusive contract relationship with a facility and, especially, in terms of the process of getting that contract renewed, extended, or expanded.

In my practice, I've given this process a name, the Strategic Group Process, but no matter what you call it, it recognizes the fact that the complexity of Relationship Contracts is such that instead of there being a timeline -- steps 1 through 4 carried out in sequence over time toward completion (like in the manner of a Transactional Contract) -- Relationship Contracts require a process-based approach that concurrently implements a number of substrategies and their ensuing tactics.

Among the substrategies that groups must implement are those aimed at positioning your group so that it is viewed by hospital administration and medical staff as the only conceivable provider of radiologic services. Creating an experience monopoly is one of those positioning strategies.

We know that humans actually tend to make most decisions based on emotions, not intellect, and that we then "back fill," in a manner of speaking, our preliminary emotional decision with "facts" that we can use to justify our emotional decision to third parties.

I'm not suggesting that facts are not important. What I am suggesting is that radiology group leaders must understand that negotiation is not simply about hard facts. Simply who tells the better story -- your group or another radiology group, your group or the hospital, your group or the leader of the cardiology group -- might result in who wins the economic battle.

The unique experiences I write about are valuable because of the real benefit they bring to their intended audience and because they tell a broader story: Only your group can provide a certain package of experiences, experiences that other groups would never consider delivering even if they could understand their importance.

What your set of unique experiences consists of will depend completely on your circumstances.

For example, how does your group interact with referring physicians? What transpires upon a referral? How are reports delivered to referring physicians? Are there differences among referring physicians with respect to preferences as to those reports, and how does your group address them? What deliverables are provided to the referring physicians? What follow-up exists?

Asking these and other questions with respect to the group's relationship with referring physicians, hospital administration, and patients will help you design a truly unique set of experiences -- an experience monopoly that will distinguish your group from all would-be competitors.

By Mark F. Weiss
AuntMinnie.com contributing writer
July 3, 2009

Mark F. Weiss is an attorney who specializes in the business and legal issues affecting radiology and other physician groups. He holds an appointment as clinical assistant professor of anesthesiology at University of Southern California's Keck School of Medicine and practices nationally with the Advisory Law Group, a firm with offices in Los Angeles and Santa Barbara, CA. Mr. Weiss provides complimentary educational materials to our readers. Visit www.advisorylawgroup.com for his free newsletter. He can be reached by e-mail at [email protected].

The Profit Center: Part 3 -- Crafting effective employment contracts, April 24, 2009

The Profit Center: Part 2 -- Steering clear of Stark and false-claims violations, March 31, 2009

The Profit Center: Part 1 -- 7 key steps to contract success, March 12, 2009