JOHN SHUFELDT, MD, JD, MBA, FACEP
One of my favorite Seinfeld exchanges is this prickly dialogue between George and his fiancée, Susan, regarding his disdain for (and challenge with) condoms:
GEORGE: Oh, no, no … condoms are for single men. The day that we got engaged, I said goodbye to the condom forever.
SUSAN: Just once … for the make-up sex.
GEORGE: Make-up sex? You have to have that right after the fight, we’re way past that.
SUSAN: Come on, just once?
GEORGE: No, no … I hate the condom.
SUSAN: Why?
GEORGE: I can never get the package open in time.
SUSAN: Well, you just tear it open.
GEORGE: It’s not that easy. It’s like “Beat The Clock”, there’s a lot of pressure there.
SUSAN: Come on, George, just tear it open.
GEORGE: I’m trying, dammit.
SUSAN: Tear it.
GEORGE: I tried to tear it from the side, you can’t get a good grip here. You gotta do it like a bag of chips.
SUSAN: Here give it to me.
GEORGE: Would you wait a second? Just wait?
SUSAN: Give it to me. Come on. Come on!
GEORGE: (Tosses the condom aside); it’s too late.
Unfortunately, in business, it takes much more than a condom to protect you from the dreaded “FTD.” That’s right, you read it correctly. “FTD” – a financially transmitted disease.
In addition, sadly, if parts of your supply chain are in distress, particularly in an economic downtown, your business could experience significant “shrinkage.” How, then, do you apply a “business condom” and what signs do you look for to know if your business partners are at risk for having an FTD?
Signs, Symptoms, and Protection
A business can insulate itself from the travails of its supply chain vendors in a number of different ways.
Before signing an insurance plan contract, read the fine print. For example, many health plan contracts force you to continue seeing their patients for a period of time, even if the insurance company stops paying on a timely basis.
Signs of an FTD: A high rate of providers discontinuing their contracts with the insurer. Ask for reasons clinicians have dropped the plan. Most states have a Department of Insurance where a consumer or vendor can inquire about the health plan’s financial strength.
Wearing the condom: Insist on timely payment for clean claims and understand what the plan defines as a clean claim. In addition, understand the plan’s grievance process and ask to speak with providers who have been through it.
Whatever you do, don’t allow the plan’s poor management to become your headaches, or worse, your downfall. Patient volume is great but only if you are getting recompensed in a timely manner for the care you provide.
Supply vendors are critical cog in a well-managed urgent care center. Providers and patients expect the supplies you use in the clinic to be top quality, easily accessible and, at worst, “just in time.”
Signs of an FTD: Poor stability, lack of market presence, and responsiveness. The time to evaluate this is before you become dependent on supply vendors. Runa a process whereby you supply a number of potential vendors with your supply list and ask them to bid on your business. Inquire about discounts available once you hit certain volume thresholds, as well as the possibility of joining any group purchasing plans.
Wearing the condom: Insist that they maintain an agreed-upon inventory of the items critical to your center’s success. In addition, use financial penalties for the percentage of your items on back order and for late deliveries of your critical items.
If you are forced to turn a patient with a laceration away because your supplier was out of a suture kit or wound glue, that vendor should be willing to pay for the loss of revenue associated with that patient being sent elsewhere.
Billing companies are another (and perhaps the most important) cog in a center’s cash flow cycle. I have witnessed and, sadly, experienced billing companies ruining busy urgent care centers time and again by not processing claims in a timely manner, by not following up on claims, and by only collecting on the “low hanging fruit.”
Signs of an FTD: Unacceptably high number of days for them to send out a claim. If the number of days increases, your day’s sales outstanding (DSOs) will go up and your cash flow will suffer.
Look at the number of denied claims and how long it takes them to reprocess that denied claim. If you start to witness a revolving door of client account reps, it is time to pull out!
Wearing the Condom: Before contracting, evaluate the stability of your billing company by insisting that they disclose their financials on a monthly or at least quarterly basis. Ask to see their clearing house contract and inquire about their payment terms with the clearing house and whether or not they are current.
Negotiate certain performance metrics in your contract, with penalties if they are not met and rewards if they are exceeded.
Finally, negotiate an out clause which is automatically triggered in the event of default without cure for failure to hit agreed-upon or promised metrics.
Other vendors to be concerned with are those with whom your ability to offer care to your patients in dependent upon their ability to fulfill their obligations to the center For example:
- IT vendors
- Internet connectivity providers
- Prepackaged pharmacy vendors
- Staffing agencies
- Provider recruiters
- Radiology over-vendors
- Landlords
These are challenging times to own a business. One small mistake, one contract clause overlooked, can start a business down the slippery slope toward failure. And, as George discovered, it is simply a matter of time before shrinkage (“Like a frightened turtle!”) sets in.
