Sorting Through The Choice Of A Management Company

Two roads diverged in a wood, and I took the one less traveled. -Robert Frost

   I have always been a fan of Robert Frost. I can still recite several of his poems in full, having been compelled to commit them to memory by my 5th grade English teacher. For a general and vascular surgeon who has made a career in wound care I have undeniably chosen a road less travelled—and it has made all the difference. In truth, Frost’s oft quoted work about a choice of paths in a yellow wood exemplifies the many difficulties in decision making; but I think we do fairly well when faced with a binary decision. I am persuaded that it is a multiple of fairly equivalent options that leave us “standing long.”

  In our non-poetic world of institutional medicine, the issue of opening a wound and hyperbaric center has focused on two relatively basic choices: Should the hospital enlist the services of a management company or develop the center using in-house resources? In my biased opinion as the chief medical officer of a management company, this is a simple decision for several reasons. First, the majority of hospitals in the United States are reluctant to expend the capital required to purchase the chambers and construct the center. There are significant regulatory challenges, particularly with regard to chamber safety, that must be addressed. Building the physician panel and educating the clinical staff can be difficult and costly. Finally, success depends on a sustained commitment to marketing the center. The wound and hyperbaric center is only one service among many in a hospital. As such, there is a tendency to address marketing only when there are critical problems. A successful center requires constant attention. For these reasons, most hospitals will choose to outsource the operation of the wound and hyperbaric center to a management company.

  The far more difficult decision is the choice of a management company. There are at least a dozen companies offering services from simple consulting to full service “turn-key.” The goal is to choose the company that best meets the needs of the hospital and clinicians. All of the companies offer generic hyperbaric: initial training, policies and procedures, quality assurance, and billing assistance. However, beyond the basics, there are clear differences between companies and the services they offer. It had been my hope to compare and contrast the various companies and their offerings but this information, due to its propriety nature, is not readily available. Instead, I present 10 questions that should be asked before choosing a management company or continuing or renewing an existing contract.

1. Does the company function like a vendor or a partner?

  A vendor sells a service for a fee, receiving compensation independent of the profitability of the program. In contrast, a partner shares in the success of the center. If the program is prosperous the partner benefits; conversely, if the center fails, the partner also fails. Management companies working together with hospitals and practitioners as partners are incentivized to make the center a financial and clinical success.

  Vendors are able to offer services at reduced rates because they take less risk. However, careful examination of the cheaper services proffered by a vendor-type management company is essential. In most cases there are no actual cost savings. For example, a center hires a vendor that provides generic wound care and hyperbaric services for a fixed fee. After the first year the wound center has 1,200 patient visits and averages 2 hyperbaric dives per day. Had the hospital enlisted the services of a partner-company invested in the center, it could have had nearly 7,000 patient visits and 6-8 dives per day. In the latter case, the hospital could have realized significantly greater direct and ancillary income.

2. Is the management company providing access to capital?

  A number of the companies in the market place offer capital for the construction of the center in a fashion compliant with federal regulations. In today’s uncertain economic environment this can make the difference between opening the center and waiting until surplus funds are available.

3. Are the financial projections for my center realistic?

  I was recently stopped by a physician who was disappointed by the income he earned in his center. After a quick review it was clear that he was earning exactly what I would have predicted given the center’s payor mix and patient volume. However, the management company’s proforma for physician income had predicted that he would make more than a million dollars a year. Not surprisingly, the hospital was less than satisfied with its revenues as well. Profit projections should be reasonable and conservative. There is a tendency for some companies to grossly inflate anticipated revenues in order to gain a competitive advantage, which usually signals a weakness in its program.

4. Does the management company have a full-time medical director?

  Wound care is absent in the majority of medical school curricula. It receives greater coverage in podiatric and nursing schools, but our medical educational institutions are not producing large numbers of wound care specialists. Hyperbaric education is non-existent outside of a hand full of fellowships and 40-hour courses. Consequently, the wound and hyperbaric center may be staffed by less experienced practitioners. Access to an experienced physician with a broad scope of practice is a requisite offering. Since hyperbaric complications are infrequent, will the physician have someone to consult when the unusual occurs? For example, I was recently consulted by one of our medical directors about a patient who was discovered to have previously unrecognized pneumothorax midway through her hyperbaric treatment. Together, we were able to manage the patient successfully.

5. Will my techs, nurses and physicians receive adequate education?

  The majority of hyperbaric companies either provide an introductory wound and hyperbaric course or utilize one of the readily available courses. Unfortunately, often times the education begins and ends with this course. I suggest that this is woefully inadequate. Education should be the management company’s greatest value. First, it is important to know if the company provides on-site proctoring. Hospital credential committees frequently require on-site oversight for the first 10-12 dives in order to grant physician privileges for HBO. Does the company provide ongoing education? Does it host local and regional conferences to educate the center staff and fill in knowledge gaps in the community? Are there hyperbaric safety conferences? Does the company have representation at national meetings?

6. Is the company financially stable?

  The financial health of the management company can have an impact on the center. If there are changes in reimbursement does the company have the resources to weather the storm? My first experience with a hyperbaric management company emphasizes this point. Shortly before opening a center at one of our hospitals, Medicare decreased hyperbaric reimbursement by 50%. The company providing the services closed its doors.

7. Will you see a company representative after you sign the contract?

  A frequent complaint from wound care center personnel is that the management company representatives are only on campus during contract negotiations: every three years. The management company should provide clinical oversight, ongoing education, quality assurance, on-site marketing assistance, and periodic financial reviews.

8. Does the company provide a wound care specific electronic health record (EHR)?

  There are a number of excellent wound care EHRs available. Most interface with the hospital’s electronic record. EHRs are not only mandated, but provide an opportunity for the management company to educate staff and physicians, introduce new documentation requirements, and through the dashboard features provide consultation on difficult cases. The premium management companies will provide an EHR.

9. What if I have problems with my inpatient services?

  The top management companies will provide more than outpatient services. If the hospital requires assistance developing or revamping its inpatient wound program the management company should be able to help. A quality management company should be capable of assisting in reducing length of stay, optimizing the number of home health visits, or managing inpatient negative pressure use and more.

10. Will the company establish a research program at my center?

  It is my opinion that to become a “center of excellence” the wound and hyperbaric program should participate in research at some level. This must include access to training in Good Clinical Practices (GCP) and preferably additional training in the unique aspects of wound healing, critical limb ischemia, and hyperbaric research techniques.

  The answers to these questions should permit the clinical and administrative team to narrow down the list of management companies from a dozen to two or three. A good decision will make all the difference.