Consider this (not uncommon) scenario: Sleepy Anesthesia Group (SAG) has been providing exclusive services at Hospital XYZ for over 15 years, and suddenly they learn that the hospital has put out a request for proposal (RFP) for anesthesia services. SAG feels caught off guard – what should they do?
Find the trigger: The first step is to assess why the hospital published an RFP. What triggered this? Possibilities include:
- The hospital may have requested services (more OR coverage, additional non-operating room locations, a perioperative surgical home [PSH], a more robust quality program, or other service enhancements) that the group has been slow, or unwilling, to provide.
- The hospital may not realize the full extent of current services provided. For instance, the group may be providing PSH or enhanced quality services but failed to communicate to the hospital its “value adds.”
- The hospital may be frustrated with group communication. Perhaps group leaders do not engage well or are not visible to hospital leadership.
- The group may not manage itself well, allowing disruptive behavior or failing to act upon recurring complaints about physicians.
- The group may have recently requested additional support and/or terminated the contract “to put the negotiation on a timeline.”
- The hospital may have new leadership that is trying to level set service requirements or define the market rate.
Understanding the trigger will help the group determine what to emphasize if deciding to respond to the RFP, which is really its first decision point. Does the group want to provide a response? If the group has been unwilling or unable to meet the hospital’s needs, is it willing and/or capable of making the necessary changes to win the bid now? Are the parties aligned in their mission and/or goals for the anesthesia service? And if the hospital has unreasonable cost expectations for the service level it is requesting, how far will the group go to maintain the contract?
Respond professionally: Successfully responding to an RFP means putting forth your best offer and showcasing your group’s strengths. It is important not to get emotional about the hospital’s business decision to explore its options. And it is essential to concentrate in a positive way on your value proposition as it compares to potential competitors. Ultimately, the group must understand that a hospital contract is a business agreement, and periodic due diligence is a reasonable practice for both stakeholders.
Know your competition: Many smaller groups become intimidated if they find out that a large national group is one of the contenders. If the group has established its value proposition, a larger competitor should not be a deterrent. Certainly, a large national competitor may have advantages in the form of a clean slate, a marketing department to help put together a flashy presentation, and charts and graphs demonstrating the services they will provide. But a solid incumbent group may have more local knowledge (hopefully!), surgeon and administrative support, and commitment to the community. With a solid value proposition, a smaller group may also have hiring advantages, as many physicians and anesthetists prefer to work for private physician practices, and/or the practice may have a lower overhead that will facilitate a more competitive bid. And the hospital may feel it has more leverage with a local physician group than with a larger corporate entity.
Make sure to consider the market for services when assessing your bid. Have you thought about the competitive landscape? Perhaps you are a large multispecialty group in a high-cost, extremely tight anesthesia market. What is the likelihood another group could truly replace you? If that is the case, weigh your leverage in your response. Alternatively, if your market is flush with resources, your group is small, and your facility is considered desirable, prudence is warranted.
“Often, the document will ask for background about the group and its members. This is an opportunity for an incumbent group to highlight past efforts to advance hospital causes.”
Engage consultants: While many smaller groups are reluctant to spend the money, it may be “penny wise and pound foolish” not to engage professional help in this situation. There are consultants who have experience with this type of work. An unbiased outsider can ask the tough questions and help the group assess what it needs to emphasize in its response. An experienced professional can assist in determining an optimal staffing model and appropriate cost structure, as well as how to best market yourself and create your own flashy presentation.
Create an exceptional proposal: Once the group understands which strengths to emphasize/weaknesses to acknowledge (and, more importantly, solutions to offer), responding to the RFP becomes straightforward. Read carefully through the questions and gather your documentation for answers. Be sure to note any restrictions to the process, such as timelines and prohibitions against speaking with members of hospital administration and/or the medical staff about the RFP. This last point is critical for all group members to understand, as one person having a prohibited conversation could jeopardize the group’s bid.
Often, the document will ask for background about the group and its members. This is an opportunity for an incumbent group to highlight past efforts to advance hospital causes. Do not assume that the RFP evaluators know any history, and do not feel defensive about needing to explain your past contributions. Take time to update requested CVs into a uniform, professional format. Be sure to highlight specialty training like fellowships and certifications, and emphasize your bench depth/strength to handle key services such as regional anesthesia or high-risk obstetrics.
Highlight your leadership: The RFP will likely ask about leadership. If you know that the hospital has issues with an incumbent leader, your group may need to assess its current leadership and consider changes for group survival. Make sure you include viable alternatives and/or a transition plan to include someone that you know will be more acceptable. If you have a physician who you know is considered “problematic,” explain your action plan to address that. Better yet, demonstrate actionable changes to your governing documents to facilitate proactive management of future disruptive group members.
Highlight your quality: Typically, the RFP will ask about quality initiatives and group willingness to tie some reimbursement to performance. If you have not had a strong quality performance program in the past, provide a detailed description of the program you will create. Know that you cannot make empty promises – the RFP response is often binding, but even if it is not, you need to stand by your word. You will likely have an opportunity to talk about efficiency initiatives – from the past or for the future. If the hospital has asked for a small group of “anesthesiologists in charge” but your group has not developed a plan for this, do so now. The same applies to other service indicators – explain what you have done and how you will expand these efforts in the future. Many small groups provide elements of a PSH (assisting with preoperative testing protocols and clearance, enhanced recovery after surgery [ERAS] protocols, and/or developing a strong regional anesthesia program to improve ambulation and reduce length of stay) even if they have not marketed it as such. Now is the time to explain what you have done and how you will expand your efforts. If you have data to support how you have reduced cancellations and/or length of stay to improve the hospital’s bottom line, be sure to share that in your response and presentation.
Consider all options: The RFP will likely include a detailed description of services to be covered. It is critically important to look at different ways to staff the service and compare costs. For example, if you are an all-physician group, you need to consider pricing a care team model as well because you know that competitors will. Even if your group does not want to staff it as a care team should it win the bid, you need to put forward the most competitive price if you want the opportunity to provide the service.
If the request is for less service than the group currently provides, mention that. If you think the data supplied is “off” based upon experience, provide your answer based upon the information supplied to facilitate “apples to apples” comparison with competitors (who lack experience to identify the discrepancy and will answer based upon data provided). But also consider providing a second response explaining the discrepancy and how that will influence your bid. Valuation of services can be particularly difficult for small- or medium-sized groups. Most physicians have little experience assessing FTE needs, understanding benchmarks, and weighing that against hospital expectations. If you have never enlisted professional help, now may be the time to do so. Finally, be sure to include transition costs if you will be expecting facility assistance with those. Particularly as the incumbent, you may have an advantage if you already have the staff, but locums are expensive and hiring can take time, so be realistic in considering those costs if you have lost staff because of delayed negotiations or the RFP process itself.
The bottom line: Be sure that both your written response and presentation are concise, well written (no grammatical or spelling mistakes!), and presented in an appealing, professional format. This is your chance to market yourself, so put your best foot forward! Do not anticipate an opportunity to negotiate after the fact, as you may not win the bid. Offer the most competitive price that you can, include all the services you can reasonably provide, and then let it go. If someone else is willing to do it for less than your bottom line, they will likely sacrifice quality, take a loss, or fail. You have not lost if you have put forth your best offer and could not match the winning bid. At that point, it might be better to move on or go to work for that person and let them pay your salary rather than using your salary to supplement payment to others because of “winning” a below-market award.
After the award: If your group is selected, know that this is the beginning, not the end. Bear in mind what triggered this process and begin working on strengthening and communicating your value proposition to avert a future RFP.