Re: National P&O Contracting

Re: National P&O Contracting

Susi Ebersbach

9/13/2006

I have read all the responses to the Smithson National P&O Contracting
post and noted there is a very basic concept no response has specified,
though several have come close, and I fear it is so basic we may believe it
to be common knowledge. You won't often see my opinions on the list-serve,
though I read it faithfully and am regularly influenced by all of yours. If,
in fact, there is an advisor to major insurers in the U.S. out there with
a lack of understanding of this key capitalistic concept, then I would hope
this response will help clarify and educate.

In my opinion, here is the fundamental concept lacking from the National
P&O Contracting According to Smithson post....

Yes, it is true that managed care insurers desire to lower their costs of
administration, just as providers do, by streamlining contracting,
credentialing and service location management functions. (What is still ripe
for debate is whether these costs are lowered, or simply deferred to the
provider). At any rate, insurers may be in the market for network services.

Yes, it is true that both Linkia and POINT (not OPGA-which does not contract
to service managed care organizations) strive to provide these same benefits
to managed care insurers.

The key difference between the POINT network (owned by VGM) and the Linkia
network (owned by Hanger) is that VGM does not own, or intend to own any
service provider locations. Therefore, it does not intend to move
market-share, via POINT, to VGM. The fees to operate the network are
similar, but POINT does not take the service provider portion of payment
home to its bottom line. The same cannot be said of Hanger, who clearly
operates Linkia to gain market-share through Linkia, and intends to move as
much service as possible to its Hanger service centers. This makes the
liaison between CIGNA and Linkia/Hanger monopolistic/monopsonistic in the
view of independent providers and of mindful patients. It poses an inherent
threat to the independents survival and only an independent company that is
willing to turn its business over to its competitor would logically
cooperate. If this model is expanded, patients will ultimately suffer.
It's not purely a matter of the number of providers in each network, the
core issue centers around the ownership of the service locations the
contracted entity will naturally prefer to send insureds to for service, and
the long-run impact the gradual shift to a single provider will have on the
industry.

This may not matter to the insurer, but it is of critical importance to the
survival of the independent provider.


Regards,
Susi Ebersbach
Director of Business Development
POINT Health Centers of America, Inc.
7061 Corporate Way
Dayton, OH 45459
Tel (937) 439-7869
Fax (937) 439-7858
Cell (866) 764-6860
<Email Address Redacted>
www.pointhca.com


-----Original Message-----
From: sue smithson [mailto:<Email Address Redacted>]
Sent: Friday, September 08, 2006 5:52 PM
To: <Email Address Redacted>
Subject: [OANDP-L] National P&O Contracting


I am a contracting consultant in the insurance industry and have had a
series of e-mails regarding the O&P National contracting issue forwarded
to me. I am presently consulting with various national insurance
companies that are presently investigating national O&P contracts.

I have two questions but would like to preface them with some details to
establish how I came to this inquiry.

Linkia is setting up a national contracting process, for the insurance
companies this appears to be a good thing, sign one contract as opposed
to negotiating and signing hundreds of contracts. Saves administrative
costs and thus keeps premiums down. And yes, Linkia is affiliated with
one national provider, we know that, but why would this be an issue?
Coverage, service and costs are the issues to be considered, as long as
that can be delivered, everything else is secondary.

The O&P industry is unregulated, few if any states have licensure, and
the industry as a whole does not appear to have any compliance or
internal audit standards of any consequence. By contracting with one
network/company, a uniform and consistent patient care standard can be
applied because it is being controlled by one group that can actually
monitor and enforce minimum standards, something the O&P industry and
association has apparently not been able to implement with the
independent practices.

My question is stimulated by the posting by Mr. Kidd, founder of POINT
supporting his business partner Mr. Andreessen, President of OPGA. Mr.
Kidd states I see it (Linkia) as the greatest threat to traditional O&P
in my career!

What is the difference between what OPGA and POINT are attempting to
create and what Linkia has created? If VGM (owners of OPGA and POINT)
were able to grow and acquire the national contracts, than the
independents that did not join would be locked out of the contracts as
well. If OPGA or POINT were to have secured the national Cinga contract
instead of Linka, then OPGA would establish a network until it was
saturated and then not allow additional providers; that is how a network
works, once the network meets the needs of saturation, then no new
providers are admitted.

I truly do welcome any responses and feed back to my two questions.

1. As an insurance contractor, why would I want to sign hundreds of
contracts with hundreds of individual providers when I can sign one with
a network manager?

2. As an insurance contractor, what is the difference between Linkia and
OPGA?

Thank you in advance for your response.

Sue Smithson

Indepedent Insurance Contracting and Consulting

--
___________________________________________________
Now you can search for products and services
<URL Redacted>