The Big 3

November 1, 2004

PHCS President and CEO Joe Driscoll takes on healthcare's Big 3 with a proprietary PPO network.

Successfully managing healthcare is a lot like a finely tuned juggling act. It requires balance and precise coordination of many moving pieces. While members demand quality and more healthcare choices, managed care professionals strive to contain costs and create value for their customers.

Add in the challenges of building a provider network and providing care management services, and it's readily apparent that creating equilibrium isn't easy. Achieving the right balance is complicated enough on a regional basis, but when expanded to a national level, it takes on a whole new intensity.

"There's a great balancing act when you provide network services to a customer," he says. "You want to offer access to the highest-quality healthcare providers, but you also have to provide cost savings."

"The first step in delivering significant savings is having strong network contracts. These stem from a first-hand knowledge of the market and direct relationships with providers," Driscoll says.

"A network must be selective about the providers with whom it contracts," according to Driscoll. "Access is critically important, but it's just as crucial to provide quality and cost savings. If you contract with every hospital in an area, you aren't necessarily providing real value to your customers or the participating providers. There must be a strong value proposition for both."

In exchange for negotiated rates on medical services, providers rely on PPOs to direct member volume their way. This direction provides doctors with the incentive to join a PPO network and agree to reduced fees. It takes a highly skilled contractor to understand and balance the needs of customers, members and area providers. PHCS built its network by leveraging a contracting staff of more than 100 professionals in regional offices across the country.

"We recognize that healthcare is a local business and without a local presence, you can't have great relationships with doctors and hospitals," Driscoll explains.

Because they live, work and receive their own healthcare in the areas they support, local contractors have a thorough understanding of the unique needs of their region.

As a result, they develop personal relationships with community providers, making it possible for them to work collaboratively and arrive at the best arrangements for managing healthcare costs.

The value of local contractors is perhaps best demonstrated in the more rural areas, which present special challenges to PPO networks.