Network shopping? Consider your goals

One size does not fit all providers

Have you been looking into joining a network? Are you already in a network, but wondering if there is a better option for you? If you answered yes to either question, you’re not alone.

According to Tom McNulty, PharmD, president of Health Integration Strategies, a Pasadena, CA-based data processing and home care consulting firm, there is no perfect network for all home infusion providers. In the second part of a two-part series on networks, Home Infusion Therapy Management takes a look at the various network models that exist and the benefits and disadvantages of each.

"It’s an individual choice," says McNulty. "It depends on the individual provider, what their goals are in their marketing, and what their particular market is experiencing."

Networks vary from small, provider-based networks to regional and national provider-based networks, as well as integrated health systems and independent non-provider-based networks. While the choices are numerous and complex, McNulty says each type of network has its own benefits and disadvantages.

Possibly the fastest-growing trend is that of integrated health systems, which McNulty defines as a health system that is either hospital-based or physician group/hospital-based.

"Integrated health systems are just getting rolling now and are starting to gain some steam," says McNulty.

However, even though all ancillary services such as home infusion are provided, the fact that such systems are hospital-based doesn’t necessarily mean they exclude stand-alone home infusion providers.

"It depends on what the health system’s priorities are," notes McNulty. "Do they want to have their own home infusion program, or are they looking to subcontract? There are a lot of different structures in networks."

One example of network structure is a self-sustaining network, which is probably the easiest and quickest route.

"You may say, My payer wants a one-stop shop and I’m an infusion provider, so I am going to go down the street to my DME and nursing friends,’" says McNulty. "And you will take it upon yourself to run the network, consolidate the bills, authorize care, and coordinate everything."

A second option for a provider creating a network is the stand-alone method, in which the network will have its own budget, steering committee, management, and reporting systems.

Both the self-sustaining and stand-alone networks have their inherent benefits and disadvantages. The benefits include:

increased control over referrals;

direct management of your relationship with the payer;

direct accounting for financial success and days outstanding.

Don’t underestimate budget requirements

On the flip side of the coin are the risks, including:

Financial and time commitments associated with start-up.

McNulty notes that a common mistake providers make is underestimating both time and budget requirements. He adds that it is important to remember that there is a six-month to 12-month sales cycle to sell a network to a payer, so for that time period it’s unlikely you’ll derive income from the network.

Potential for distraction from your primary business.

"It is an in-depth business line that must be considered a new business line with all of the different components figured out," says McNulty.

"You have to decide on either central referrals or decentralized referral. Who does the authorizations? Who does the claims consolidations? Who does the payment disbursal? Who does any kind of reporting to the payers? Who handles the relationship with payers?" he asks.

Hidden costs such as phone systems and information systems.

Handling existing provider payer contracts.

"Does the new network contract supersede everything, and are you marketing against yourself or against one of your network providers?" asks McNulty. "Do you have your own dedicated staff to sell the network, or do you have your own staff sell the network? Is the contract exclusive or just one of many?"

McNulty points out that if the new network’s contracts are exclusive, they supersede all previously existing contracts. But if the new contracts are not exclusive, does your sales staff sell just your home infusion business or the business of the entire new network?

If you’re not interested in starting your own local or regional network, you can join an existing national provider, which offers several benefits over the local option:

You reduce your financial risk because there is no start-up cost or ongoing expense.

It provides you with a new referral stream that you otherwise may be excluded from.

It allows you to concentrate on your business rather than splitting time between home infusion and the network as a whole.

However, McNulty adds that national providers have risks as well:

"You strengthen the competitor’s position," he says.

"The national provider becomes stronger because you are in the network, and if you’re a quality provider, they don’t sell that fact; they simply sell the fact that they can handle a larger capacity."

You have no control over referrals.

"Depending on the referral process, you may receive only the worst cases from a contracted plan," according to McNulty. "If it is centralized referrals, you get what they give you, and unless you are the only person in that geographic region, they have no incentive to send you the best cases."

You sacrifice independence.

"You lose payer visibility because you are just one of a network, so your name is lost."

Competition controls your livelihood.

"Days outstanding and accounts receivable are controlled by a competitor," says McNulty. "The network may say, The payer hasn’t paid us so we’re not paying you,’ and that can starve you for cash, which is no small issue."