RFP Strategy

Weaponized RFPs

March 23, 2011

More and more hospitals are disrupting their longstanding hospital-based group relationships as they seek to cut stipends and get more for nothing.  The favored tool?  A “weaponized” form of the request for proposal, called a “Fulcrum RFP™, designed to get a group to grovel for the continuation of its contract.

Of course, the concept of an RFP is not new; it’s been used for decades across many industries and by governmental agencies.  But as opposed to its traditional use, identifying vendors for discrete supply orders or for a one time project, the Fulcrum RFP is increasingly being used as club to beat down the expectations of the present provider group.

You can classify RFPs into three distinct categories:

True RFPs™ — These are actual searches for the best quality provider with a favorable quality/cost ratio.  This type of RFP is the closest in relationship to the traditional form used in industry and government.  It’s commonly seen in situations in which the current, or sometimes very recently former, group has “blown up” and can no longer provide coverage, and in situations in which the current group has completely lost the facility’s trust.

Fictitious RFPs™ – These RFPs belie the fact that hospital administration is not interested in the merits of any response; they have already decided to whom they will award the contract.  Yet, for one political reason or another, they’ve decided to issue a phony RFP to project a patina of “fairness” to the medical staff, to the hospital’s own Board, to some third party . . . or perhaps to you.

Fulcrum RFPs™ – This is the increasingly common type of weaponized RFP.  As the name implies, Fulcrum RFPs are designed to create leverage.  The facility intends on renewing with the present group but uses the RFP as a tool to dictate terms by fiat and to pressure the group into negotiating against its own best interests out of fear of replacement.  Nonetheless, the facility is open to competing proposals.

It’s essential to understand in any particular situation what type of RFP you are dealing with in order to calculate your group’s response, or, in some cases, to determine whether or not you will respond at all.

Of course, the best defense is the development of a strong experience monopoly combined with expansion of your business to serve patients at multiple facilities.

As financial pressures on hospitals increase and as commoditization of hospital-based physician services continues, the trend toward RFPs will intensify.  Develop and implement your strategy now, preferably years before you find yourself on the receiving end of an RFP designed to replace you, to force disadvantageous terms, or, even worse, to have you offer to cut your own economic throat in the mistaken belief that a slow bleed is better than a quick chop.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.weisspc.com

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