Dan Gottry - Blog

Dan Gottry's Blog

Wednesday, September 13, 2006

POINT Healthcare Weighs in on Linkia

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.

posted by Daniel Gottry at 11:42 AM