By Joe Paduda, Author, Managed Care Matters
Workers comp payers – TPAs, employers and insurance companies – buy lots of services from many different vendors. Some are ‘purchased’ by adjusters and case managers on a claim-by-claim basis, but most payers use the formal ‘request for proposal’ process when big dollars are at stake. Vendors of networks, bill review, managed care services, IT applications, law firms, voc rehab providers and surveillance companies have all been on the receiving end of a voluminous, detailed, structured and rigorous RFP.
The erstwhile vendor is initially happy.
Then the work starts. Even if the vendor is big, has staff to help write the responses, and has a ready-made library of canned responses, it is still a lot of work. We aren’t talking a couple hours here and there by a junior staff writer – every question has to be reviewed and assigned, then the answer checked for accuracy, grammar, and consistency with other answers. Then someone has to find all the reports and IT flow documents and disaster recovery plans and professional certifications and insurance coverage documents and CVs and make sure they have the right appendix numbers and are in the right format. Then it has to be collated, checked one more time, signed by an executive, and shipped out. All on the prospect’s schedule.
Let’s not forget the folks who are doing this work are also the folks who are supposed to be doing the ‘real’ work – handling the tasks that actually deliver value to customers and owners alike.
The point is there is a lot of work involved, and most of the vendors who are doing the work are not going to get anything out of it – at least in terms of revenue. No, they’re going to have to savor the joys of a job well done, even if not done well enough to actually win the business.
I know, the ‘customer’ has also put a lot of work into the process – no argument there. Just understanding what it is you want, what restrictions exist, what the timeline should be and who should be involved in the process from initial specs to final decision means meetings on top of meetings.
The erstwhile vendors want to deliver for your company, they think they can do a better job than anyone else. But they’re stuck – RFPs are structured to make it easy on the buyer – to allow them to score each proposal using the same methodology, enabling straight-forward and objective comparison. Instead of being allowed to show their stuff, responders are forced to answer what they’re asked, rarely allowed to demonstrate their abilities and insights and expertise and knowledge. Sure, vendors may be able to differentiate, usually in response to the “is there anything else we should know, or other ideas you have” question. But the responses to these questions don’t fit the scoring methodology. Even if they are creative and innovative and fresh, and look promising, the RFP process makes it very tough for the vendor to differentiate, to show how, and why, they do things and why that’s a better answer.
The vendors submit their proposals, then the waiting begins.
Sure, there’s a decision deadline. But more often than not, the deadline comes and goes, unmarked by the award, or announcement of a potential award. Instead, there’s news that the prospect needs more time to review the proposals, or more information has come in, or…
At the risk of being accused of unfairness, ask yourself – how often has an RFP process ended when it was supposed to, with a decision made, vendor selected, and losers notified, according to the original timetable?
I’ll go out on a very solid limb and say the answer is ‘not very often’.
Let me suggest this. The more a prospective customer delays the decision, the less credibility it will have, and the less willing potential vendors will be when the next RFP comes out. Some decisions are seemingly never made, until the queries from once-hopeful vendors trickle away.
If and when the award is announced, those buyers willing to have the tough conversation with losers are doing the right thing. Work comp is a small world, and treating losing vendors professionally is just the right thing to do. It will also make them better when next they respond to the next RFP.
It is also a recognition of the work invested by all vendors, not just the winner. It provides the losing vendor with valuable input and knowledge, and delivers at least some return on all that effort.
About Joe Paduda
Joseph Paduda is a nationally recognized expert, speaker, media source and author on managed care in group health and in workers’ compensation. He translates complex data into actionable knowledge and is able to take an aerial view or to drill down into intricate niches.
His practical approach and 20 plus years experience in the field give clients precise direction and applicable programs.
He writes the popular weblog Managed Care Matters attracting more than 1500 unique visitors a day and a good deal of comment in the health care world. His blogs are frequently republished on other sites. Mr. Paduda also conducts industry surveys, including focused on managing pharmacy costs within workers’ compensation, bill review in workers comp, and work comp claims systems.
Prior to founding Health Strategy Associates in 1997, Mr. Paduda served in sales, marketing and management positions with managed care and insurance companies, including MetraComp, a United Health Care Company, Travelers Health Company, Liberty Mutual and American International Healthcare/AIG.
A frequent speaker and prolific author, Mr Paduda has appeared on ABC’s Nightline, Fox Business News, AirAmerica, and NPR and been featured in The New York Times, LA Times, TheStreet.com and many industry publications.
About Health Strategy Associates
Health Strategy Associates is a national consulting firm specializing in managed care for workers’ compensation and group health. The firm serves insurers, managed care companies, employers, health care providers, and venture capitalists.
Developing a successful managed care program is like mastering chess, a game in which a series of decisive, logical moves – driven by analysis, research and insight – lead to victory. By constantly monitoring the world of health care and the macro factors and policies influencing it, we help clients make informed and intelligent decisions.
Principal Joseph Paduda has an unrestricted view of the national market and its players and an uncanny ability to take a big-picture view and drill down into the smallest niches. His advice will help you summon the full force of your resources to create better products, stronger market share and greater profits.