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Teaching Doctors to Be Government Contractors: The New Reality at Public Hospitals Print E-mail
Written by Andrew E. Schwartz   
Thursday, 19 March 2020 08:36

I recently helped a small, provider-owned group obtain a medical staffing contract at a public hospital in South Florida. As the son of a doctor, this was one of the best achievements of my legal career. But it schwartz andrew - fort lauderdaledemonstrated some of the challenges doctors may face in the near future.

Once, hospitals were staffed by doctors and nurses who were directly employed by the hospital. Then, the landscape changed. Instead of employing doctors and nurses, hospitals entered into contracts with medical staffing companies. Many of these staffing companies were just that; large, companies that placed bodies in hospitals. They were not necessarily owned, or even run by, doctors. But, some entrepreneurial doctors formed their own medical practices or groups and obtained some of these staffing contracts for themselves. The doctors who run such practices have to wear two hats: doctor and business owner.

Public hospitals offered a refuge for medical providers who didn’t want to work for large staffing companies. Although public hospitals are frequently required to conduct competitive bidding for property and services, contracts for personal medical services were often exempt from such requirements. This allowed medical providers to legitimately leverage their professional reputations and relationships into staffing contracts at public hospitals.

That era is coming to an end. As government entities come under ever-increasing pressure to spend efficiently, public hospitals have started using competitive bidding (requests for proposals or RFPs) for medical services. In the public bidding environment, it is not enough for an established local doctor with an excellent reputation and a good working relationship with hospital administration to offer his group’s services at a “fair price.” That doctor must show that he is better than the competition, which may include large staffing companies. Larger companies have several distinct advantages over smaller, provider-owned firms. One of the most notable is that larger companies understand a simple truth of the public bidding process that many smaller companies don’t: The contract doesn’t go to the firm that is “best;” the contract goes to the firm that picks up the most points during scoring.

Everyone who submits a proposal in response to an RFP claims to be the “best.” Scoring highest is how you prove you are the best and win the contract. This is where “doctors” need to act more like “government contractors.” Take, for example, a doctor-owned firm that is currently providing the services the hospital is bidding out under an RFP for a replacement contract. The incumbent doctor-owned firm may be doing an excellent job and have an outstanding relationship with the hospital’s executive administration. But, in today’s market that’s just not enough to win the contract.

RFPs usually included multiple “evaluation” or “scoring” factors the hospital will assess when selecting a contractor. Although different labels may be used, the typical RFP will include a “Management/Approach” factor and a “Past Performance” factor. An incumbent firm’s outstanding work on its current contract may get it good scores under the “Past Performance” factor, which scores the relevancy and quality of the offerors’ references. But, doing a good job on an incumbent contract will not necessarily get that firm good scores under the “Management/Approach” factor. To get good scores under the “Management/Approach” factor, the firm needs to clearly and concisely state its understanding of each stated requirement that is being assessed, and its approach to meeting that requirement. Smart contractors will explain how their approach “exceeds” the requirements.

Additionally, while no contractor should rely on “magic words,” the annoying fact of life is there is a government contracting jargon. For example, the phrase “XYZ Hospital should have substantial confidence in ABC Firm’s ability to successfully perform the RFP requirements because ABC Firm is the successful long-time incumbent provider of the services advertised in the RFP” will go a lot farther during Past Performance scoring than “As XYZ Hospital knows, ABC Firm is doing an excellent job providing these services.” Doctor-owned firms that want to keep their contracts (or win more contracts) would be well-advised to master this jargon and use it to their advantage in their proposals.

In sum, the future will bring new challenges to doctor-owned firms that want to do business with public hospitals, and doctors should prepare themselves to meet those challenges.
Andrew Schwartz is a Partner in the Fort Lauderdale and Tallahassee offices of Shutts & Bowen LLP, where he is a member of the Government Law and Business Litigation Practice Groups.

Last Updated on Thursday, 19 March 2020 09:39

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