Don’t Get Surprised By the Ownership of the Competitor

Recently, a group of physicians were in the process of opening a new urgent care center and had requested a contract with the dominant provider of healthcare insurance in the area. The payor was offering a contract with reimbursement well below Medicare rates. The physicians could not understand why the rates were so far below market and why the payor was refusing to budge. Then one of the payor representatives let it slip that the payor was thinking about expanding their own urgent care chain into that town. The doctors were dumbfounded. They had known the brand name of the urgent care chain, as this chain operated many urgent care centers in neighboring towns. The physicians were well aware that this urgent care chain was a potential competitor. But they had been previously unaware that the insurance company actually owned the urgent care chain. In South Carolina, Blue Cross owns a very large urgent care chain. In California, Kaiser operates its own urgent care chain, and Kaiser generally does not even offer contracts to urgent care centers that it does not operate.

So what is the take-home lesson? If there are any larger chains of urgent care centers in your area, investigate them and be sure that you know what entity owns the centers, before you decide to open an urgent care center. Make sure that no local dominant payor is involved in the ownership. Opening an urgent care center is hard enough if all local payors are working with you. But opening an urgent care center with the dominant local payor refusing to contract (or refusing reasonable rates) will mean tremendous financial struggles. Yes, there may be potential antitrust issues, but getting the federal government to intervene is truly a long shot.

We all know the saying “Caveat Emptor,” translated, “Let the buyer beware.” Maybe there should be another saying, “Caveat Entrepreneur“.

This resource was first published prior to the 2019 merger between DocuTAP and Practice Velocity. The content reflects our legacy brands.