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Cost minimizing strategy # 3 - controlling the physicians' behavior.

One night shortly after becoming CEO, Gekko has a nightmare. A doctor and a patient are sitting together in the privacy of the doctor's office, and the two of them are deciding how much of Gekko's money to spend. And as they ponder their options, all they talk about is what the patient wants or needs.  Then, the decision at last made, the doctor takes out his pen and with a few strokes bends the will of the vast medical-industrial complex - and mobilizes Gekko's money - to suit his patient's needs.

Gekko awakens in a sweat, and considers his dream. He realizes that all you had to do was to multiply the one encounter he'd dreamed about by the 1.5 million of similar encounters that take place every day, and you'd know why healthcare is so expensive.  It frightens Gekko to think that this is how his money is being spent.  But the fear motivates him powerfully, and focuses him on what he has to do to control his expenses.  

Simply, he has to control the behavior of his physicians. There is no way he can allow them to carry on as if the patient is their only concern. When FTP physicians are counseling their patients, deciding how much of FTP's money to spend, they've got to consider something other than just the patient. They've got to consider the needs of FTP.

Gekko knows there are many, many ways to accomplish this.  Some involve making the physicians loyal to FTP; others making physicians frightened of FTP.  Some involve subtle intimidation; others heavy-handedness.  Gekko can pull no punches on this one.  This, he knows, is where the money is.  He decides to use every means at his disposal to become an unseen presence in that office with that doctor and that patient. He's got to become the doctor's primary customer; keeping Gekko happy must become the doctor's number one concern.

        Controlling the flow of patients.  

Physicians are nothing without their patients. So the first thing Gekko must do is wrest the "control" of patients away from the doctors in each of his cities of operation.  Purchasing key community hospitals is a major step toward this goal, but Gekko leaves nothing to chance.  

So he mixes himself a martini, puts his feet up, and dictates a first draft of an "18 Month Plan," aimed at nothing short of bringing the physicians to heel:

        THE FTP 18 MONTH PLAN

Phase 1 (Months 1- 6): Open the gates. Allow any willing licensed physician in the area to join FTP's physician panel. Actively and aggressively recruit all the largest and best known physician practices.  Purchase a few key practices, if necessary, to break any physician resistance to joining FTP.

Phase 2 (Months 7 - 12): Get control of the patients.  Armed with an impressive physician panel that promises not to limit the choice of any patient, aggressively market FTP to all large and moderate-sized businesses in the area.  By the end of month 12, FTP should be offered to every employee of every company in each area of operation employing 250 or more. Undercut prices of every other insurer in the market, if necessary, to achieve this goal.  On Day 1 of month 13, FTP should control at least 30% of all insured patients in key medical practices.

Phase 3 (Months 13 - 18): Collect the data, begin making the cuts. Track how much of FTP's money is being spent by every FTP physician.  Then, with fanfare, drop from the FTP panel at least several prominent and highly-visible physicians who are deemed to be spending "too much" on patient care. (Note: The letter sent to the dropped physicians should not give cause for termination.  It should simply thank them for their services, and say those services will no longer be required.)  (Note: This step will be most effective if those physicians dropped from the panel are not only well-known to their colleagues, but also lose a substantial proportion of their long-time patients as a result of their being dropped.)

It's a good plan.  It is designed to rapidly and efficiently assume control of the physicians' very means of livelihood - their patients - and in practice Gekko is pleased to find that it most often accomplishes this goal before the doctors even realize what is going on. The plan is vital to the mission of FTP, and fortunately, it works well (although in three cities it takes up to 24 months to complete).  

Once the 18 month plan has achieved its goals, Gekko institutes Phase 4. Phase 4 lasts forever.

Phase 4 (Month 19 and beyond): Turn the screws.  Let the FTP physicians know what is expected of them.  A) Revise the terms of their contracts with FTP.  New contracts will lay out terms of capitation and associated incentives and disincentives, and will add nondisclosure language.  B) Begin a quarterly "review" of each practice, showing physicians in detail where they are spending dollars, and comparing their expenditures both to target values and to the expenditures of their peers.  C) It will be necessary to continuously reinforce who is in charge. Periodic issuance of without-cause termination notices to selected physicians will be important. Handing out occasional but highly-visible performance awards will also be helpful in this regard.

In other words, now that Gekko "owns" the physicians, it's time to let them know what their new boss wants.