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Care managers vs Cost centers

All “discounts” are not bad.

Unfortunately in comments on and emails regarding yesterday’s post a few folks jumped to the opposite conclusion.

Let me explain. There are two distinctly different types of healthcare providers – let’s call them Care Managers and Cost Centers.

Care Managers are the treating physicians, the physicians that are managing the patients’ care and responsible for the patient’s outcome.

These the primary care docs – and in some cases surgeons – that are demonstrably better, delivering objectively and quantifiably excellent care. Think occ med docs, orthopods, physiatrists, PM&R specialists – the physicians who understand workers’ comp and return to work.

They  schedule care promptly, treat conservatively, don’t dispense meds, don’t upcode and unbundle. They respond to information requests, assist with return to work, and call for assistance when a patient isn’t actively participating in their recovery.

Those physicians are valuable indeed and must be treated differently. Once you’ve established that a physician fits that description, treat them as such.

Don’t bother them, pay them well, send them as many patients as possible, and show them via credible data that they are performing well compared to their peers. Have your staff assist the physician’s staff with scheduling and routing patients to network providers.

Monitor them, measure them by consistency with evidence-based clinical guidelines, and don’t hesitate to query them if things appear to go sideways.

Then there are the Cost Centers,  providers that do what the Care Managers ask.  Generally these are deeply discounted and/or management is outsourced to specialty vendors.

Cost Centers  are typically hospitals, ancillary care, ambulatory surgical centers (ASCs), pharmacies, physical therapy, radiology centers, and often surgeons [can’t wait to hear the howls about naming surgeons as cost centers…] and the like. These providers do WHAT the treating MD tells them to do.

Of course, one must assess their performance and preferentially and aggressively direct patients to:

  • hospitals and ASCs that deliver the best clinical outcomes and value patient safety;
  • physical therapists that focus on treatment modalities improving functionality and mitigating pain and the impact thereof;
  • imaging centers with demonstrably good results; and
  • surgeons that deliver excellent outcomes at a reasonable cost.

But make no mistake – there are thousands of facilities and imaging centers, and tens of thousands of therapists, surgeons, and other specialists. You have what they want – dollars to pay for services – and should use it as bargaining leverage.

Understanding the difference between Care Managers and Cost Centers is key to delivering lower medical spend while focusing on quality care focused on helping patients recover.

What does this mean for you?

It is STILL not about the discount – it is about your SPEND.

One thought on “Care managers vs Cost centers”

  1. from a colleague who wished to remain anonymous…

    Joe, following this set of posts, and for me, you are preaching to the choir. However, I’d offer there’s a third set of providers you’ve missed: those are the Churners. They add cost without value, providing palliative, useless, or even counterproductive care that does not result in significant clinical or functional improvement. They can be from any specialty, including primary care/occ docs, surgeons, pain management docs, chiro’s, PT’s, etc. They need to be managed out, to the extent they can be, depending on the jurisdictional rules. I know from experience: most of my clinical career, I worked as a Care Manager, but I also once worked FOR a true Hall of Fame Churner.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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