One on One: Patrick Hampson, Smooth operators

While the Pittsburgh region might be a straggler when it comes to the state-of-the-art in medical practice management, it hasn't hindered MED3000 from becoming a premier player in the field.

When hospitals and insurers were straining their coffers to buy physician practices in the late 1980s

and early 1990s, MED3000 Chairman and CEO Patrick Hampson, was convinced the model wouldn't work. Indeed, most of those eager buyers ultimately sold off the physician groups. The physician practices, still in need of strong management, looked to companies like MED3000 to take over the business side of their practices.

With strong referrals from satisfied physician practices, a focus on using IT as a tool to integrate practice management and a hands-on approach to managing physician groups, the 520-employee company has managed to establish a presence in 37 states, with 5,000 affiliated physicians and more than $250 million in recurring revenue from multiyear contracts.

Hampson says acting as a hands-on manager for physician practices rather than as a practice consultant has set MED3000 apart from the pack.

"We're known as true operators in the industry now, so you get a lot of situations where that's our big differentiator," says Hampson.

Out of its expertise in IT systems, MED3000 has developed a data warehousing operation that includes information on between I percent and 2 percent of the U.S. population, an invaluable database that provides a valuable block of information. The data, says Hampson, provides physician practices with a powerful tool against which to benchmark their performance.

Hampson talked with Smart Business about how MED3000 builds its business with strong management skill, IT expertise and word-ofmouth referrals.

Q: How do you approach physician practice management?

I guess the first rule of thumb is being smart enough to have smarter guys than I'll ever be, and what I try to do is hire the experts from the different segments of the health care industry. You've got the managed care side of the industry, you've got the physician side of the industry. We only work on the physician side of the industry, so it's the physician-side of managed care, the physicians' side of practice management.

Q: How do you manage physician practices?

The way I try to run things is to bring in the knowledge base, then integrate it into the operation, integrate it into IT, and then once it's integrated, form actionable plans that make a difference in the practices. Once again, whether you're in California or in Pittsburgh, the key mantra is we want physicians to win. We're trying to give them goods and services to give them a valuable differentiation that keeps them in the driver's seat on the delivery side. My job is to keep going after the best knowledge base I can, integrate the knowledge base and then try to bring the solution to physicians that drives that differentiation.

Q: How does what you do differ from what practice management consultants and your other competitors do?

I think one of the big differences in MED3000 vs. other companies is a lot of people go out and hire consultants. Our focus is not to hire consultants; our focus is to hire people who are operators in the industry. So we don't really want an IT consultant, we want somebody who's actually out there using IT in a real world environment. We don't want someone who's a practice management consultant. We want somebody who's actually managing a practice. Once you focus on true operators, not on consultants, not on the latest theory that's come out, you can make real progress, you can make a real valueadded difference, what works in the real world, not some theoretical world where people try and make 100 mistakes before they figure out it really wasn't supposed to go that way.

Q: How did you extend MED3000 nationally?

Some of our regional operations started because (physician) groups would get together with the same concept trying to manage themselves - didn't run things very well so they'd ask us to come in and take over the operations side of their business. They'd stay independent, but not go back to managing their practices. One of the key terms physicians keep using is that they do the art and science and we do the business and technology side.

Q: How do you acquire new clients?

Today, we're pretty much word of mouth. We'll get hospitals or large physician groups. They have typical practice management systems, they've been around for 25 years, there's probably not a nickel's worth of difference between any of them and they'll basically tell you their days in accounts receivable are 65 or their denial rate is 9 percent. That's not really management. What we do, because we convert physician systems into something better, we're able to go in and say we'll improve your revenue cycle management, but anyone should be able to do that. What we'll do is find revenues for physicians and hospitals in diagnosed patients who have not been seen by those physicians within the protocol of that physician. So what MED3000 tries to do is bring those patients back using our tools, IT knowledge and operational knowledge, and improve the revenue for the physicians and improve the quality.

Q: What is MED3000's growth strategy?

We're not a low-cost producer, so our strategy is differentiation. We really focused on the data warehousing and the business intelligence. Now we're in a phase where we're starting to take a leadership position. We're the largest in the industry, we've probably got the strongest financials and balance sheet in the industry. Now, our strategy is to consolidate the industry. We're going out and buying our competitors. And I'd say by the end of 2006, we'll probably be the largest health care management company in the United States, and the next step is to take a leadership position in business intelligence with physicians. As we increase our ability to capture disparate data, laboratory systems, pharmacy systems, radiology systems, I would say by 2008, we should lead the country in business intelligence for folks in the physicians segment of the industry.

Q: How do you stay ahead of the curve and your competitors?

Once a year, we bring all the physician leaders together. All the IT solutions, all the clinical solutions that we built have come from our national care management committee. We'll bring the ideas, they'll sit and discuss them. They'll tell us what's working, what's not working, and that becomes our research and development plan for the future. This year, we started the MED3000 national data task force. Our national data task force is built to not only work with us on what data needs to be captured, but on how to turn that data into usable information, and I think it's a one-of-a-kind in the country. We've got physicians, managed care and hospital executives and employers, so it's a real blending of the minds trying to figure out where we should be in the next five years and really differentiate the practices that we manage.