Welcome to part two of Revenue-Generating Insights, Focus Search Partners’ three-part series dedicated to PE firms invested in healthcare services. The series started with Why Managed Care and Revenue Cycle Management Strategies Are Top PE Priorities. It continues with an up-close look at the role of chief managed care officer (CMCO) and the traits PE firms should prioritize when hiring for this strategic role. (View Part III)
As data analytics in finance becomes even more nuanced and revelatory in this burgeoning digital age, healthcare-focused PE firms are quickly prioritizing functions that create additional value through augmented data management. We see it in search requests for financial planning and analysis (FP&A) talent and revenue cycle management (RCM) leadership.
Then there is the increasing importance of managed care, which now plays a far more strategic role in healthcare platform decision-making than ever before. It’s becoming so critical, in fact, that leadership of this function is now often elevated as high as the C-level. However, the candidate pool hasn’t fully caught up to this shift. This makes finding the ideal chief managed care officer (CMCO) difficult, but not impossible, especially when you understand the essential traits needed to succeed in this elevated role.
1. Forward-Thinking Perspective
The healthcare industry is anything but static, whether we’re talking about the development of new treatments and standards of care, changing regulatory requirements, or shifting payment philosophies. Just look at the shift from fee-for-service to value-based care (VBC). Between patients demanding it and states like California, New York, Oregon, and Texas pushing their own VBC-related initiatives, this shift is only gaining ground, according to Medical Economics.
Today’s CMCO needs to keep as close a pulse on such emerging industry patterns and shifting trends as physicians do their patients. This ensures that a healthcare platform’s managed care function is always prepared to negotiate and sign contracts with new or different expectations from payors, regulatory agencies, and, even, patients.
2. Strategic Mindedness
PE-backed healthcare platforms are built on acquisitive growth, and we’re seeing CMCOs now play a much more strategic role in expansion plans. In one case, we helped a behavioral health start-up find a CMCO who was able to identify which states and markets had better reimbursement terms, which were already flooded with providers so best to avoid, and which were underserved, making it easier to secure payor contracts.
Just as that example shows, the strategic CMCO is someone who is willing and able to work closely with the PE firm to decide when, where, and how to establish and enlarge a platform’s footprint.
3. Relationship Cultivation
It’s not enough for the CMCO to know where managed care conditions are ripe for growth, this leader also has to be a relationship builder in order to help facilitate actual expansion. You need a true collaborator in this role who can work internally with everyone from the PE investors to the CFO, the RCM leader, and physicians, especially those in a founding role, such as CEO or COO.
Equally if not more important is the CMCO’s ability to build strong external relationships with payors. When we’re conducting CMCO searches, we always ask candidates to provide specific examples of how they’ve built trust and rapport with payors in the past. Furthermore, we also ask them to quantify the financial impact their relationship-building skills had on managed care contracts.
4. Analytics and Data Storytelling Prowess
As RCM teams implement new systems, they’re able to automatically capture and quickly aggregate vast quantities of data collected throughout the bill-to-pay cycle. That data is highly useful to the managed care function, but only if the CMCO understands what it means and can effectively communicate that when working on new payor contracts or renewing existing ones.
For example, you can’t fully convert to VBC unless you have a population health team in place that is able to provide quality data on positive patient outcomes that the CMCO can use to negotiate higher rates of pay in its contracts. Likewise, as long as fee-for-service continues, such persuasive data storytelling leads to more advantageous rates in those payor contracts.
5. Negotiating Finesse
Your CMCO is the first-chair negotiator for new and renewing payor contracts, and you have to trust that they can conduct such discussions in your platform’s favor. The best way to avoid unforced giveaways in negotiations and strike favorable terms is to hire a managed care leader who projects significant business acumen, industry experience, and market knowledge. Oh, and don’t forget a certain amount of gravitas.
When these essential traits are exhibited by a CMCO who can also effectively present extensive data that highlights positive patient outcomes, your healthcare platform gains a significant competitive advantage.
6. Tech Savviness
This goes hand-in-hand with analytics. In almost every CMCO search we’ve done, the PE firm is upgrading their healthcare platform’s systems and integrating all acquired practices’ legacy processes into a single tool. Whoever is leading your managed care function needs to be able to comfortably engage with such new technology and effectively glean valuable insights from it.
7. Remote and Hybrid Leadership
Today’s back-end operations can and are being performed by highly dispersed teams of employees in fully remote or hybrid environments. This is unavoidable in the post-pandemic era in which companies struggle to fill back-end roles without such flexible work conditions. The managed care function is no different, so your CMCO needs to be a leader who knows how to connect with, develop, and motivate their teams and the individual members within them.
Who Will Own Your Managed Care Function?
That question now looms over many healthcare platforms, but when they find the right answer, i.e., someone who fits the bill of today’s CMCO, PE firms quickly see a sizable revenue lift. Think $2 million in six months or $8 million in three years. We’ve witnessed first-hand those exact CMCO success stories with PE clients celebrating money previously trapped in highly neglected contracts now going straight to their bottom line.
With Focus Search Partners’ healthcare practice by your side, you can celebrate a similar story.
Stay tuned for part three of this series, Five Tips for Finding and Attracting Your Next Director of Revenue Cycle.
Do you need a chief managed care officer to uncover hidden value in your portfolio company? Contact Focus Search Partners today.