The following was from a recent post to one of the MGMA listservs:
I fully agree that once you have your fixed overhead covered it is good business to try to fill up the rest of your capacity with "lesser reimbursement" patients. Once those fixed expenses are met you just have variable incremental expenses on the remaining volume…giving credence to the theory that "you can make profit from volumes of lesser payors."
I too agree with this. Why complain about physician productivity if you can increase it simply by adding additional managed care plan participation to the practice? Of course you would want to add an "out" mechanism if the other contracts in place become more profitable and/or additional patient steerage occurs.
Of course people will say that additional overhead will occur by adding certain payors to the practice (ex. HMOs) but I have found that statement might not be true, especially if you negotiate out some of the related "red tape" that causes overhead to rise accordingly.