The Trouble with Medical Answering Service

By Joseph Sameh

Summer, 2003

Nationally, the medical answering service industry has a problem.  Typically, when a person purchases a service, there is a perceived notion of value gained through that purchase.  Housekeeping, snow removal, tow truck services, and office janitorial services are just a few examples.  Physicians' point of view towards answering services once fell into that category as well.  But that was then and this is now. 

The Problem: Managed care, by changing the one-to-one relationship between patient and physician to a triangle of physician, patient, and third-party payer has caused medical answering services to be perceived as a cost-center rather than a valued service. Each evening for more than 60 years, answering services have been providing overnight backup telephone support for physicians.  Before managed care, most patients and their physicians had a one-to-one relationship that lasted throughout their lives.  Most physicians were sole proprietors in private practice.  When a patient called the doctor after office hours, the doctor naturally had great insight into the patient's history and medical needs.  The two grew old together.  The invoice amount paid by the physician to the message service was viewed as part of the overall cost of maintaining good relations with patients in an era of increasing economic advantage for healthcare providers.  A fee-for-service insurance reimbursement model characterized the era.  As such, the patient and the provider were both beneficiaries of the after hours call.  The patient received around the clock care that was expected and the physician knew the patient would be a loyal customer in return.

With the advent of managed care, certain concurrent events changed the landscape of medical practice management.  One change that exerted great influence on the patient-provider relationship was managed care itself and the impact of its lists of network providers.  No longer was the relationship between patient and provider under the control of the patient and the physician.  It was suddenly under the influence and control of the insurers and employers.

Managed Care Organizations (MCOs) began to apply downward financial pressure for reimbursements to physicians.  As a result, the patient/provider relationship hit a low point.  Patients began to complain that not enough time was spent with them in the office.  Sometimes physicians were no longer readily available after hours.  Physicians began to complain that they couldn't treat the individual appropriately due to managed care oversight.  Physicians also began to experience income stagnation and even contraction.  Consequently, physicians no longer perceived themselves as the beneficiaries of the after-hours transaction.  The new beneficiaries of after-hours services became the patient, the answering service, and occasionally the pharmacy. 

Unfortunately, the physician still has to retain 24-hour coverage, and therein lies the problem; physicians still must pay for answering service.  Today, answering services for physicians are considered a necessary evil.  When patients call after hours, the physician may be contacted by the answering service.  If so, the physician and the patient discuss the crisis at hand and map out a strategy.  For all the commitment, hard work, and effort of the call center staff, the only thing the physician perceives today is an invoice from the call center at the end of the month - that is with the exception of the middle of the night wake up call to treat the patient.  How would you feel if you were a purchaser of this service?

Along with the emergence of MCOs and due to some of the same pressures, solo practices began to disappear as ever increasing group size became an unpleasant fact.  This trend benefited the physician in some quality of life measures. Permitting and supporting a nightly call coverage scenario, one in which physicians began to experience evenings off on a regular basis, is one such benefit.  The era of sole proprietorship was largely over.  Now we have the day of the physician-employee.  This further inflamed the breach in the patient/provider covenant as patients lost control over who would manage both their daytime and after-hours needs. 

Development of large, multi-disciplinary groups led to another tension: the successful management of on-call coverage schema by the message center.  Due to human error or lack of understanding, often the wrong physician may be paged or no one at all is contacted for urgent matters.  Indeed, industry experts agree that incorrect message dispatch is the most daunting issue for physicians utilizing medical answering today.

Adding to this challenge, outside market forces have inevitably affected every provider to the health care field.  Answering services are no exception to this reality.  In terms of inflation-adjusted dollars, the rates for answering services are significantly lower today than they were 20 years ago.  Labor costs are higher as a percentage of overall costs than ever.  An abundance of high-tech equipment and a search for lower paid, entry-level employees answering phones for physicians is the result.  When one adds the cost to adequately train and retain quality employees there is scant room for error on the employer's part.

To add insult to injury, regulatory pressures on the health care delivery system have created more paperwork for every medical practice.  Consequently, office staff has a greater burden than ever before.  According to Howard Wolinsky, co-author of Healthcare Online For Dummies and a veteran medical and technology reporter for the Chicago Sun-Times, "If we could get physicians and their patients to communicate via email and avoid voice mail jail, we could save loads of time and even squeeze out more time for docs to spend with their patients face to face.  Now that would be a breakthrough."  According to Wolinsky, "with the availability of broadband and new technologies, the pieces already are in place."

Other sources, including Harris Interactive, reported that the results of a survey conducted in April 2002 indicate that 95 percent of patients want to exchange email with their physicians.  However, a much smaller percentage of physicians do.  This suggests that many patients hope physicians will take advantage of Internet technology to improve patient outreach efforts, but that physicians themselves may still be ambivalent.  According to the results of the Harris Interactive survey, people are accustomed to using the Internet for customer self-service.  Customers can now track package shipments, pay bills, order books, and do numerous other tasks without the participation of a customer service representative.  More than 90 percent of people with Internet access would prefer to communicate with their doctor via email while only 15 percent of physicians would want to do so.

The most significant use of the Internet in the teleservices industry is in the self-management and maintenance of on-call schedules.  As a result, many call centers have been reclassified into contact centers. 

The threat: A number of organizations are providing email access to physicians.  Understanding the threat of this technology is crucial.  These new providers will unquestionably grow and this trend has the potential to destroy the medical answering service industry as we know it. 

These companies are well organized and superbly financed; some even have the support of pharmaceutical companies and massive electronic medical records suppliers.  One such company, Medem, is endorsed by the American Medical Association.  Think back to the introduction of voice mail and remind yourself how that technology changed the commercial telemessaging business.  In a similar way, cable TV has hurt the broadcast networks.  For those providing medical answering services, this is an even bigger threat.

The opportunity: Admittedly, these players have the significant advantages of access and money but many don't fully understand the operational dynamics of the health care call center market, the patients, and the practices.  Many companies intend to charge patients to use their service.  Why patients would flock to a "pay-for-email" model when they could place a phone call instead is hard to imagine, unless the office hold times are so staggering that any price is worth avoiding the wait.  Banks have successfully implemented pay-for-service by providing notoriously poor service to their client base.  Now banks charge for everything.  In the U.S. we have what many believe is the best health care system in the world, but access can be a challenge.  These new players are addressing the aspect of patient access.

Most of these companies rely on the physician as the contact point for the patient.  Stated differently, if the patient's call results in a physician requiring the patient to come in to the office, the doctor ends up asking the patient to call the office to schedule an appointment.  The physician becomes the secretary for the secretary.  Physicians answering phones at the front desk is not a viable option, yet these companies think physicians will want to answer all email messages.

However, there are some successful Internet self-service models.  Federal Express successfully offered its clients an easy-to-use system.  Customers can augment live customer service with Web-based self-service.  This process saves millions of dollars annually in reduced labor and the more it is used, the more valuable it becomes.  This is known as the "role of network" effect.  In order for medical teleservice companies to survive in the age of managed care, they must adopt successful Internet strategies and capitalize on their industry experience before they are passed by.

Joseph Sameh is the founder of Mediconnect, Phone Screen, and NeedMyDoctor.