As described in a recent article in American Medical News, the Mayo Clinic and the Cleveland Clinic are both independently offering medium to large groups of specialist physicians an opportunity to use their esteemed brand names and a variety of other resources formerly only available to employed physicians. In return, the group has to pay a fee and agree to meet clinical criteria.
That’s a franchise model, although Mayo and Cleveland don’t use that terminology. Perhaps they are worried that the term “franchise” may conjure up unflattering comparisons to fast food chains. But, as I’ve described in a previous blog post, the franchise model is not frivolous. It is a serious, time-tested business structure appropriate for a business that his a mix of large scale and small scale requirements. Large scale requirements are things like infrastructure for research and development, volume purchasing, specialized management disciplines, and branding. Small scale requirements include top local talent that is highly motivated to develop relationships and attend to the details that determine the quality of local operations. A large, conventionally-structured company can certainly have “field” employees spread out in many local areas. But, they may not be able to attract and retain the best local talent. And those field employees won’t be as motivated as franchisees that are, by definition, entrepreneurial business owners.
It has to be real to avoid being cheap
Mayo Clinic and Cleveland Clinic are well aware that they have strong, valuable international brands. They take their brands very seriously, both in local markets for care delivery and on a national and international scale when they have ventured into publishing and internet-based businesses. So, I know they must be keenly focused on picking franchisees that won’t sully their names. The worst thing for them would be for their franchisees to deliver poor care under their logos, creating confusion in the market about what their brand stands for. Franchisers know they need to assure that their standards are maintained consistently. This consistent adherence to standards is one of the most essential sources of value to consumers.
But why not focus on primary care?
The fact that both Mayo and Cleveland are focused on “single specialty groups” implies to me that they are directing this franchise model on specialists rather than primary care-based organizations. But, perhaps it is the primary care providers that could benefit the most from getting access to resources that are too costly for them to develop themselves. Things like advanced analytics, health care information technology, lean coaches, care management training, call centers, contracting professionals, and sophisticated advertising. These are the capabilities that serve as the foundation for successful primary care-based accountable care organizations (ACOs) or to achieve favorable performance in episode-based, bundled payment for chronic diseases. To a primary care franchisee, the brand name recognition may actually be less important than the opportunity to have world class infrastructure and management support, while still allowing the participating primary care physicians to maintain a degree of independence.
The following tongue-in-cheek video illustrates the idea.