Healthcare Business Development

In many years of working on proposals, I’ve seen three different kinds of situations where multiple consulting firms might be involved in working on the same bid. These are as follows, with some notes regarding potential problems:

• Finance or Actuarial Consultants. In health care proposals (our domain) we frequently see a separate firm or firms working on the business proposal – the pricing buildup. Usually, there is virtually no cause for concern regarding the interaction between different consulting firms. Sometimes the finance team will ask for drafts of the technical proposal, so they can verify that all technical elements have been included in their pricing.
• Multiple Proposal Developers. Sometimes a single proposal consulting firm simply cannot supply enough staff or all of the right technical expertise for a particular bid. (This might be because they are just really busy and have people assigned elsewhere.) These situations usually work out quite well, particularly if the proposal manager is part of the client’s staff. In some instances, though, the proposal manager is a member of one of the consulting firms. This can create potential problems, if one consulting firm feels they are being “supervised” by another. The potential exists for one firm to feel that they are being unfairly treated as part of the managing firm’s “agenda” to eliminate them. Whether or not such an agenda actually exists is moot. To address, it needs to be clear that there is a single individual on the client’s staff who is responsible for overall management.
• Multiple Procurement Consultants. The complexity of a procurement means that a company ought to consider carefully selecting consultants with targeted skill sets to do different parts of the work. Think about two consulting firms, A and B. Both say they do proposal work in your industry. On examining both, though, you find that A really has a reputation for doing high-level strategic work and government relations. B is really good at presenting client concepts in writing. So – why not avail yourself of the benefits of both? Hire A to develop your strategy and position yourself with the customer. Hire B to write the proposal.

During the course of a proposal project, you – and your chosen consulting firm – are going to run into problems. It’s the nature of the beast – you are working on a large and complex project with a very short timeline. Effective project management techniques will help you and your consultants get through the issues and keep moving forward.

Sometimes, though, the problems mushroom into something bigger – it just seems like things are not working out between you and your consultants. When this happens, you need to explore what’s happening. For example:

• Are your internal resources creating barriers to success? If the business solution is unclear or constantly shifting, the consulting team won’t know what they are writing about from day to day – and deadlines keep slipping. If subject matter experts (SMEs) are uncooperative or unavailable (usually because they are buried with other work), it’s unlikely the consultants will be able to make much progress.
• Are the wrong consultants assigned? It happens – a consultant was assigned to a section but doesn’t have the specific skills and knowledge needed for that particular section. Or, something happens in the consultant’s life that creates a huge conflict for the proposal. A good consulting firm will generally detect and solve these problems very quickly, but they need feedback.
• Is there a personality conflict? These cover a broad spectrum of “stuff.” Sometimes the consultant is an extrovert assigned to work with a subject matter expert who is an introvert. Sometimes it’s the reverse. Occasionally there are just differences in work approaches that can lead to conflict: “my way or the highway.” These all have to be examined and carefully worked out between the company and the consulting firm – it can be an involved process, but it needs to happen quickly to ensure effectiveness.

Now you have a contract. The tasks have been defined, and consultants are assigned and eager to begin work. What’s next?

Several things need to be addressed. The most important one is: who is in charge of the consultants? The consulting team needs to be clear about who gives direction, makes decisions, and resolves conflicts. If there are many masters, there will be problems.

Here are some others (not an all-inclusive list):

• Who are the consultants to work with to determine company approach, obtain information, get access to information technology resources (if appropriate), and so on? This might be a client-side project manager or an overall executive sponsor for the procurement.
• Will the consultants work on or off-site, and if on-site, how do they gain access?
• Will there be regular status meetings or checkpoints? (The answer should be yes!)
• What are the due dates?
• What tools should the consultants use?

Now your work becomes much more difficult. Who is the right choice for outsourcing your complicated and important proposal?

There are many sources out there for finding proposal consultants. The professional association for proposal development and management is the Association for Proposal Management Professionals (APMP). APMP has various national and local resources to help you find proposal consultants. See www.apmp.org.

Individual consultants – that is, solo practitioners or “lone guns” – can be outstanding in a variety of situations. They may be an acknowledged expert in a very particular area that is relevant to your proposal effort (for example, using a specific system to perform care management). They can also be helpful when you just need one or two people to augment a proposal effort.

However, individual consultants can have drawbacks. If a disaster strikes – a death in the family, or a serious illness – they may not have any way to provide a ready alternative to complete the work. They also may not have appropriate general and professional liability insurance, information technology backup and security measures, and other infrastructure. While you’re not paying for those things, that means you are also assuming the risk if something goes wrong.

There are also various consulting firms that will conduct proposal development. Without naming individual companies, I will categorize them as follows:

• Large business development firms that have specialization in proposal development. These companies have a good track record; however, in our experience, they are great in some industries and not so good in others.
• Large and medium general consulting firms. In some cases they say they will do proposal development.
• Small to medium-sized consulting firms specializing in a particular industry. Mostly, these are management consulting firms, but they may advertise that they do proposal development.
• Small to medium-sized consulting firms specializing in business development. These are firms that have chosen a particular subset of industries for which to pursue business development and proposal development.

You can find any of these organizations through a variety of ways: exhibits and networking at trade shows; general networking at professional organization meetings; networking with colleagues in the industry; searching on the Internet, and so on.

The advantage of working with a consulting firm – a company that is more than a sole practitioner – is that they will probably have some of the necessary tools and infrastructure already available. Thus, if there is a problem, the firm usually assumes responsibility – and has the wherewithal – to fix it.

Once you have identified some candidates, how do you choose the individual or firm best suited to your needs? First, you will need to clearly define your needs, and communicate those to the consultant. A good consultant will usually not want to sign up for a project where they don’t have the specific expertise you require, so they will self-select out. Second, you’ll need to ask some pointed questions of the consultant: what’s your background? What experience do you have in working on similar projects? How successful have you been for other clients?

On this last question: unfortunately, despite several firms that trumpet “our win rate is X%!” (with a suitably large value of X) , win rate isn’t everything. Consulting firms can’t always tell whether they are working with a client that has a strong solution, competitive pricing, and good customer relationship – at least not until they are well into the bid process. So, a firm may have some losses on its record. You will need to probe beneath the surface to understand more about why a consulting firm was or was not successful. Don’t be surprised, though, if the firm refuses to provide this information, particularly if they only work in one industry – yours. Remember that they have an obligation to protect the confidentiality of their client’s information, and you would expect them to do the same for you.

You should also ask the consultant to provide references. If you run into a roadblock here, it might be for a good reason: the consultant’s most important references may also have some interest in the same procurement, but don’t happen to need the consultant right now. However, they won’t want you to have that consultant either.

Beyond asking key questions to help clarify the consultant’s skills and abilities, you will simply need to trust your judgment. What kind of rapport do you establish in your initial meetings with the consultant? Does it appear that you will have a good working relationship with the consulting team during the project? Remember that things will just become more stressful as the proposal reaches the final days, and if you have a contentious relationship at the beginning, it will probably get worse.

Here are a couple other items to consider during selection:

1. Is it necessary to issue an RFP to consulting firms? While the quality of the proposals you get might be indicative of the kind of work the firm will do for you, the problem is that proposal schedules are often short. By the time you finish with the RFP process to select a consulting, the procurement you are interested in will be nearly over. However, you might consider issuing an RFP – with general questions – if you plan to form a long-term relationship with a consulting firm to work on several bids, and none of those bids are active right now.
2. What kind of project should I do first? Sometimes the best thing to do is to dip a toe in the water. Ask a consulting firm to provide an editor, or strategy expert, or Red Team reviewer first. That way, you don’t spend as much for the first project, and can evaluate the firm’s general performance. Expand future engagements if you are happy with the results.

If you have decided that you need to outsource some or all of your proposal development work, now you need to decide:

• What do I outsource?
• To whom?
• How do I structure the arrangement?
• How do I manage the engagement?
• What do I do to solve problems?
• How do I use multiple consulting firms on the same bid?

What do I Outsource?

Before you start to outsource work, you need to clearly define what you are expecting to outsource. Does it include proposal management, proposal writing, editing, formatting and production, red team review, strategy development, graphics development, or something else? The decisions you make here obviously depend on the availability and capabilities of your existing staff.

Remember, though, that multitasking just does not work as well as we would all like. (Despite the admonishment on the job description that says “must be good at handling multiple tasks and assignments.”) Various studies have shown that people are generally not very good at this; my own observation is that multitasking performance becomes much worse as the complexity of each task increases. So: having a proposal manager function as a writer, or having them try to manage several large complex bids is likely to fail. They are going to miss something critical. On the other hand, a graphic designer might work on proposal graphics for several bids in a given day – they just need to know the priority of the queue.

 If you have not already read Part 1, I would suggest taking a look at that now – the scenarios regarding Company A and Company B are fundamental to these recommendations. And – these are strictly general recommendations – deciding whether to outsource proposal development requires a much deeper analysis of the company’s market position and capabilities.

To recap – Company A has just a couple of medium-sized contracts with five-year terms, and operates only in one state. Company B has more than a dozen medium to large contracts with one- to five-year terms, covering multiple state and federal customers.

Should Company A Outsource?

For Company A, to know when and whether it’s appropriate to outsource, we need a bit more information. In particular, how competitive is their market? If it’s attractive to local, national, and regional competitors, then the risk of losing is increased – magnifying the need for a better proposal.

In this situation, we would recommend that the company outsource the proposal development work for renewals of each of its two contracts. The work is too infrequent to build a high-performance internal proposal development capability. And, there is too much risk in removing key executives from operational roles to work on the proposal. (Who knows whether they are really any good at that anyway?)

By outsourcing the work to a qualified proposal team, the company can leverage the best expertise and experience available for procurement, and use its internal subject matter knowledge to collaborate on designing the best solution for the customer.

But what if it is not a competitive market – in fact, the company is the only likely supplier of the required product or service, and there is no competition? In that case, it probably makes sense for the company to allocate some part of staff time to work on the proposal. Caution: if the company thinks there is no competition, but the intelligence is faulty – well, you get the point.

Should Company B Outsource?

Company B – given its large number of contracts and its desire to grow by adding more contracts – should almost certainly outsource, some of the time. When? Well, that really depends on the workload, and the internal staffing available for proposals.

Because Company B has a number of contracts, is in multiple markets, and is reasonably large, they will have multiple contracts up for re-procurement every year; sometimes several at once. Thus, it makes sense for them to build an internal proposal development capability – consider that:

• The company can standardize certain proposal development processes
• They will likely achieve some cost reductions by paying permanent staff rather than consultants
• They can build an internal, concentrated source of expertise for working on proposals.

But what is the right staffing level? Think about the worst case – a dozen contracts renew at the same time. Given the typical size of state healthcare proposals, and the usual 30-90 day response schedule this might require as many as 40-50 full-time staff members to process.

What do those people do for the next year? The next five years? Mostly, they cost the company money.

But how do you predict exactly what you will need? It’s harder in this situation, because we don’t know exactly when the contracts might really come due, or what new opportunities might arrive, requiring proposals.

In situations like these, we usually recommend that the company do a little ground work to determine the number and size of proposals in an average year. Then, based on its own productivity metrics, calculate the number of full-time staff required to service that proposal load (without regard to any overlap that might occur in actual proposal schedules). Finally – we suggest that the company then hire approximately 50% of the calculated staff requirement – and outsource the rest as and when needed.

This helps address several of the challenges described here and in Part 1. The company can:

• Have sufficient staff to build and retain internal core knowledge and proposal expertise
• Use staff expertise to standardize proposal processes
• Service ongoing, routine proposal development needs for most workload, without overstaffing and associated costs
• Conduct general maintenance and proposal database activity during low work periods
• Bring in supplemental staff to address the workload at peak times (multiple re-procurements or new procurements on top of existing load)
• Draw on external, top-level expertise to provide new ideas and perspectives for proposals from time to time.

If you do business with the state or federal government, chances are that you will need to submit a proposal to secure any substantial contract. And – if you have ever worked on a proposal for a large contract – you know that it can be time-consuming, arduous, and maddening. (“What solution are we proposing this afternoon?”)

Schedules for procurements – release of the Request for Proposal (RFP) – can be unpredictable as well, for several reasons:

• The agency is directed by legislation or regulation to establish a new program or replace an existing program, or wants to design a new program to improve cost control
• The agency cancels an existing contract due to contractor performance problems
• The agency decides not to exercise option years in the contract, because of contractor problems, or a need to make a significant change in the program design – or just to keep everyone on their toes
• Design of the RFP for a scheduled re-procurement takes more time than anticipated due to political wrangling, changes in agency leadership, and program design decisions
• Approval of funding for a shared state/federal initiative (for example, Medicaid) takes longer than expected, thus delaying release of the associated RFP.

Even with great intelligence about what’s going on in the halls of the legislature or agency, it’s easy for potential bidders to be surprised by the release of a new RFP.

Now let’s consider the effects of that unpredictability on two very different organizations.

• Company A has only two contracts with a single state, with multi-year (five year) terms, and values in the tens of millions of dollars per year for each contract. It wants to retain its existing contracts, but has not particular interest in seeking other government contracts beyond these two. So, this company might reasonably expect to respond to a request for proposal every three to five years, depending on how the contract start and end dates are staggered.
• Company B has over a dozen state contracts (covering several states) and some federal contracts, with contract values ranging from tens of millions to hundreds of millions, and contract terms ranging from one to five years. It wants to retain its existing contracts and secure new ones that fit the company’s strategy and help to achieve its objectives. So, Company B might need to respond to five to ten requests for proposal in a given year. Or, it might have fewer, if there is a dry spell in new opportunities that match its objectives.

Here’s the problem, then: how should I staff for proposal development in each of these scenarios? Examined closely, each presents some great opportunities – and some significant challenges.

Company A

Opportunities:

• Because of infrequent RFP work, don’t use proposal staff at all – just have internal team write the proposal
• Saves cost of setting up an internal proposal unit
• Allows direct connection of contract subject matter expertise to the proposal.

Challenges:

• Using operational staff diverts them from value producing activities on existing contract, potentially degrading contract performance – which may affect ability to re-win the contract
• Operational staff has no specific proposal management or proposal development expertise – may miss things, causing proposal to be non-compliant, or just waste time on unproductive activities
• Outstanding skills in technical, business, and persuasive writing are needed; this is a skill set that not all operational staff have or get to practice and refine
• Competitive capability in proposal development, and in program solution design, may not be up to the standard of other larger competitors who also want the contract
• Existing contract subject matter expertise may be limited to what the agency wanted in the past, not what they really want as expressed in the new RFP
• Internal resources tend to be less objective about the effectiveness and competitiveness of their operational solutions (in all cases, but particularly in regionalized companies that aren’t as frequently exposed to what’s going on nationally).

Company B

Opportunities:

• Size and number of procurements means that company can build an internal proposal development department with dedicated expertise
• Achieve economies of scale by doing a lot of proposals using lower-cost internal staff instead of outsourced consultants
• Allows standardization of proposal development processes and application of quality management techniques to improve processes and proposals.

Challenges:

• Dedicated internal proposal development department can have an insular view – sees only this company’s way of doing proposals, not very aware of industry-wide product design and proposal presentation options
• Get into a rut on proposals – this proposal looks like the last one, lacks fresh ideas and perspective, “phoning it in”
• Lack of predictability on actual RFP issuance cycles makes it hard to determine the right staffing level to cover every opportunity – too many staff, have people idle much of the time; too few, cannot handle peak periods.

From these challenges, you can see that there are reasons why it’s sometimes appropriate to outsource some proposal development work. These include:

• Acquiring direct, current, and high-quality expertise in general proposal development
• Acquiring current knowledge and an objective outside perspective regarding the state of the art in strategy, products, and proposals for your industry
• Allowing staff to remain primarily focused on current job and contract performance while the proposal is underway
• Addressing variable staffing requirements due to the lack of predictability in procurement cycles.

By the way – my comments in this post, and two subsequent ones that will address this topic, are from the perspective of our background and work in the state and federal healthcare arena. But, I think most of these concepts apply to other industries as well.

In Part 2 of this series, I will provide some recommendations for when to outsource, based on the scenarios given here.