In the past few years, there has been a shift in how physicians approach contracting with managed care plans. The “victim” mentality no longer rules. Practices are reading contracts, raising questions, getting some better terms, and sometimes fighting back in court or through the states’ attorneys general.
Still, most physician practices don’t have a whole lot of leverage in negotiating contracts. There is plenty of competition, and unless you have something that the customer – the patients – value, the health plan has the leverage in any negotiation.
First, leverage does not mean that the plans have the power to dictate terms. For the plans, they have to sell to the employers, but it’s the employees who ultimately have to be reasonably satisfied. Everyone on a company, from the CEO down to the janitor, will have the health plan. So it becomes very personal- even the CEO will hear about it at home if the plan’s rules cause inconvenience, delays and otherwise interfere with seeking care. So, what are characteristics that are valued by employees?
- Geographic location: if the employees are geographically dispersed, the physician panel has to be dispersed as well, so employees don’t have to travel long distances to see their physician.
- Specialties and sub-specialties: It is reasonable to have a smaller panel of specialists, but geographic access remains an issue. Patients also will want their specialist to be able to follow them in the hospital, so specialists need to be dispersed and on the hospital staffs.
- You are a significant provider for the plan members: Patients don’t like to be told that they have to change physicians.
- You are a “go-to” practice – a well known and well respected practice, one that patients seek out.
Even if you have some power in the relationship, rarely will you have strong power to dictate fees or other terms. Stay focused on the big picture – the issue is not what you are paid for each
The plans have to deliver quality services within their budget, which comes from the premiums collected. In planning your negotiation, look for what you can offer than (1) helps them sell plans and (2) controls costs and (3) demonstrates value and better outcomes. Plans are likely to pay for “quality” if this can be demonstrated in some measurable way, as this controls their costs
You have something to bring to the table in a negotiation – figure out what it is, and understand thoroughly what it is your potential partner wants from a deal. Negotiation is not about beating the other guy – it’s about completing a deal that brings rewards to both parties.