Do Payer Negotiations Have to be “Bloody”?
A recent article 1 in Modern Healthcare described upcoming negotiations between providers and payers as “bloody”.
We find in our work that they don’t have to be.
Both providers and payers have been and are still progressing through a worldwide pandemic so we are both still dealing with plenty of uncertainty about the future clinical needs of our communities and the costs to provide that care.
The insurance industry is built on measuring and pricing risk using statistical analysis based on historical data, then building products that move as much of that risk to others or adding extra protection for their profits.
The pandemic has called into question many of their base assumptions, just as it has changed many of our clinical practices.
In the case of healthcare insurers, the payers have contractually obligated themselves to cover the costs of their subscribers, but only once all conditions are met. So, they build complex products that many of their employers and subscribers (our patients) don’t understand.
However, payers cannot provide the care for the products they sell - so they contract with healthcare systems or build fragmented networks that can provide the care they have contracted for.
We have found that by preparing rational, fact based analysis of the current business relationship with goals based on the realities that both parties face, we can have productive business negotiations that can build a foundation for a solid business relationship.
We are not suggesting that these discussions will be easy or without some discomfort but if you stay focused on reasonable objectives, the payers can adapt. Afterall, they report quarterly profits on a routine basis so they are not in much danger, but they cannot provide the care you do for your community so they need you to keep those premium dollars coming in.
Our process starts with an assessment of the current relationship based on data that both parties have so we start from common ground. We then use tools to measure the net revenue value and the reasons for that result. From there we discuss internal and external opportunities to improve the value of the relationship and the variety of options to achieve those goals.
We discuss the external opportunities with the payer to see which they are most amenable to and remind them of the value of the care we provide to allow them to collect premiums from our community.
In almost all cases, if we are dealing with a rational team on the payer side, we will come to an agreement that allows us to serve their subscribers in our community with a margin than allows us to reinvest in the advanced clinical care that keeps our patients healthy cost effectively.
We are not suggesting this is easy, but if approached intelligently, we find that you can achieve your goals.