How to gain an edge in negotiations with managed care companies

While many dread negotiating rates with managed care companies, hundreds of practice professionals learned the secrets to success from Ron Howrigon, president and chief executive officer, Fulcrum Strategies, Raleigh, N.C.
 
Howrigon says he has largely seen these beliefs to be true, and says that learning to negotiate more effectively can help you to protect your practice from these trends. Negotiation is especially useful now because industry changes stemming from the Patient Protection and Affordable Care Act will prompt insurance companies to be more aggressive, Howrigon adds. “Negotiation is a process, not an event,” he explains. “If you don’t do the work ahead of time – if you don’t train – then you’re not likely to have very much fun at the negotiating table.”

One of the most important steps is to understand your position and that of your opponent before you start talking. “Take a really serious look at what you are good at and what you are not good at,” he says. “It has to be honest.”

Evaluate your position

Knowledge is power. Before heading into a negotiation, get the answers to these questions:

• Are you the dominant player in your marketplace?
• Do you compete against hospital-owned or “mega” practices?
• What does your payer mix look like?
• How do your payers’ fee schedules compared with each other? (The payers already know this.)
• What is your value proposition? What unique value do you bring to the payer?

Evaluate your opposition before heading into the negotiation

• What is the company’s market share?
• What is the company’s competition?
• Is the company profitable and growing?
• What are leverage points you can use against them? What are the company’s weaknesses?
• Are there any intangibles you can use, such as complaints against them?

Not sure where to start your research? “Google is a wonderful thing. You can get all sorts of information and articles that way,” Howrigon advises. He also recommends checking your state’s Department of Insurance, where you should be able to get a carrier’s financial filings for that year. You might also want to ask the broker who manages your staff insurance policies. “They deal with all of the carriers, and they know all sorts of information,” Howrigon says. 

Once you know where you and your opponent stand, set specific goals about what you want to get out of the negotiation. How much reimbursement do you want and what contract terms do you need?

To create leverage, “make the pain of the change less than the pain of the status quo,” Howrigon explains.

Other negotiating tips

• Reach out to the payer if you want a better rate.
• Develop analytic and alternative payment capabilities.
• Know your leverage points.
• Don’t fall for payer spin.

Knowledge makes all the difference. Don’t “walk into a negotiation without having done a fair amount of work upfront. You are going to get beat.”