Physicians have more power when it comes to negotiating contracts with health care insurers than they think.
The general perception is that physicians, unless they’re part of a large group or an IPA or PHO, have little to no leverage when it comes to negotiating contracts with health care insurers. But that’s all it is — perception. It isn’t reality. According to Carmina Nitzki, a consultant with Chicago-based, national healthcare consulting firm Health Directions, that perception exists simply because physicians haven’t tried otherwise.
“It’s true that the bigger you are the more leverage you have; the greater the voice when negotiating,” Nitzki says. “But that doesn’t mean that physicians in smaller groups can’t negotiate. They just they can’t negotiate because they haven’t had that experience yet.”
Analyze before negotiating
Nitzki suggests that the first thing physicians should do before reaching out to negotiate with payors is to analyze their own business as a way to achieve additional leverage. A specialist might focus on certain procedures. A family or general practitioner might focus on an exclusive service he or she provides. Those unique services can be used as leverage.
“Every urologist does vasectomy, but now some can do the procedure without using a scalpel,” Nitzki says. “Are you one of those physicians? Does that make you more unique in your area? Or, do you have a certain piece of equipment in your office that most physicians in your line of practice don’t have? Those things are palatable to the patient, so point out to the insurance company that you’re going to bring in more patients because of the way you perform certain procedures, so perhaps you should be paid more for them.”
Then, when it’s time to approach the insurance company, it’s important to aim high. Nitzki says that too often physicians think they’re going to get rejected immediately if they aim too high, but that’s not the case. The insurance company will always come back with some type of counter-offer.
“It’s just like any other negotiating process,” she says, “but physicians have been afraid to engage in it.”
Ripley Hollister, MD, a family physician and board member of The Physicians Foundation, says that once an insurance contract has been analyzed and negotiated, the on-going monitoring process begins. Hollister, who has been in practice for 25 years, says that insurance contracts are becoming more and more complex every year. Monitoring, he says, is an on-going process.
“The big touch point where I think physicians miss the opportunity is when amendments come up,” Hollister says. “Insurance companies call them material notice of change, and these amendments aren’t always friendly. Sometimes they require more work for my office staff, and the carrier doesn’t build in a new rate or bonus that will allow me to do that. Plans don’t necessarily know what goes on in a doctor’s office, so you have to re-educate them. You have to go back and negotiate with them. Explain that your practice is all about providing good, quality care for people, but that you can’t do it for free.”
Hollister says that education includes alerting insurance companies that you’ve just adopted a new electronic medical record or that you’ve become a patient-centered medical home. Perhaps your practice is moving from management of an individual patient to management of a population of patients.
“Those are all leverage points, where you need to say, ‘I’m doing my job in terms of taking better care of patients, who are also your clients, so you need to step up to the plate and help us with that,’” Hollister says.
Be prepared to walk
As with any negotiation process, there comes a point where, financially, it may not make sense to accept a particular arrangement. Nitzki says it’s perfectly fine to say “no” and walk away on good terms.
“If you’re a new physician you may not have the volume of patients that can give you much leverage, but perhaps in a year or two you will,” she says. “So don’t be afraid to walk away and come back later.”
Hollister agrees. He points out that most successful physicians will come to the point where they realize that what’s being offered in the way of reimbursement simply won’t allow them to address all of their intrinsic costs. “It’s tough, but there are times when the physician has to say, ‘I care about my patients. I want to offer them quality care, but I simply can’t do it under the equation you’re offering me.’”
That response, says Nitzki, may just prompt insurance companies to blink.
“Payors do not want to have everyone under their belt,” she says. “They want to corner the market, too.”
Ed Rabinowitz is a veteran healthcare writer and reporter. He welcomes comments at firstname.lastname@example.org.