Early in my career, I sat through some nasty, hostile contract renewal negotiations: the big payer shoving the contract and rates down the provider’s throat and the largest provider in the market holding that position hostage for outrageous rate increases that were not sustainable for consumers. Bad relationships all around.
Since then, I have seen and contracted everything from percent of/off billed charges to complex risk models and capitation, and have learned a few tricks along the way, mostly through trial and error. Through these early experiences, I developed an approach that leads to much better outcomes and very collegial payer/provider relationships. First, my approach is built on the basic premise that most often, payers and providers need each other in a defined geographic marketplace (there are exceptions) so relationships are key. Second, I believe all of us should conduct business in a respectful manner and consider how we want to be treated in return. We need to build relationships and partnerships, not engage in head-to-head combat. In this article, I outline my approach and provide some strategic tips. In future newsletters we will explore the nuances and issues related to specific contracting methodologies like bundled payments, risk contracts, and others, but for now, let’s concentrate on the contracting process.