How Physicians Should Negotiate with Payers

In any physician's office, obtaining a viable revenue stream is most commonly goal number one.  Beyond waiting for patients to make timely payments to their invoices, much of the income of healthcare facilities revolves around physicians' relationships with their payers.

In order to obtain optimal contracts, medical facilities must be able to negotiate cost-effective terms that make sense for both businesses. The negotiation process can be an intricate dance between the two parties, but physicians who are armed with ample information are likely to achieve better results, creating a positive outcome for the facility, payers, and patients.

Below you will find a SWOT analysis that speaks to a few key topics physicians should consider when they're negotiating with payers. By performing this analysis, practices can better leverage the best parts of their business and negotiate better rates.

Strengths
Leaders who know their organizations' internal strengths can take advantage of the positive market positions their facilities hold.

Consider the following questions:

• How many new patients are enrolled in the plan?
• Does the organization utilize quality measurements when reviewing revenue and expenses?
• Does the facility boast of a strong patient satisfaction rating?
• What types of benchmarking have been put in place to record quality and efficiency?
• How is the organization's service unique and new in the current market?
• Are leaders networking with peers at a local and national level in an effort to learn and trade best practices?

Weaknesses
No organization can improve if it's not aware of its deficiencies.

When analyzing weaknesses, healthcare providers should pay particular attention to the following:

• How is the current fee structure impeding advantageous results?
• What percentage of the current fee structure is attributable to current Medicare fees?

Opportunities. 
There's always room for improvement. Successful organizations are always on the lookout for ways in which they can improve.

• What is the break-even point? This can be determined by adding overhead and physicians' salaries and dividing them by total frequency of all codes for a certain payer. This weighted-average cost can then be compared to weighted-average disbursements.

Threats. It's vital to monitor contract end dates so administrators can be apprised of proper timelines necessary to request changes.

Negotiations, as tedious as they seem, are imperative. With proper due diligence and preparation, practitioners can realize real results; readily enhancing their facilities' bottom lines.