Restrained to Dealmaking: Finding Leverage in Payer Negotiations
For months, one of the nation’s largest not-for-profit health systems had been navigating intense payer negotiations over several multi-state contracts. As system leaders worked to finalize the agreements, they realized they could benefit from a framework that could guide future negotiations with increasingly aggressive health insurance companies.
Cognizant that their payer negotiations were becoming more pointed, the system’s leaders came to us for smart leverage tactics that would preserve internal and external relationships. We were brought on several months before any major contracts expired, which enabled us to take a timely, balanced approach to identifying and employing points of leverage.
We first established a dialogue with key functional teams within the organization — communications, HR, legal, physician relations — to ensure optimal representation of all business operations in our negotiations. Initiating a campaign-style approach, we then engaged stakeholders throughout the system’s sphere of influence. From communicating with employers struggling to provide their staff with coverage to encouraging patients to call insurers with appeals to work with the health system, we dispatched multiple calls to action to amplify leverage platforms and communicate the widespread need for equitable contracts.
We conducted regular briefings with system executives to advise on communications tactics. We also established regular weekly campaign team meetings with more than 30 internal stakeholders. Moreover, to help leaders prepare for future contract discussions and combat the growing trend of contentious payer negotiations, we assembled a negotiations playbook.
The negotiations ended with multi-year contracts that exceeded internal minimum rates and helped the system keep pace with inflation costs. Meanwhile, the organization was able to fulfill its mission to serve more than one million patients impacted by the agreements. Our efforts helped minimize media coverage and reputational impact. Now, equipped with a strategic playbook, the system has procedures in place to manage the trend of aggressive payer negotiations.
Barriers to Successful Payer Negotiations:
Engaging cross-functional teams for cohesive approach
Identifying and creating points of leverage
Rising healthcare costs due to inflation in all aspects of the economy
Representing system-wide, year-over-year interests in contract cycles
patients affected by the agreements
to or negative impact on care services
In the middle of or preparing to negotiate a payer contract?