Dancing with the Devil

Dancing with the Devil:
Insider Secrets for Negotiating
with Managed Care Companies
Presented by:
Ron Howrigon
President & CEO
Agenda
• The reality of the exchange world
• Payer reactions to ACA
• Why are managed care negotiations critical to your business
success?
• The negotiation process
• Position evaluation
• Goal setting
• Strategy development and examples
• Negotiation tactics and examples
Newton’s Third Law:
To every action there is always an equal
and opposite reaction.
Healthcare Spending as a % of GDP
From Managed Competition to
ACA and the Exchanges
1993 Enthoven writes about “Managed Competition”
Create uniform benefit plans
Force universal coverage
Competition not only between plans, but also between
delivery systems
• Create a market place where transparent pricing drives
purchase decisions
• Drive budget-based capitation
• End result - a more efficient and effective economic
market for health insurance and the delivery of care
•
•
•
•
Payer Reaction - Consolidation
• Aetna buys Humana - $37 billion
• Anthem buys Cigna - $54 billion
• Centene buys HealthNet - $7 billion
Consolidation – Before
1.
2.
3.
4.
5.
6.
7.
United
Anthem
Aetna
Humana
Cigna
Centene
HealthNet
$141 B
$ 61 B
$ 58 B
$ 48 B
$ 29 B
$ 16 B
$ 14 B
Consolidation
1.
2.
3.
4.
5.
6.
7.
United
Anthem
Aetna
Humana
Cigna
Centene
HealthNet
$141 B
$ 61 B
$ 58 B
$ 48 B
$ 29 B
$ 16 B
$ 14 B
Consolidation – After
1.
2.
3.
4.
United
Aetna/Humana
Anthem/Cigna
Centene/HealthNet
$141 B
$106 B
$ 90 B
$ 30 B
Total
$367 B
Medicare
$505 B
Payer Response?
• Tiered Networks
• Exchange Networks
• ACO Model
• Value Based Contracting
• Capitation and Risk Transfer
• Fee Schedule Reduction
Why Negotiate?
• Healthcare reform means insurance companies
are going to get more aggressive
• Narrow networks are real
• Medicare is still going broke
• Managed care is targeting physician expenses
• Protect your future. Remember: if you are not
invited to dinner, you probably are dinner.
The Negotiation Process
Evaluate
Position
Evaluate &
Adjust
Evaluate
Opposition
Close Deal
Set Goals
Negotiate
Develop
Strategy
Evaluate Your Position
• Market position
• Competition
• Payer mix
• Payer fee schedules
• Value proposition
Evaluate Your Opposition
• Market Share
• Competition
• Current Performance
• Leverage
• Weakness
• Intangibles
Set Goals
• Reimbursement
• Contract Term & Termination
• Language
• Walk Away Points
• Opening Position
• Negotiation Points
Managed Care Strategies
• Delay: “Our lady of perpetual negotiations”
• Limit of authority: “Corporate, legal, budget, etc.”
• Two steps forward and three steps back
• Funny math
• The run around
• Package pricing
Managed Care Strategies
• Divide and conquer – hospital vs. physicians
• ACO Strategy
• Corporate Budget
• Not all products – narrow networks
• Indifference
• Employer communications
• Termination language and dates
Develop A Strategy
• Negotiation is all about leverage!
• “Let us never negotiate out of fear. But let us never
fear to negotiate.” - John F. Kennedy
Provider Strategies
• Value Play
• Non-Par Bluff
• Court of Public Opinion
• Musical Chairs
• Sell to the Hospital Bluff
• Make the pain of the change less than the pain of
the status quo
Road Map to the Maze
• Be proactive!
• Map out relationships first!
• Stay involved with all local physician organizations.
Don’t become the scape goat.
• Develop analytic and alternative payment capabilities.
• Know your leverage points.
• Don’t fall for payer spin.
• Once you have secured your flanks, then negotiate!
Negotiation Points to Remember
• “The best battle plan rarely survives the first contact
with the enemy.”
• Adapt, adjust and overcome
• Everything is negotiable
• I can’t vs. I won’t
Key Points
• Negotiation is a process not an event!
• You must effectively negotiate your managed care
contracts in order to succeed.
• Knowledge, analysis and planning are essential for a
successful negotiation.
• Contract language negotiations can be as critical as the
rate negotiations.
• Be prepared. Don’t go into a gun fight armed with a
knife.
Questions?
Thank You
Contact:
Ron Howrigon
Fulcrum Strategies
[email protected]
919-753-4141