Flipping the Script on Negotiations
As one of the largest Catholic health care systems in the nation, Trinity Health operates a network of 101 hospitals across 27 states, 17 clinically integrated networks, 126 continuing care locations, 136 urgent care locations, and the second largest PACE program in the country. As a faith-based not-for-profit health system Trinity Health invests heavily back into the communities it serves, delivering $1.5 billion in the form of charity care and other community benefit programs in fiscal year 2023.
In the third session of Revive’s Summit Series, Stuart Kilpinen, SVP of Payor Strategy & Product Development, and Bob Beverwyk, VP of National Payor Contracting, both from Trinity Health, discussed how they have transformed Trinity Health’s approach to health plan negotiations, including some of the challenges and opportunities that exist in an effort to secure more balanced contracts. We developed a re-cap of some of the key takeaways, themes, and questions discussed in the session.
Key Takeaway #1: Understand what drives success for the health plan and find areas to align incentives.
Prior experience on the payor side of the business has aided both Stuart and Bob in their approach to health plan negotiations. Having built up an internal team with a variety of backgrounds, this diversity gives Trinity Health a unique understanding of how to prioritize their revenue goals and align them with the needs of the payor.
While both providers and payors are aiming for the same thing, more dollars in than out, there is inherent conflict in the reimbursement model as it exists today. Traditionally profit-driven companies, often publicly traded, health plans are seeking increased returns for shareholders. Conversely, Trinity Health, like many systems across the U.S., operates as a not-for-profit health system. Their motivation is not driven by profit margin, but by providing the highest-quality care; any margin that does exist is invested back into improving care delivery for the communities they serve.
But according to Bob and Stuart, it’s important to understand that there is room for aligned incentives. “You’ve got to manage through the competing interests and try to find those areas of alignment. At the end of the day, there’s going to be things we just don’t agree on, and we have to find solutions,” said Stuart.
Stuart also shared that it’s about being able to demonstrate and prove what’s in it for the payor. “A lot of what we do is having to justify how we operate together, and how it benefits both parties. To the extent that we can have a higher level of performance, how we can reduce their costs to operate our contracts? That’s been our focus — to try to create a win-win situation where we can.”
Key Takeaway #2: Hold payors accountable to supporting organizational initiatives to streamline operations.
Operational improvements are one way to improve collaboration with health insurers. Trinity Health recently transitioned to Epic, so they’ve been working hard to leverage that technology and capability, bringing the value of large-scale automation and care coordination into negotiations. “We’re looking for opportunities where we can streamline operations with payors, reduce both sides’ administrative costs, and improve our revenue cycle…. To the extent that we could find those operational areas that we can create value both ways, we’re looking to expand on that and automate how we operate with payors,” shared Stuart.
Like many systems, Trinity Health is looking for ways to lower their costs. They have made a concerted effort over time to develop national agreements with the largest plans that ensure mutual value. Driven by operational efficiency, large-scale agreements have significantly reduced administrative costs and have allowed Trinity Health more consistency in the relationships they build with health insurers.
“We’re looking to operate more consistently, more efficiently, and part of that is being able to work in a consistent way with each of the payors. It’s more efficient to have fewer pieces of paper [contracts]. It’s also more efficient to have common procedures and a common way to work with the payor. And I think that benefits both of us. We’ve looked for those types of opportunities to create more efficiency, more consistency, and to save more money,” said Stuart.
Key Takeaway #3: Contracting professionals should consider the power of communications to help improve negotiation outcomes.
It has become increasingly important to secure agreements with health insurers that bring providers out of the red and protect sustainability. Engaging stakeholders, including employers, brokers, and patients to help encourage accountability can be a highly effective strategy to do this, but requires a fair amount of awareness-building and education efforts. With this in mind, Trinity Health has built a negotiations strategy that now includes strategic communications, including storytelling and community relationship-building. Stuart and Bob expressed the significant benefit in having managed care contracting and communications teams collaborate on formulating the right message, to the right audience at the right time.
“We’re at a point in the country right now that we just can’t afford to be silent. Hospitals are closing, failing, or struggling all over the country. That’s their story. That’s our story, too, in some degree,” explained Stuart.
This fall, Trinity Health launched “Health Comes First” to raise awareness of the financial struggle not-for-profit health systems face due to lack of fair reimbursement from health plans.
“The major payor organizations are making significant profits. If those funds aren’t used to support important community health systems, how does that play out? Communities lose access to much needed care and services, and the communities that lose access first are the ones that need it the most. We can’t just stand by, so we’ve been pretty aggressive in getting that messaging out, and we’ll continue to do that,” they shared.
Internal engagement in spreading this message across managed care, communications, advocacy, and government relations teams have enhanced its reach. “There’s a lot of correlation and connection about our messaging with the government programs and with private payors. And the last thing that we want is for our constituents to be surprised. So having a plan, being prepared, working closely with our communications areas, and telling our side of the story is critical. Not being prepared can backfire on you, and you end up in a worse situation than had you been transparent and upfront with those that count on you to work together for your patients,” shared Stuart.
If your organization needs a communication strategy to help achieve your negotiation goals, please contact Kate Caverno (firstname.lastname@example.org), VP of Communications at Revive.