Thought Leadership

Three ways health systems can strengthen their footing ahead of the next big negotiation

By Revive
posted Oct 16, 2020

If you’ve worked with any of us from the Revive Payor-Provider team or spent any time reading our newsletter, you’ll know we remind our clients that “preparation is half the battle” when it comes to contract negotiations.

At a time when payors are in the best financial position to fairly support health systems and reporting record profits, we’re seeing them double down on efforts to squeeze hospitals and providers – regardless of where the hospital stands on quality, affordability, or fulfilling community and member needs.

During the pandemic, Anthem breathed new life into the RAND 3.0 study aimed at furthering big insurance’s narrative that the reason healthcare is so unaffordable is that hospitals and providers are greedy, charging too much. While hospitals are hemorrhaging cash, United is moving full steam ahead with its corporate mandate to unilaterally slash rates and bolster the expansion of their physician empire. The list goes on, but the point is contracting teams must recognize the upper hand all payors are enjoying right now and be prepared to have to fight for what you need. We see it every day, payors actively exploiting hospitals’ fragility to push through bad deals.

But here are three things that hospitals and health systems can start doing right now to prepare and strengthen their footing ahead of your next big contract negotiation:

1. Develop relationships with your top employers

Employers are among the most influential stakeholder groups hospitals have when it comes to contract negotiations (and payors are taking notice). Employer engagement has been the tipping point in some of the most contentious negotiatios we’ve seen. We’ve also seen strategic engagement help prevent a public negotiation altogether. Investing in your relationships with employers can yield significant returns. Unfortunately, most hospitals aren’t doing enough – sometimes anything – to build value with employers. Start today.

Start by knowing who your top employers are and understand how they are utilizing services. Use the data to identify natural ways to deepen the value the employer sees in your hospital. Ask employers what they need.

Here are some ways hospitals can strengthen support with employers based on our research:

  • COVID-19 leadership (leverage the authority your executive leadership has in this space to position your hospital as a resource for COVID-19 information, testing, and safety)
  • Wellness programs (onsite check-ups or flu shot clinics)
  • Disease prevention or management clinics (based on employee demographics)
  • Patient support resources (billing support, patient navigators or advocacy)
  • Get to know brokers.

2. Get to know brokers

When it comes to some of the most challenging negotiations, a hospital’s ability to move lives (moving patients from one payor to another) is an effective way to pressure payors. And while brokers can be very loyal to health plans thanks to commissions and incentives, there are ways health systems can partner with brokers to level the field and even achieve an advocate when it’s time to move patients to preferred payor partners.

Here’s what brokers will look for from health systems: access and information. Offer brokers access to the patient market in your facilities (lead generation) and key physicians (meet & greets); access to hospital events such as health fairs; information that helps them sell to employers, including population health programs, wellness initiatives, and introductions or training on patient technology (patient portals, etc.).

3. Sync up with your government relations and public relations department.

Research continues to show that the public has record goodwill and trust in health systems and providers. Now is the time for hospitals to share their stories with the media and with elected officials. Just like employers and brokers, relationships with your elected officials and local reporters are key. Make sure these stakeholders understand the good work your health system is doing – even beyond the COVID-19 response (the public is hungry for feel-good stories unrelated to the pandemic). It’s also important to show how your health system is taking the lead on addressing community needs and setting the record straight on the vast misinformation around pricing. Find synergy among your government relations and public relations peers to understand the key players and how your contracting strategy fits into the existing narrative and political agenda. Hospitals have the attention of the public – use it wisely.

The work hospitals and health systems do in the contracting “off season” is just as important as the negotiations themselves. When negotiations get sticky, the systems that have invested time into cultivating positive relationships with key influential stakeholders will have an easier time finding support from these groups that are often needed to close the gap to the required deal.

Know that you’ve always got a supporter in Revive. We not only help hospitals navigate tough negotiations, but we can help you secure the reputational footing you need to set yourself up for success well ahead of negotiations.