3 Contract Negotiation Tips for Healthcare Execs

September 23, 2019

Expert shares the skills healthcare executives need for successful negotiation.

Margaret Neale’s negotiation advice for provider executives is the same advice she would give to payer executives: Don’t look at your counterpart as the enemy; instead, search for areas where you share common goals.

Margaret Neale, PhD, is professor emerita at Stanford University’s Graduate School of Business and the co-author of “Getting (More of) What You Want: How the Secrets of Economics and Psychology Can Help You Negotiate Anything, in Business and in Life.”

She acknowledges that the payer-provider relationship can be fraught with conflict, but it doesn’t have to be.

Passionate physicians who have devoted their lives to treating patients want to give them access to potentially lifesaving treatments; provider organizations want to support these efforts, while remaining profitable. Payer executives want to provide members with access to innovative treatments.

Thus, her advice to provider and payer executives, alike: “Think about how [you] can be open to conflict, which may open up new avenues of agreement.”

Specifically, if the provider executive wants to secure coverage for a $1.2 million treatment, they should consider creative solutions where the focus of the conversation isn’t the cost of the drug. Rather, the provider executive can seize the opportunity to see the payer executive’s point of view and achieve an outcome “where the value isn’t just about dividing up $1.2 million or maybe ‘the winner gets all,” she says.

Related: ICER’s Leader: How to Assess the Value of Cell and Gene Therapies

For example, with CAR T-cell treatments, provider organizations are learning about ways to care for patients experiencing side effects that can land them in the intensive care unit. This is useful information for payer executives who are trying to manage risk, says Neale, who will present at the Pharmaceutical Care Management Association Annual Meeting, which takes place in Scottsdale, Arizona, on September 23 and 24.

Two additional pieces of advice from Neale include:

1. Determine your end goal for the negotiation. As a protagonist on either side of the negotiation, the healthcare executive “has to enter with the goal of being better off” than they were before entering the conversation, insists Neale.

Each party to the negotiation determines what that means, she adds. For example, a healthcare executive’s goal could be the ability to respond to more patients or to achieve better outcomes for patients.

Here’s how this could work out: The provider organization can’t afford to provide unlimited access to immunotherapy treatments without partnering with payer organizations for reimbursement, while remaining financially sound. Thus, their goal for participating in the negotiation is to increase their ability to provide the treatments to patients by increasing reimbursement from the payer organization.

2. Listen. In order to achieve success, the healthcare executive has to listen to the challenges their counterpart is facing. That allows the executive to frame their proposal as a solution to a problem their counterpart has, says Neale.

If, for example, the payer executive’s overarching goal is to provide treatment to a wide variety of health plan members, how can the provider executive frame a solution that allows the payer executive to do that?

Finding out the problem an executive wants to solve isn’t difficult. “Most people are quite willing to tell you their problems,” says Neale.

Aine Cryts is a writer based in Boston.