Recognizing the Clout Employers Have During Contract Negotiations

With more contract negotiations between providers and payors hinging on commercial payment rates and language, a larger emphasis has been placed on employers and the role they can play in contract negotiations. Traditionally, the audience with the loudest voice and influence on the payor were their individual members. The goal was to get the members energized to put pressure on their health plan, and the health plan would listen. Not so simple anymore, unfortunately. The collective power of the individual members has slowly given way to another bigger player — large employer groups. These employers are often the most lucrative part of a payor’s business, other than Medicare Advantage, and therefore have much more influence over their decisions than individual members. The larger the employer, the louder their voice. In fact, employer-sponsored health plans cover more people than any other source and accounted for roughly $700 billion of all healthcare spend in 2017, equating to about 20%.

We can also use the recent example of Piedmont Health’s 2018 contract negotiations with Anthem/Blue Cross in Georgia, as reported in local and trade media. Despite repeated attempts to reach an agreement, the two parties went out of network, leaving approximately 500,000 patients without in-network access to Piedmont’s facilities and physicians. It wasn’t until Georgia’s governor stepped in and brought the two parties together that they were able to find a resolution. Why did he step in? Because the State of Georgia’s employee benefit plan was provided by Anthem/Blue Cross, meaning more than 600,000 lives — including state workers, teachers, retirees, and their respective dependents — were potentially impacted by this negotiation.

With few exceptions, we see the majority of employers relying on their broker or benefits consultant — or the health plan they chose — to influence how they think about their local healthcare landscape and the cost of healthcare services. It is now critical that providers take back control of this narrative and have direct conversations with local employers, as they also represent one of their most important influencers and biggest suppliers of revenue.

Building a solid relationship with local employers should be at the top of any provider’s to-do list. This can happen through organic conversations where providers learn how they can better support the employers’ workforce needs, help control healthcare costs, and be a collaborative partner well before any contract negotiation begins. The first of two tactics you could use to execute this would be through an employer roadshow. Identify the employers with the highest volume of employees visiting your facility by utilizing your EHR information, then set up personal meetings with their benefit decision-makers. You could also launch a direct mail campaign to the same audiences highlighting your service offerings that are most important to those employers — especially if there are cost-savings for those services at your facilities compared to other competitors. Those two approaches work hand in hand.

Regardless of your approach, the goal should be to establish strong partnerships with this valuable audience. Then, when you find yourself preparing for a contentious contract negotiation, those employer relationships will already exist and those employer partners can support and apply pressure directly toward a payor on your behalf. Do the prep work now to ensure you’re in the best position possible moving forward. The success of your future contract negotiations may depend on it.

May 8, 2019
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