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Winning is better in payor/provider contracting

As I was driving home from my middle son’s freshman football game, he sighed and said to me, “Winning is so much better than losing.”

This insight, delivered from the simple and exhausted mind of a 14-year-old boy, is so true. And nowhere is it more true than in the world of payor/provider contract negotiations. I know that connecting the dots between high school football and payor/provider contracting is probably a sign of my mental instability, but it’s true.

Winning is better. There’s no way around it. Hospitals and health systems that “win” in their payor contract negotiations are financially healthy. They have adequate resources to invest in technology and new capabilities. They are able to take risk, and partner with physicians, and otherwise go about the hard work of transforming their little corner of the healthcare system. That doesn’t mean they necessarily do those things – but they can because they win.

In any situation, it’s rare that you know exactly what causes you to win. And that’s particularly true when it comes to payor/provider contract issues. We’ve mapped the Five Ingredients of Successful Payor/Provider Negotiations – clarity, resolve, story, strategy, and discipline – yet it can be difficult to pinpoint which of the ingredients makes winning possible in any given situation. All five are critical, and putting them together gives any organization the best chance of a successful outcome.

Yet we almost always know why we lose, and that’s when we learn the most.

Losing is so much worse than winning. Hospitals and health systems that “lose” in their payor contract negotiations are financially strained. They lack adequate resources to invest in technology and new capabilities. They are unable to take risk, and watch critical physician groups and specialists align with their competitors. They are unable to transform their little corner of the healthcare system, watching as others make progress. They are forced to shrink, close services, and even sell to a consolidator. That doesn’t mean they necessarily do all of those things – but they have fewer options because they lose.

Winning is hard work, for sure. For my 14-year-old, it means long summers of two-a-day workouts, endless sessions in the weight room, and great moments like the practice last week when the 320-pound varsity lineman stepped on his hand. Yet he stays with it because he knows he will survive. His hand will heal, his soreness will disappear with rest, and he can sleep in the winter. He knows deep down, it’s all worth it to be part of a team that has won 50 of its past 52 games and four straight state championships. He knows winning is better. You only have to lose once to know that.

We all know it, too. The question is, are we willing to do what it takes to win?

February 8, 2018
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