The CFA Perspective

Six Keys to Successful Negotiation with Your Hospital

Posted by Charles Franc

4/1/16 7:00 AM

6-keys-to-successful-negotiation-book-thin.pngPhysicians all over the country are exploring new ways to align with one another, align with hospitals and create new operating structures in an effort to leverage their position within the current forces shaping the healthcare marketplace.  To do that well, physicians must plan and negotiate effectively.  How do we as physicians successfully negotiate mutually beneficial partnerships with our hospital administration colleagues?

Negotiation, in its simplest form, seeks to maximize value or benefit and minimize loss or risk between one or more parties.  A key factor in successful negotiation is for physicians to acquire, develop and deploy effective negotiation skill-sets -- something that was not likely part of their training.  Obviously, physicians are experts in assessing complex problems and making appropriate, effective decisions.  However, in our experience, when physicians need or want to strike a deal with hospital administration it can often result in ”cognitive dissonance” when attempting to negotiate mutual value or workable agreements.  Frequently, this can be vexing for physicians to be sure.

So, what are the critical success factors that drive effective negotiation with hospital leadership? Here are six keys:


  1. Know Thyself:  Frontload for Success. Assess your negotiation strengths and weaknesses.  You need, at a minimum, to prepare yourself through studying successful negotiation methodology.  Or seek subject matter experts to assist you.
  1. Know Your Hospital Administrators’ Negotiating Position:  Maximize Your Leverage.  Assess the operating strengths and weaknesses of your hospital, including market share, level of quality, profitability, competitive position in your specialty and current state of their operational/clinical capabilities.  Finding the strongest position for you and leveraging their weaknesses or adding new strengths to the hospital’s position in the marketplace is the goal.
  1. Understand Barriers Upfront:  Assess The Landscape.  Assess the value proposition from the hospital’s perspective -- does it put them at moderate to significant risk legally, strategically and/or operationally?  If yes, you will need to craft or adjust your plan to address those issues; create attainable, mutual value; and decrease/mitigate risk.
  1. Use Data In Your Deal Presentation:  Use Visual Aids to Describe the Proposal.  Like physicians, highly performing hospital managers are trained to use data to drive decisions.  Presenting your concept and proposal with supporting data, such as incidence/prevalence data, growth projections, financial/operational impact, or evidence-based quality improvement research is effective.          
  1. Employ Effective Interpersonal Skills:  What You Say and How You Say It Matters.  The manner in which you communicate with one another and negotiate deals is positively or negatively impacted by the way you speak and interact.  Employing interpersonal techniques that build trust and seek to positively mold and shape negotiations is very important.
  1. Think Outside the Box:  Always Assess Alternatives.  Sometimes the best thing to do when considering negotiating a deal with a hospital or health system is to not negotiate at all!  On occasion, the best way to maximize value for you and/or your practice is to develop something on your own or with others.  We often counsel CV medical groups to conduct a feasibility assessment when considering alternatives to developing and negotiating hospital deals.  With current trends in reimbursement, maximizing practice/operational growth, efficiency and convenience; improving financial metrics; and creating greater leverage in the healthcare marketplace may best be accomplished through joining with other medical specialties or other capital partners..

Summary

For two decades, hospitals and doctors have developed and/or embraced various alignment strategies and structures to address volatile marketplace dynamics and an increasing “fee for value” environment.  Sadly, our research shows many CV physicians are at a decidedly disadvantaged position when it comes to successfully negotiating with hospitals and health systems.

For CV physicians, the ability to craft and negotiate the best deal(s) possible for their practice increasingly requires a level of dealmaking sophistication many cardiovascular physicians have not been trained to use, had the time to address or have not been as successful as they would like to be.  The six keys outlined herein will help CV physicians improve their ability to secure value-added practice agreements with or without hospital administrators.  Working to better understand and leverage your strategic position is a skill many cardiovascular physicians would do well to develop.

For additional detail, click below to see CFA’s white paper, “Six Keys to Successful Hospital Negotiations.”

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