Preparing Your Organization for Rate Negotiations
Five takeaways to help companies be successful
July 05, 2022
Preparing Your Organization for Rate Negotiations
With inflation recently hitting a 40-year high, many consumers are feeling the pinch. Luckily, healthcare inflation tends to lag the national average as reimbursement rates and other contracts are negotiated in advance. But as the cost for prescription drugs, medical supplies, and labor increases, payers and providers will experience greater pressure to demonstrate value and improve quality, while preserving patient access and managing costs.
Whereas most rate negotiations are resolved behind closed doors, FTI is currently tracking several disputes across the country that have caught the attention of local media, industry trades, and public officials.
These high-stakes and sensitive disputes often generate significant media exposure and threaten disruption to patient care and financial loss, all of which increase political, regulatory, and reputational risks for those involved.
Further, these disputes are playing out in public at a time when a majority of Americans (58% in a recent KFF Health Tracking poll) say they are worried about being able to afford unexpected medical bills, which can occur when patients seek out-of-network care after a contract dispute fails to be resolved. In the same poll, a majority of Americans (51%) say they have delayed medical services due to cost, including mental health and hospital services.
As your organization considers how to approach contract renewals and rate negotiations, here are five takeaways we are advising clients to consider in preparation for rate negotiations.
Patient Stories Pack a Punch
Healthcare is personal and the stories of patients struggling to pay medical bills or facing disruptions in care are emotional, relatable, and common. Reporters bring these stories to life, often including criticism of both sides for failing to reach an agreement in the process. We advise clients to prepare for critical media coverage – and the resulting social media backlash – but also to anchor their public statements in how they are helping individuals and families navigate these issues. Failing to be sensitive to the patient experience may be perceived as out-of-touch or too focused on company profits. Additionally, employing a proactive patient outreach and media strategy can help shape the public narrative and mitigate some of these risks.
Bring the Data
Supporting your argument with data is the foundation of any strong communications plan – and there is a lot of data out there to leverage. Hospitals and health systems are now required to publicly post prices for many services, numerous studies have evaluated the effects of market consolidation, advocates are investigating the network adequacy of health plans, and the public is regularly asked to weigh in on what they like and dislike about our healthcare system. Additionally, many organizations have access to first-party data, like customer satisfaction surveys, patient claims, and billing records. Messaging is only effective if it resonates with your key stakeholders, and strengthening your argument with compelling research and data can help your organization shape the narrative and counter arguments during negotiations, with the media, and in the public.
Assemble the Right Team
High-stakes negotiations require an all-hands-on-deck response. Given the potential reputational, financial, and regulatory risks that can occur as the result of a public dispute, organizations need to think holistically about the team of individuals that can contribute to a successful outcome. In our experience, each team member – from the CFO to call center representative, social media associate to in-house counsel – has a unique view on how a dispute affects the organization, its reputation, and their patient/ member interactions. Plus, each team member can be tapped to contribute, using the diversity of the team’s experience, connections, and communications channels.
What not to do? Dig in with your negotiating team and close the doors. Many times, unforced errors occur when someone without the correct information, preparation, or direction makes a decision without seeing the bigger picture.
Choose Your Storytellers
The right messenger can bring a story to life. Think strategically about who in your organization is best positioned to communicate authentically. Is it the CEO? Chief medical officer? A nurse or physician? While a communications officer can wrangle the press and draft statements, he or she is not the only one who can communicate effectively. Consider other trusted, highly regarded messengers within your organization who can tell a powerful story about the impact of the dispute on individuals, families, and the community or region.
Remember, the individuals who appear on the local news, in letters to the editor, in social media videos, and at community forums say a lot about your organization. Spend time learning their stories, make sure they are comfortable talking with the press, and are prepared to answer difficult questions.
Think broadly about who else might be in your corner. Leveraging allies like patient organizations, trade groups, professional societies, labor unions, or consumer advocates can strengthen your negotiating position.
Have a Plan… and another… and another
Negotiating doesn’t happen in a vacuum. Unexpected or prolonged media attention, regulatory scrutiny, political pressure, patient/member dissatisfaction, or expected financial loss can necessitate a rapid change in strategy and tactics. Tapping that diverse team to think through multiple potential scenarios and preparing actionable engagement plans until a new contract is signed is the only way to mitigate compounding risks.