Power to Negotiate

September 1, 2007

There are three practices in my region that do the majority of the specialty work in my field. I feel that I have no leverage with insurance companies on my own. Could I form a loose business arrangement with these other practices to negotiate with payers? We don’t want to merge our corporations. We just want to form a partnership of sorts for the purposes of negotiation. Can this be done?

Question: There are three practices in my region that do the majority of the specialty work in my field. I feel that I have no leverage with insurance companies on my own. Could I form a loose business arrangement with these other practices to negotiate with payers? We don’t want to merge our corporations. We just want to form a partnership of sorts for the purposes of negotiation. Can this be done?

Answer: The only model that meets your need is something called “messenger model” IPA. In essence, you associate only for negotiating reasons. But you cannot see one another's fee schedules. This would be considered price fixing or collusion since you aren’t actually the same entity. Instead, a messenger relays the proposed fee schedule to each practice individually, and each practice individually decides whether to take it.

Your negotiating stance would be even stronger, obviously, if you did join in a full partnership. It might be worth looking at if you can overcome the associated obstacles. In either case, get some good legal help.