Why practices lose before payer negotiations even begin

For many physician practices, payer negotiations feel like a losing battle before the first conversation even happens. The culprit usually isn't a lack of leverage; it's a lack of preparation.

Doral Jacobsen, CEO of Prosper Beyond VBC, works with practices across the country on payer contracting strategy. She says the defeatist mindset she encounters most often traces back to three interconnected problems: a poor track record that breeds anxiety, an absent strategy that erodes confidence, and a fundamental lack of clarity about how existing contracts are actually performing.

Physicians Practice: When practices say they feel defeated going into payer talks, what is usually driving that? Is it a lack of leverage, a lack of clarity on what to ask for, or poor internal alignment?

Doral Jacobsen: What we typically see is a poor track record. A practice might have had a negotiation that didn't go very well and then makes the assumption that this is difficult across the board. That's not necessarily so, but it definitely creates anxiety and a lack of interest in pursuing other negotiations.

There's also a lack of strategy. Most practices that we work with haven't identified or really articulated what it is that they want in the short term and the long term. That leads to a lack of confidence and fear of rejection. If you don't have a strategy and you don't have confidence in your position and a plan, of course you're going to wonder how things are going to go.

And then there's a lack of clarity. So many practices don't really know how their contracts are performing. They're not sure what their reimbursement rates are. They don't understand the implications from a language perspective. It's really difficult to establish a starting point if you're not sure where you are from a landscape perspective.

For example, I had a client in Florida not long ago. When they retained us, they said their worst contract was with a particular payer on the Medicare Advantage side. We did our assessment and found they had about eight contracts on the Medicare Advantage side. That definitely wasn't the worst one. It was actually in the middle. They originally wanted to terminate that contract, but by the end they did terminate it, because it had become the lowest Medicare Advantage contract. It's really important to do your homework, and a lot of practices haven't done that. That impedes their ability to effectively deploy a contracting strategy.