Negotiating With Hospitals Is A Challenge To Logic And Common Sense


For the past several years many of our clients have moved away from a world of fantasy and make believe  into a world of Common Sense, Logic, and Prudent Business Practices in the never ending search for fair and equitable health care pricing.

We have met with numerous hospital administrators in an effort to negotiate fair and reasonable rates. What we have found is a carefully rehearsed series  of objections common to all we have met.

One hospital administrator parrots another.  It is now exceedingly easy to anticipate the content and outcome of any meeting with any hospital administrator anywhere.

Why not pay a hospital using Medicare pricing as a benchmark? That seems logical and makes sense. After all, hospitals have been filing Medicare claims for years, and have the systems in place to do so.

But, below is the standard hospital response:

Objection #1 – “We do not have the system set up to bill your client RBRVS based rates.”

Answer to #1- “Oh really? Don’t you bill Medicare for almost 80% of your patients? That’s all were asking you to do here, with a premium load to you of, say, 10%. Can’t you do that?

Objection – “Nope, it’s a systems problem, an insurmountable systems problem.”

Answer – “Ok, we will do it from our end. Just send us your inflated charges, based on your mysterious and onerous Charge Master, and we will adjudicate the claim based on RBRVS + 10%, less duplicate charges and medically unnecessary charges. ”

Objection – “Nope, No Can do. Our system is not designed for that. It is an insurmountable systems problem.”

Editor’s Note: Conclusion – Hospitals employ lousy I.T. geeks or Hospital Administrators are lousy liars.


Fan Mail Letter received from an insurance consultant:

I think you hit it on the head on both accounts- lousy systems and lousy liars. Add a third- stupidity.

Plus they don’t get the business that we are in. I once told a hospital client that I could get them lesser rates if they switched to the PHCS PPO for their employees who use other hospitals. They said they didn’t want to do that because PHCS paid so little to them on their contracts with PHCS.

Later I was consulting for the same hospital that switched from Blue Cross to PHCS for their own employees in their own hospital. They didn’t like the discounts PHCS was taking. I asked them if what PHCS was allowing was greater than cost. They said yes. So I tried to explain to them that they should just be running their own employees bills through at cost. They didn’t even need a TPA. They didn’t get that!

Fan Mail received from a large National TPA:

This article is a good one.  So tired of their excuses.  Also we do have some hospitals who are doing Medicare + so I think the rest of the hospitals are lying about not being able to get the system to accept it.