When Reason & Logic Won’t Win The Argument, Arm Twisting Will

By Bill Rusteberg

I’ve been dealing with hospital administrators since the 1970’s and during the years since little has changed. I know exactly what the hospital administer will say and do during the negotiation process, their tactics, including the traps they set for amateurs.

Also unchanged is their attitude and that of their subordinates who they’ve trained to be just like them. They all graduated from Clone University.

One thing that drives me crazy are plan sponsors who want direct hospital contracts at almost any price. They don’t know in advance what they are willing to pay and have set no limits when entering the negotiation room.¬†They don’t know when to walk away.

And then there are those plan sponsors loathe of employing arm twisting tactics. They don’t understand the concept “The only thing a son-of-a-bitch understands is another son-of-a-bitch. These weak negotiators never win.

Good business is when both sides win. Bad business is when there is only one winner.

Here is free advice to plan sponsors who seek direct hospital contracts:

  • Set your parameters in advance and be prepared to walk away
  • State your offer upfront
  • Don’t fall into traps which will be set immediately in your first meeting
  • Meet with the right person otherwise you are wasting time
  • Never have more than two meetings. If you are not successful in two meetings, you never will be
  • Be knowledgeable about the hospital’s financials and payer mix. Be knowledgeable about managed care contracts, know and understand the language
  • Always be fair
  • Understand you’re the one with the money (power) and the hospital wants it
  • Don’t smile when you don’t have to

I could write a book about some very interesting episodes over the years. It’s almost funny even if it wasn’t. One example was a brief meeting I had with a hospital administrator in East Texas some years ago which went something like this: “Hi, screw you!” followed by “Hi, screw you too.” Another example in West Texas: “We aren’t gonna accept your patients, we will consider them cash pay” followed by “That’s great, we couldn’t ask for anything better than that, let’s do it!” And we did.

Plan sponsors embracing Reference Based Pricing don’t need hospital contracts just like you don’t need a contract when shopping at your favorite grocery store. Hospitals know that and so should you. That makes walking away from the negotiating table easier than ever.