May 22, 2017

The current highly competitive atmosphere in anesthesia means that practices must be able to build and nurture solid relationships with their hospitals in order to win and keep exclusive contracts.

In a session at the Advanced Institute for Anesthesia Practice Management (AIAPM) in April in Las Vegas, healthcare attorney Vicki Myckowiak, Esq., of Myckowiak Associates, PC, Detroit, stressed the importance of pre-negotiation—understanding the hospital’s strategic plan and having a strategic plan of your own in order to know how your group fits in with where the hospital is going—as an essential part of the negotiation process.  That negotiation process, she said, filters into every aspect of the anesthesia group’s relationship with the hospital.

The following summary of takeaways from Myckowiak’s presentation is a continuation of last week’s eAlert on negotiating exclusive hospital arrangements. 

Know who your “customers” are and look at every encounter with them as an opportunity to promote your group.  According to Myckowiak, anesthesia groups have three customers: surgeons, patients and hospital administration.  “Customer service is actually not a dirty word when it comes to making sure you keep a stable relationship with your hospital,” she said.  Many of the most successful groups have members in high leadership positions—as the chief of staff or even as a member of the board, for example—and this participation in hospital leadership helps cement the group’s customer relationships.

Use satisfaction surveys to understand how your group is perceived.  “Only if you understand how you are perceived can you take the steps necessary to control that perception,” said Myckowiak.  Use survey feedback to implement changes that will improve your relationships with surgeons, patients and hospital leadership.

The larger the group, the stronger the need for this kind of feedback.  “You’re all working in different rooms and doing different procedures, and you really don’t know how other members of the group are dealing with patients and the surgeons until a volcano erupts,” Myckowiak said.  It’s important not only to measure, but also to use the data to address the issues, such as a quality problem or a physician who routinely comes in at the bottom of the survey on all aspects.

Don’t let disruptive providers stand in your way.  Disruptive providers usually are equal owners in the corporation, and so sanctioning them can present a challenge.  Addressing this challenge so that a rude or unprofessional colleague does not sabotage your group’s relationship with your facility requires the will of the entire organization, which is a challenge in itself.  But if you don’t deal with a group member who is wreaking havoc, you could end up jeopardizing your contract.  “We are safest when conduct is not an issue,” Myckowiak said.

Issues related to disruptive behavior often are best handled by legal counsel that specializes in contract or employment law.  “You have to be able to cut somebody out if the issue is stopping you from having a good relationship” with your institution, she said.  “I’ve worked with many groups who basically live with it” and are relieved when the disruptive colleague decides to leave.  While hospitals understand that disruptive providers are a reality, “what they’re really looking to see is what you do about it,” Myckowiak said.  Hospitals are most likely to want to continue to work with a group that is willing to take action regarding a disruptive clinician.

To help deal with problems related to disruptive behavior, she advised anesthesia groups to develop a code of conduct, a set of published norms to which members are expected to adhere and which the group is prepared to enforce.

Build group solidarity and leadership.  To ensure unity within the group and help clarify leadership roles and responsibilities, it can be useful to take a step back and look at how the group governs itself and assigns responsibilities to different bodies.  Many groups run into problems during exclusive negotiations when they empower some individuals to be the negotiators and then another group member undermines that process by stepping in inappropriately and talking with hospital administration without the group’s knowledge or permission.  Group solidarity and strong leadership can help prevent this.

Effective pre-negotiation also involves resolving governance issues within the group.  Not every issue needs to or should be decided by every group member.  “The problem is that some groups are not used to having executive committees.  When you are negotiating an agreement and in the process of strengthening the relationship with a facility, leaders should be empowered—and compensated for the work they’re doing,” Myckowiak said.  The group should have a few leaders that it trusts to make some decisions so that not every decision must be made by the group as a whole.

Know your costs.  Work with your CPA to understand what it costs to deliver your services and run your practice.  “If the hospital is going to give any sort of financial support, they’re going to expect to see why they’re giving it and they’re going to expect to see what’s open to negotiation," Myckowiak said.  “That’s just the way it is.”  Be prepared to support that documentation.  “It’s really hard to argue with the numbers when you can prove those are the numbers,” she said.

Myckowiak recommended working closely with an experienced CPA to develop a budget for the negotiation.  “Eventually, your CPA is going to sit down with the chief financial officer of the hospital.  If the numbers are put together correctly, the CPA will have no problem showing those numbers persuasively,” she said. 

Develop support from the surgeons and be ready to demonstrate that support when needed.  “It doesn’t happen all the time, but surgeon support can be helpful,” Myckowiak said.  One anesthesia practice with whom she worked had an orthopedic surgeon tell a facility that they would pull all of their cases from the facility unless it brought the practice on board.

Approach negotiation as the beginning of a mutually beneficial partnership.  Think of negotiation as something that will benefit the group and the hospital—an “I win, you win” proposition and a positive experience in which everyone will be better off in the end.  Some anesthesia groups feel powerless by the time they enter a negotiation because they feel dependent on the facility and don’t feel they can push back.  According to Myckowiak, these negatives can be overcome by “the way you approach the negotiation, the data that you bring to it, the confidence that you have and the work you’ve done beforehand to have a seat at that table.  You should look at it as a win-win, but also realize that you’re not going to get everything you want.”

Understand the needs of the other party.  If the hospital is digging in its heels regarding a particular issue, try to figure out why they feel so strongly about it.  If you can understand why, then you can agree to it, look for another hospital or come up with a counter solution that makes everyone happy.  “When a line is being drawn in the sand, you need to understand the reasons,” said Myckowiak.  “Where does that fit within their strategic plan, or what experience have they had that brings this up?”
 
Develop realistic positions.  Your goals have to be realistic and prioritized, Myckowiak stressed.  Don’t start with a line in the sand.  Leave room to negotiate.  “It’s nice to hold something back, and then have the hospital feel that it’s getting something from you, and that you’re standing together,” she said.  The most important matters, such as the dollar amounts of the contract, the coverage grid and exclusivity, should be decided by the entire group.  Smaller matters, such as the responsibilities of the medical director, can be left to the negotiators.

Form a negotiation team.  The best negotiators are not always the group’s leaders. Some people are able to stand firm and persuasively communicate the group’s position and reasons for a request, while others are just people pleasers.  Choose people who understand the issues involved in the negotiation—confident decision makers who are committed to the process, prepared for the long haul and respected by the group.  Empower the team to do their job without being second-guessed.  Do not allow “sidebar conversations”; however, if they happen, deal with them immediately.  “Nothing can bring you down more than a sidebar conversation in which you draw the line in the sand and then someone pushes you somewhere else,” Myckowiak said.

Include outside legal and accounting experts on the negotiation team.  “Often, a group doesn’t have this expertise and needs to bring in outsiders,” said Myckowiak.  “Whether internal or external, if you have a team that knows what it’s doing, it’s going to serve you well in the long run.” 

Set the agenda.  Try to control the process rather than waiting passively for the hospital to lead, and make concrete proposals that you can really live with.  “It doesn’t make sense to enter an agreement with a facility where you can’t meet the expectations.  You’re just setting yourself up for failure.  The point is mutual success,” Myckowiak said.  Make sure everyone understands what is in the agreement.  Don’t forget what the contract says you agreed to do.  Stay ahead in preparing to meet the agreement’s provisions, based on a clear understanding of your rights and responsibilities.

Myckowiak recommended that the anesthesia group, rather than the hospital, draft the agreement.  “Understand that a contract goes through many iterations.  Sometimes a word really matters, such as ‘shall’ versus ‘should.’  Use an experienced attorney who knows what they’re doing,” she said.

“Stay involved in leadership, strengthen your group through strategic planning and try to understand the changing healthcare environment,” Myckowiak concluded.  “The ability to be nimble and to understand what’s going on are going to be vitally important.”

Your billing services provider can help you gather useful data for contract negotiations in a variety of areas, such as payer mix and operating room efficiency.  ABC clients:  Please contact your account manager for more information.

With best wishes,

Tony Mira
President and CEO