Contracting: Know your strategy

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Thursday, July 9, 2020

Q. What questions do I need to answer before contracting?

A. More contracts do not equal more value. Before you get started, ask the right questions, make a plan and be prepared to follow-up.

Who are your patients today and are you expanding your services in the future?

There are two key dimensions to consider: geography and your patient’s insurance mix (Medicare, Medicaid, commercial, etc.). These factors will be the foundation of your payer strategy.

Who else provides the same service(s) in your area?

Payers assess their needs based on the market as a whole and this will impact your contracting outcomes and define your opportunity. You need to understand the concentration of providers like you in your service area(s) and the demand from your target patient population. This helps define the components of your value proposition with the payers—it is not only about quality of care.

What does your current portfolio of contracts look like?

Identify the offerings you expect to represent the majority of your revenue and any historical claims composition. Consider the timeline of contract execution and last negotiation to prioritize outreach.

What is your payer contracting strategy?

Prioritize your outreach and identify who you will reach out to. Navigating health insurance carriers is intimidating and unintuitive, and you need a plan. Engage consultants if you hit a wall—relationship and experience matter.

Do you have the time and resources to execute your strategy?

Payer contracting and negotiations take time to complete. Although the amount of time to secure a final contract can vary greatly, six to nine months is a good benchmark to keep in mind, and persistent follow-up is essential. 

Armando Cardoso is CEO of Healthcents. Armando can be reached at info@healthcents.com.