Negotiating and Renegotiating

Successful TacticsFebruary 23, 2013Mike Valentine, MD

Centra Medical Group – Stroobant’s Heart CenterCardiovascular Summit Co-Chair

Negotiating 101

• Who are we?• What arrangements are in place?• What are our options?• How can we succeed?

Know Your Options

• Medical Directorships– Cath Lab - Outreach Director– Non-Invasive Lab - CME– Clinical Quality

• Co-Management Agreements• Call Coverage – ER / STEMI / Nights• Leadership / Management

– Dyad Models

Know Your Options continued…

• Hospitalist Service• Recruitment Assistance• Joint Ventures• Horizontal Integration• Vertical Integration• Employment

Negotiating 101

• NEGOTIATION is the means by which an agreement is reached.

• You must start with the END IN MIND

Negotiating 101

Success

HumilityFlexibility

Mutual Gain (Win-Win)

Failure

ArroganceIgnorance

Selfishness

Do NOT Act Like A Cardiologist!

Negotiating 101

• Key Advice– Know who the dealmakers are– Separate the people from the problem– Focus on interests, not positions– Use objective criteria– Invent options for mutual gain

Negotiating 101

• Negotiation Language– Most Favorable Position/Maximum Plausible

Position– Walk Away Position– BATNA (Best Alternative To Negotiated

Agreement– Inexpensive Valuable Concession– Time Out

Negotiating 101

• Five Steps in Negotiation1. Prepare2. Engage3. Propose4. Bargain5. Agree

Negotiating 101

• Successful Negotiation Means Each Side Feels:– Sense of Accomplishment– Other side cared– Other side was fair– Would do it again– Will keep the bargain– Can say thank you and mean it

Negotiating 201

• Tough Love• Keep you friends close, but keep your

enemies closer

Negotiating 201

• Maximum Plausible Position• Bracketing• Reluctant Buyer/Seller• Higher Authority• Concessions• Impasses/Stalemates• Closing

Negotiating 201

• Maximum Plausible Position– You go first

• Bracketing– They go first– Best if you don’t know them well– Allows equal counter on either side– May get what you want!– Never say yes to first offer

Negotiating 201

• Reluctant Buyer / Seller– Range up front– Walk away price– Feel / Felt / Found – key phrases– State position, then BE QUIET!

Silence is Power

Negotiating 201

• Higher Authority– Never be the decision maker– Leave ego at home – Appeal to theirs!

• Concessions / Commitments

Negotiating 201• Impasses

– Set them aside– Split the difference

• Stalemates– Share risk– Win-Win– Change the teams, Remove the loser– Third party arbitrator– Always save face

Negotiating 201

• Always use an expert• Double agents are invaluable• Verbal, then written• Never have a deadline

Renegotiating 301

• Renegotiation starts the day you sign a contract

• Build and prove – Value and Trust

Renegotiation Rules

• Record the victories• Prove your value with Leadership!• Know the “Fair Market Value”• Keep your expert close• Reimbursement models are changing –

more is at risk

Renegotiation AssumptionsOffensively you have:• Developed a relationship

with the hospital• Committed to a common

vision• Honed your decision making

model• Created value in the system

(and can quantify it)• Maintained productivity• CREATED TRUST

Defensively you have:• (Unusual) Compensation

escalator• Non-Compete Management• Cardiologist recruiting and

employing exclusivity• Unwind provision• Medical records access• Understanding of

renegotiation parameters at the outset

Key Business Underpinnings

• Health Systems attuned to changing reimbursement dynamics

• In past, more wRVUs = better• Today, systems want to incentivize patient

health management and efficiency– New definitions of productivity– Systems focused on flexibility

Warning Signs

• Health system complains about “losing money” on employed physicians

• System approaches renegotiation as “take it or leave it”

• Renegotiations are conducted on physician-by-physician basis

• System discourages physicians of obtaining guidance from third parties

Positive Indicators• System regards physicians as “adding value”• Physicians involved in CVSL management • Physicians have no post-termination non-

compete– Or, only a “soft” non-compete, permitting return

to independent practice• Renegotiation dialogue is open and

respectful

Final Thoughts

• Financial discussions are often sensitive– Third party assistance may be helpful buffer

with employer• Compensation renegotiations are

meritably distracting– No perfect solution available, it is impossible

to predict market changes– Set a deadline and stick to it

Questions?