Managed Care Contracts Need Scrutiny
The impact on your practice can be huge, Shufeldt says. Failing to find the "gotcha" clauses in a contract can be so detrimental in the long run that your business is threatened, and a more favorable contract can improve your profitability.
"If you can negotiate rates that are 10% or 15% better than what they offered, that essentially goes right to your bottom line," Shufeldt says. "Had you not received that additional payment, you presumably would have treated those same patients anyway and maybe just made ends meet. Even a single-digit percent increase goes right to the bottom line, and in today's world of decreasing reimbursement, every penny counts."
The larger your practice, the more leverage you will have in contract negotiations, Shufeldt notes. There is strength is numbers. A smaller practice group or independent physician's office will have more trouble negotiating favorable terms, but that does not mean you have to roll over and accept whatever is offered, he says.
Your negotiations can be hampered, however, by what other physician practices in your community accept from the managed care companies.
"I always tell people you are only as good as your dumbest competitor," Shufeldt says. "If someone opens an office down the street, accepting much lower reimbursement and terms much more favorable to the managed care companies, you will be at a real disadvantage when negotiating."
The managed care company says it doesn't need to provide you with better terms because the office down the street does the same thing for less money, and the physician practice typically responds by saying it offers higher-quality care. But even with all the emphasis on quality measures and outcomes, Shufeldt says that argument often does little to sway the people negotiating the contract for the managed care company. Quality is undefined and hard to measure, they usually reply.
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