Economic circumstances are fueling animosity, especially when negotiations go public.
Inflationary pressures are putting strain on contract negotiations between payers and providers as the two sides work to iron out deals in a challenging financial climate.
Many contracts that were agreed upon before the economy experienced record inflation are now coming to an end, but tensions are higher as providers and insurers battle over new terms. While hospitals are beginning to bring labor costs down and experience more patient volume, they've enjoyed nowhere near the financial stability of major payers—many of which continued to rake in profits through the second quarter of the year.
Hospitals are under the gun to secure favorable reimbursement rates in negotiations and payers are reluctant to capitulate. The result can be a public, drag-out war-of-words such as the one Prisma Health and UnitedHealthcare (UHC) have engaged in.
The South Carolina-based health system filed a lawsuit against the insurer giant, alleging UHC breached its confidentiality agreement during contract negotiations by disclosing information about Prisma's rate proposals to media outlets. Prisma asked the judge to require UHC to retract its previous statements to the media that Prisma demanded a 24% increase in reimbursement rates.
UHC, however, fired back in a response to the court, claiming Prisma "started this whole mess through its own media efforts" by sending an email to its patients with UHC coverage, informing them of the upcoming termination of the parties' contract. In the email, Prisma writes "We need insurance companies, including United, to cover their fair share."
Today, the court ruled against Prisma's request for a temporary injunction to restrict UHC from disclosing additional information while the case continues.
In addition to highlighting how hard both sides are fighting to not give up an inch, the dispute between Prisma and UHC also illustrates the dangers of taking negotiations public. That tactic is one providers have had to resort to in an attempt to grab whatever leverage is available to level the playing field against insurers. But it's a lever that can come with consequences.
Britt Berrett, who successfully used that tactic during his stints leading several hospitals in his career—Texas Health Presbyterian, Medical City Healthcare, and Sharp Chula Vista Medical Center—told HealthLeaders that it should be used sparingly.
"You can light that fire once. You can light that fire twice. But if you continue to light that fire, the payers are going to work around you and find alternative solutions," said Berrett. "So yes, in the here and now, it's an effective tool in the short term. But long-term, that's building animosity."
Jay Asser is the contributing editor for strategy at HealthLeaders.
The relationship between payers and providers is tumultuous right now as the expiration of contracts forces the parties to come to the table again.
Negotiations between Prisma Health and UnitedHealthcare have turned somewhat ugly, with each side accusing the other of using the media to gain leverage.
Providers often take negotiations public to put pressure on insurers, but that strategy has its drawbacks.