Becker's Hospital Review

30 Financial Management Providers have a lot on the line when negotiating these contracts, with nearly 33 percent of healthcare providers expecting value-based contracting to negatively impact their organizations' bottom lines, according to a 2014 KPMG survey. It's important for providers to use data in making their case to payers when negotiating value-based contracts. They can use data, such as hospital reim- bursement data and cost data, to perform a financial analysis when negotiat- ing. Using the financial analysis, providers can determine where they "can afford to give a little, to get the contract elements more important" to them, according to a report from The Advisory Board Company. Providers also have to prove they can meet the challenges presented in value- based contracts to make payers want to negotiate, according to The Advisory Board Company. "What we've determined is that payers are more willing to engage with providers that already have some experience with managing risk and can demonstrate the ability to reduce costs of care while maintaining high-quality outcomes," wrote the authors of the report. Are these fallouts just business as usual? It is important to remember that negotiations between payers and provid- ers are standard business practice, and even when a contract is terminated it doesn't mean the relationship between the parties is over. Many times, nego- tiations still continue. For instance, Carolinas HealthCare and UnitedHealthcare were unable to reach a new agreement before their contract expired Feb. 28, leaving 12 hos- pitals and a number of physician offices out-of-netowrk for UnitedHealth- care members. However, a UnitedHealthcare spokesperson, Tracey Lempner, says the two organizations are still involved in negotiations and "continue to meet regularly." She says, "Our goal has always been to have CHS continue its participation in our network." The same goes for University of Chicago Medicine and Humana. Although no agreement has been reached, a Humana spokesperson, Cathryn Donald- son, says, "Humana remains open to negotiating a new agreement that aligns with our members' need for affordable healthcare coverage." The personal nature of these disputes, along with the back-and-forth blame that often accompanies these disagreements, attracts media attention. Like the dispute between Grady Health System and Blue Cross and Blue Shield of Georgia, many providers and payers pass blame as to why negotiations aren't successful. Additionally, the parties sometimes provide conflicting information after ne- gotiations have failed. For instance, Carolinas HealthCare and UnitedHealth- care provided conflicting accounts of their split. The health insurer began telling its members they would be considered out-of-network at Carolinas HealthCare hospitals and would begin paying more to use those facilities once the contract expired. However, a system spokeswoman told the Char- lotte Observer that Carolinas HealthCare decided to extend temporary waiv- ers to UnitedHealthcare members so they would be billed as though they were in-network. Failed contract negotiations between providers and payers make headlines and disrupt patients, but these types of disputes are commonplace in other industries. "These disagreements may seem more radical in the healthcare industry be- cause of the relationship that people have with their physicians," says Ms. Coffman. "Whereas in other industries it is less of a personal nature." These disputes are also part of healthcare taking on more traditional market functions, experts say. "Ultimately, those market dynamics are going to be helpful for the industry," says Mr. Judy. n CEAA CERTIFIED EQUIPMENT APPRAISAL ASSOCIATES, INC. Call us at (215) 260-2680 for a FREE consultation. For more information, visit us on the web at www.ceaahealthcare.com or email us at ceaahealthcare@aol.com CEAA CERTIFIED EQUIPMENT APPRAISAL ASSOCIATES, INC. Certifi ed Equipment Appraisal Associates, Inc. is a leading nationwide medical equipment appraisal fi rm offering comprehensive medical equipment appraisals for the healthcare industry. We have conducted over 2,000 Healthcare Equipment Appraisal Assignments in all 50 states. We can appraise a single unit of medical equipment to fully equipped private practices, clinics, imaging centers and entire hospitals. On-Site & Desktop Equipment Appraisals for: When Compliance Matters, Get Certifi ed. • Purchase price allocation • Hospital and physician practice valuations • All healthcare equipment types • Stark Law, SBA, FASB & IRS compliance • Lease negotiations • Partnership buyouts • Litigation and expert witness • Asset inventory • Sale of assets • Cost segregation • Financing

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