As health systems and insurers across the country clash over payment rates and contract terms, personal relationships among executives on both sides can be the deciding factor in how those negotiations play out.
In recent months, major network breaks have dominated headlines. UnitedHealthcare’s Mid-Atlantic CEO Joseph Ochipinti recently accused Baltimore-based Johns Hopkins Medicine of taking a “cynical” approach to contract negotiations. Johns Hopkins, which has been out of network with UnitedHealthcare since late August, said it “has no desire to turn any employer or patient away,” but urged the insurer to enforce contract terms with its employer clients.
In Maine, Brewer-based Northern Light Health announced in August it would terminate its contract with Anthem. In a public letter from Northern Light President and CEO Timothy Dentry to Anthem Maine President Denise McDonough, the health system cited payment delays and administrative burdens. In Anthem’s counter, it said that Northern Light’s proposed 30% price increase over three years was “not in the best interest” of its members. The two organizations have since agreed to a contract extension to continue negotiations through the end of October.
While these public disputes reflect a breakdown in communication, some executives say the opposite is true: direct, personal relationships between leaders can often prevent impasses from escalating.
‘Everything is relationship-centric’
Randall Farmer, Chief Operating Officer at the Delaware Health Information Network, said payer-provider partnerships work best when both sides take time to understand each other’s business objectives.
“For us, it comes down to making sure they understand our value in terms of care coordination and data services. Everything is relationship-centric. You cannot maximize the effectiveness of your organization if you aren’t focused on relationships. For us, that meant understanding the relationships between payers and their customers. It’s not just about our customer relationship, it’s about what’s important to them as they serve their customers, which are primarily subscribing hospitals,” Mr. Farmer said at Becker’s Health IT + Digital Health + RCM Conference in October.
At DHIN, a focus on trust and consistent collaboration has turned previously transactional relationships into strategic ones. When the organization began dedicating project managers and top technical staff to work directly with payers, engagement grew from 10 users on its primary portal to more than 200 at one insurer.
That relationship maturity, Mr. Farmer said, led payers to begin inviting his team into their strategic planning meetings, a shift from being “order takers” to being “trusted advisors.”
He said those personal connections also helped resolve major administrative challenges. When one hospital partner faced a sudden spike in expedited prior authorization denials, DHIN was able to reach out directly to its executive contacts at two managed care organizations. The issue was fixed within a week.
“It turned out to be a perfect storm — a system upgrade at the hospital and regulatory changes at the MCOs that caused automated denials,” Mr. Farmer said. “It was a simple fix, it just required reaching the right person.”
“Insurers are massive and siloed,” he added. “We’ve even had payer employees ask us who they should talk to within their own company to get something done. Sometimes we don’t know either, but that’s why understanding relationships and key players matters.”
‘Treat payers as customers’
Robert Poznanovich, Chief Growth Officer at the Hazelden Betty Ford Foundation in Chicago, said that across the behavioral health sector, the structure of payer relationships often determines how effective those relationships are.
“I see a lot of inconsistency in how organizations structure their payer relationships,” he said. “What’s worked for us is assigning someone with business development or account management experience to lead those relationships. They also manage our internal teams.”
He described how one long-standing personal connection could have prevented an avoidable dispute.
“We had a collection problem with one of our big payers. I’ve known the president there personally for years,” he said. “Our legal team sent a process letter without notifying me. The president told me, ‘If you had called me, I could have worked this out with you. But now that it’s gone through legal, it has to go through its own process.'”
Mr. Poznanovich said the experience reinforced how critical it is to communicate clearly, show empathy and understand what drives payers.
“I try to avoid situations that publicly embarrass anyone. It’s not a great way to build a partnership,” he said. “There might be times when you need to apply pressure or involve the community when you have a really bad deal, but I think many of those situations could be avoided if we recognized that payers have their own metrics and goals. Everyone has KPIs and team huddles just like we do. If we don’t recognize their needs, we’ll never accomplish a mutually beneficial plan.”
‘It definitely makes an impact’
For smaller hospitals, where administrative capacity is limited, personal relationships with payer contacts can mean the difference between a smooth contract renewal and a prolonged impasse, according to Lona King, CFO at Winslow, Ariz.-based Little Colorado Medical Center.
“I’ve seen the difference with payers we have great relationships with,” Ms. King said. “It’s much easier to move through contract renewals. When it’s contentious, just getting a small increase or resolving minor issues becomes a series of roadblocks.”
