The Administrator’s Role in Hospital Negotiations

Having been a cardiology administrator for three years, I know the tensions that physician group administrators (by this term, I mean to refer to a group’s chief administrative officer by whatever title) handle every day. They manage physicians who in some contexts are the practice’s owners and the production units in others. They must serve as both diplomat and advocate with hospitals where their physicians work. They also have to be personnel savvy, strategic thinkers, financial analysts, and cold-eyed negotiators with vendors.

With these multiple business skills and tasks, administrators would find it quite natural to lead contract negotiations with one or more of their local hospitals. As Lee Corso likes to say on ESPN’s College Game Day, “Not so fast, my friend.”

Before defining the best role for an administrator in hospital negotiations, it makes a difference what you are negotiating. If it is a potential integration deal where all of the physicians and staff will be employed by the hospital, you will want to be mindful that things could change drastically for you. As Larry Sobal in Appleton, Wisconsin once said during the integration negotiations, “I want to be an advocate for my doctors, but I also have to remember I may be talking to my new bosses.” On the other hand, you can be more aggressive if you are negotiating a services agreement.

Whatever agreement you are negotiating, it is helpful to remember that hospital and system CEOs have Boards and Board committees that will want to know how the hospital/system will benefit. A health system CEO once told me, “I have five people a week walk in my office that either have a business deal they want the system to buy into or they want the hospital to pay them for something they do or want to do.”

In any contract negotiations, and especially if you are negotiating with your potential bosses, here are the three things I have watched the most successful administrators do:

  1. Differentiate yourself and your approach. Make suggestions where you can that benefit the hospital as well as those for the group. That will be a real shock-and-awe moment.
  2. Think about what the hospital needs. We all know the age-old question: what’s in it for me? If you can answer that question for the hospital CEO, you often will get what the practice wants too.
  3. Be a problem-solver, not just an advocate. Some administrators think they must prove their worth during hospital negotiations. No doubt, when the hospital’s negotiators are being unreasonable and stubborn, the natural reaction is that you can give as good as you take. An administrator’s real worth will be shown if he or she can step back and determine what they really need to get the deal done (this assumes the group really needs the deal). Will a five-year deal or a majority number of physicians on the joint operating committee be enough to get those last votes for the proposed deal? I find the smaller the number of “asks” combined with the assurance that, if granted, the negotiations are over, the higher the likelihood of success for the administrator and the group.


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