The Art of Negotiation Critical to Sustaining an Oncology Practice

Meg Barbor, MPH

April 2017, Vol 7, No 4 - Oncology Practice Conference 2017


Orlando, FL—Successful negotiations are critical to sustaining a business and retaining key customers, including in oncology practices, suggested Steven L. D’Amato, BSPharm, BCOP, RPh, Executive Director, New England Cancer Specialists, at ASCO’s first Oncology Practice Conference in March 2017.

“Negotiating is all about business; it’s not personal. Check your ego at the door, keep your eye on the big picture, and try not to get caught up in the ‘emotion’ of the moment,” he said. Mr D’Amato discussed the art of negotiating, as it applies to the business of oncology and oncology practices.

The Dos and Don’ts of Negotiation

Be prepared
Preparation is key, he said. It takes street smarts, homework, and discipline to have a successful negotiation. Know the party with whom negotiations are underway, and become familiar with the desired service or product. Have a strategy, and make a bold and aggressive first offer.

“Build in a buffer to allow for movement within a negotiation. But avoid disclosing budget details or other limitations, or you’ll immediately be at a point of weakness,” Mr D’Amato advised.

Identify a leverage
Next, identify a leverage point. “If you have a service that no one else provides, be honest and transparent in negotiations, and don’t take advantage of that leverage. If you do, you’ll have a difficult time dealing with that party in the future,” he cautioned.

Master communication skills
Strong negotiators master written, verbal, and nonverbal communication, and use an assertive style of communication, he said. They keep the discussion going to facilitate mutually beneficial outcomes; adopt a strong, steady tone of voice; are factual rather than emotional or critical; and tend to use “I” instead of “you.”

Avoid confrontation
Don’t confuse negotiation with confrontation. Remain calm, professional, and patient, and don’t blame the other party if the desired goal is not achieved. Prepare for compromise and have alternative goals, and consider legal advice in the case of complex negotiations.

Match your strategy to the other party’s interests
Always understand the other party’s interests and tactics, and match your strategy accordingly, he said. Know when to yield, when to insist, when to compromise on a resolution, and when to break from negotiations to regroup and to gather more data.

Put it in writing
An ideal offer will benefit both sides, but always get everything in writing, added Mr D’Amato.

Payer Contracts: Getting What You Want

Mr D’Amato urges a team approach to the negotiation process:

  • Involve a committee of stakeholders who represent the financial, operational, and clinical domains of practice
  • Evaluate existing contracts regularly, and examine performance to improve future strategies
  • Maintain a dashboard for continuous monitoring of contracts, and beware of automatically renewing agreements.

Use data to formalize the negotiation process: review past performance, identify contract vulnerabilities, and solidify a negotiation strategy. A clear plan is the best plan, said Mr D’Amato. Establish clear objectives, and anticipate as many changes as possible.

Even with exhaustive preparation, a successful outcome is not always possible. Always prepare the best alternative to the negotiated agreement, determine the worst possible acceptable outcome, and consider mediation when the situation calls for it. When all else fails, be willing to walk away, because doing so can be a powerful tool, he emphasized.

Healthcare Reform and Bundled Payments in Oncology

The traditional fee-for-service model is acknowledged as a major driver of escalating healthcare costs, but it penalizes cost reduction, because the elimination of unnecessary procedures leads to lower reimbursement.

The future of healthcare will reward value rather than volume, but this will require the alignment of incentives of payers, physicians, and hospitals. “Bundled payment” is one such experiment, said Mr D’Amato.

Bundled payment refers to a single, predetermined payment to multiple providers, for an entire episode of care. Maximizing success in bundled payment contracts requires several factors, including:

  • Reduction in care variation
  • Care redesign with perioperative management
  • Site-of-service optimization
  • Postacute care management
  • Patient-focused intervention.

Overall, 6 key factors drive profit or loss in this environment, said Mr D’Amato, including price discounts, program costs (eg, staffing, analytics, supplies, consultants), cost reduction (ie, devices or implants), gain sharing, spillover effects, and market share gains.

“Bundled payments in cancer care are in the early stages of development, but the field lends itself to bundled payments due to its multispecialty setting,” stated Mr D’Amato.

Within a provider organization he encourages close collaboration with the clinical, financial, and operational domains of a practice.

“In the provider–payer relationship, I can’t stress enough, there needs to be transparency and trust,” said Mr D’Amato. “If you’re trying to align with a hospital system or other partner, and you don’t have the same visions and goals, you’re doomed,” he added.

In addition, project management must be strong to address barriers to the implementation of bundled payments.

Communication, stakeholder engagement, and, particularly, physician leadership are essential in negotiations and in the development of bundled payments.

Bundled payments in cancer care are new, and have yet to gain traction, but lessons can be learned from successful pilot programs, Mr D’Amato concluded.