Contract evaluation is a process that every practice should have defined and documented. This can be a simple checklist or as sophisticated as a weighted calculated system. Either way, the process should be documented and utilized by all of the individuals who have contracting authority.

Exhibit E is an example if a checklist used to review fee for service contracts. The practice should develop and continue to refine the list as an ongoing process. It is important that each department involved in the total managed care process (Exhibit C) provide input in the development of the checklist. The checklist should be an objective guideline. Many times politics can be a factor in physician contract negotiations. The checklist can offer a more objective business perspective for negotiating a good contract.

How does the operations of a practice affect the negotiations of a contract?
The operations of a practice can greatly influence the negotiations of a contract. If a practice can offer both technical and professional services in several locations accessible to a health plan’s members, the practice will have greater leverage in the negotiations with the payor. If a practice is consistently monitoring the utilization of CPT codes, the negotiator for the practice can use this information and compromise on certain codes while holding firm on other codes. Once the leverage points are identified for the practice, the negotiator, (residents and fellows) can determine how much risk to take during the negotiations. The greater the leverage, the more demand for terms that are better than ” market terms”, which is the standard or benchmark terms. It is assumed that the negotiator knows what the market terms are for that market. And where there is opportunity for rewards, there is opportunity for loses. If the practice has a payor mix which depends on one payor for a large percentage of its total business, the practice must determine if it can and is willing to lose that business if the negotiations fail. Contract negotiations is like playing a game of poker. The negotiator must know when to hold and when to fold. The practice must know its strengths and weaknesses before the negotiations begin if the negotiator is to negotiate a successful contract.

How can you as a physician be assured that you will be successful in this practice?
It is imperative that you define success. Many physicians begin their careers in a practice with unrealistic expectations. Expectations need to be founded facts and objective information. You as a prospective partner and employee, need to clearly define your expectations and discuss the foundation of those expectations to determine if they are realistic in the practice. Today’s healthcare industry is in a constant state of chaos. While some physicians see this chaos as a negative, others choose to see it as a time of great opportunity.

In a time of drastic change, the learners inherit the future. The learned find themselves equipped to live in a world that no longer exists.
Eric Hoffer

About the Author:

Wesley D. Millican, MBA, CEO and Physician Talent Officer of CareerPhysician Advisors, LP, and CareerPhysician, LLC, provides comprehensive talent solutions for academic children’s hospitals, colleges of medicine and academic medical centers across the nation. He possesses a longstanding passion for career development of all young physicians and serves as a go to career resource for training program directors and their residents and fellows. In continuing his commitment to the “future of medicine”, Mr. Millican speaks nationally at residency and fellowship programs. His Launch Your Career® Series is a proven resource for today’s residents and fellows and has served as a go to resource for program directors over the last 15 years.