A healthcare organization’s managed care contract portfolio usually represents a provider’s largest source of volume and revenue. Who are your top 5-10 payers? What are their reimbursements? Your overall cash flow is very dependent on your payer mix and what each payer is paying you.
This is an important metric every practice should monitor closely; it will give you the big picture financial overview of how your practice is doing.
These contracts need to be analyzed for revenue impact, or lack thereof, as we move into this new post-pandemic world. As providers assess changes in their landscape and plan for economic recovery, providers would be well-served to proactively update their managed care contracts, but more broadly, revise their overall managed care strategy.
Restructuring Managed Care Contracts Portfolios
Providers should assess their payer contracts and quantify all the risks. Based on that assessment, many providers will likely realize they need to open their managed care contracts for renewal negotiations to secure needed cash flow and reset pricing.
When a negotiation makes sense, the provider should focus on managing changing healthcare economics, optimizing reimbursement and securing appropriate contractual protections. For example, amendments, audit rights, prompt pay and termination (notice) required to terminate the contract.
The year ahead may look uncertain, to say the least, but that doesn’t mean you delay key decisions and strategic planning. Certainly, payer contracts are among your highest value assets to maximize. Providers should consider how they fit within their organization’s strategic plan with a focus on (but not limited to): financial Improvement (reimbursements), innovation and digital transformation.
With the current economy, insurance companies are tightening up, so it is very important that you utilize experts who are well versed in payer contracting strategies. We have the personnel and tools necessary to provide you with quantifiable results that directly impact your bottom line.