Tag: Negotiation

Price Tags and Haggling in an Exotic Market

A friend of mine recently took an exotic trip. While shopping in a market, she picked up an appealing item and asked the seller what it cost. She was given a price that seemed high, and paused to consider whether the impulse seemed justified. The shopkeeper grew confused in the silence. Finally he asked my friend, “Don’t you want to know if I can do better?”

Clearly this person was outside of her bargaining comfort zone. Many – perhaps most – Americans are accustomed to paying the price as written on a tag. If you have to ask, you can’t afford it, or so I was told growing up in suburban shopping malls.

American consumers make the same assumptions as they search for transparency in health care costs. Obviously there are charges for these services – they are clearly written on the bills after the services are delivered. So why is it so hard to find out the cost of a service before it is performed? Here it is essential for the customer to understand that the charge and the price paid may be quite different; in fact, they are expected to be different. The health care consumer is not shopping in a chain store whose clerks forgot to stamp the items with their prices. On the contrary, the confused shopper has stumbled into an exotic market without a clue on how to haggle.

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Commentology: Is This the Future of Insurance Negotiations?

Names withheld to protect the innocent.

Dear Patient:

You may have read
recent media
coverage concerning contract negotiations between XXXX Insurance
Company and XXXX Healthcare Group. First, on behalf
Healthcare Group, our hospitals and our physicians, I would like
apologize that you heard this information via the media and not from us.
were very surprised XXXX Insurance
Company contacted the press about the negotiations because when XXXX
released its media communications,
we hadn’t even had a face to face discussion about the contract
proposals. Most
contract negotiations include actual “negotiating” to arrive at
terms, but it appears XXXX Insurance
Company preferred to start things off by pressuring patients to end
existing relationships with family physicians and local hospitals.

We believe XXXX Insurance
Company’s approach of distorting the facts and
misleading the public instead of negotiating a reasonable contract is an
attempt to deflect attention from XXXX Insurance
Company’s overall plan to increase their profits. It’s a negotiating
tactic we
feel is designed more to frighten patients than resolve differences.

We want to give our
patients as
much information as we can to help them navigate this situation. First,
should be aware that XXXX Insurance
Company is required by law to notify you by June 1, 2010 that the
contract may
terminate on July 1, 2010 and XXXX Insurance
Company may even advise you to select a new in-network physician. Your
should arrive any day but your coverage with XXXX Insurance
Company remains unchanged today.

However, that
letter does
not mean you must change your physician. We understand how important it is for you to maintain a relationship
with a
physician you trust and knows about your health. That is why our
existing contract
allows patients and employers to request XXXX
Insurance Company to keep the doctors and facilities in-network for one
year or
until the employee’s subscriber contract anniversary date, whichever
date is
earlier should we not have a new contract in place by July 1.

We encourage patients
and their
employers to write to XXXX Insurance
Company today and request they keep XXXX Healthcare
Group doctors and facilities
in-network and to continue to negotiate a fair contract.

XXXX Insurance Company has
alleged XXXX Healthcare Group’s costs are higher
state and national averages. We disagree with this statement and
their data. We monitor the cost of care very closely through independent
actuaries used by many of the largest payors in the country and know
that our
commercial reimbursement is comparable to other healthcare providers
across the
state. We asked XXXX Insurance
Company to substantiate its data, which is based on its own company
information, but they have ignored our request.

In the last two years XXXX
Insurance Company earned $2.6
billion in profits. In contrast, XXXX Healthcare
Group has made $10 million in net
income in the last two years while also providing $222 million in
charity care
for patients who were uninsured. While XXXX
Insurance Company wants to argue they are fighting for their members,
clear they are looking for ways to prepare for healthcare insurance
while still maintaining their profits for shareholders. One of those
ways is to
squeeze hospitals and physician clinics that are already operating on
very slim

Even though the
have started rather unpleasantly, we will work in good faith to come to
with XXXX Insurance Company so you
can continue to have XXXX Healthcare Group
physicians and hospitals as
an option for your care.

If you have any
concerning this situation you can call us at xxx-xxx-xxxx.