Negotiating with Insurers:
Is "Win-Win" the Correct Approach? 

I think that we would all agree that most pediatricians are nice people. We tend to avoid conflict and will usually try to do the fair and right thing in our business dealings. But the question arises: is this a useful approach when dealing with insurance company issues?

The classic book, “Getting to Yes” by Fisher and Ury out of Harvard, details this approach to negotiation. The goal is to put yourself in your opponent’s shoes and give them something that they want in return for something you want (this is highly simplified for this discussion). By doing so, everyone can “win” and it will be easier to get from NO to YES. By using this technique, negotiation can be quickly brought to a successful conclusion with both sides feeling satisfied and seeing the value that the other side brings to the table. For most situations, this is the best way to negotiate, particularly when you value a relationship with your opponent.

Unfortunately, this seems to be the only technique people remember about this valuable book. There is another chapter devoted to identifying the type of negotiation in which you are actually involved. The Win-Win scenario is only valid at times when both parties value the other and want to have an ongoing and useful relationship. The corporate culture of a business is the basis for much of its negotiating style.  Some insurers are indeed interested in win-win relationships. They are impressed by the value you bring to the table and if you can convince them that it is worth it, they will agree to higher payments.

However, within the insurance industry, there are some companies that have no such cultural bias. Their negotiating style is what Fisher and Ury called the “street fight.” In a street fight negotiation, there is no interest whatsoever in an ongoing relationship. There is no interest in a give and take of value. This type of negotiation is better characterized as a “win-lose” negotiation.

Historically, we pediatricians have approached all of our negotiations with payers as “win-win” propositions. The problem with our insurance relationships is that we are actually in a “street fight” negotiation and fail to realize it. When a street fighter confronts a win-win pediatric negotiator, the street fighter will always prevail because the pediatrician thinks that the payer is actually interested in having their opponent come away satisfied. They will prevail because the pediatrician thinks that the payer sees value in an ongoing relationship. Pediatricians will make a reasonable proposal, which will then be used as a “ceiling” by the street fighter. We will offer concessions that are taken, but nothing offered in return. They win. We lose.

In a street fight, the only currency is power and the resolve to do what is necessary and/or walk away. Those items are notoriously lacking when pediatricians negotiate with payers. When you deal with bullies, being reasonable is viewed not as a virtue, but as a fatal weakness. The bully will always continue to press for more while giving nothing of value in return.

It is far past time for all of us pediatricians to take a street fight mentality with payers who take such an attitude with us. It is time to draw some lines in the sand which we will not cross. Payers listen far better when they realize that you are tough, that you mean business, and that you will do whatever is necessary to get what you want. The best negotiations often happen AFTER the letter of withdrawal from the plan.

When you enter into negotiation with payers, the first thing to do is to identify the type of negotiation that you are involved in. The next thing to do is act accordingly. Sadly, when it comes to some in the insurance industry, nice guys often do indeed finish last.

By Herschel R. Lessin, MD, FAAP (NY Chapter 3)

Dr. Lessin is a founding member of The Children’s Medical Group, PLLC, a group of 22 pediatricians in 7 offices, and is a Certified Managed Care Executive. He is the SOAPM liaison to COPAM. He has been in full time private practice for 25 years, speaks nationally on medical business issues, and is a member of the Board of Directors of a not for profit regional health insurer with more than $2 billion in premium.