Dear Friend,

It’s no secret that hospital-based medical groups, particularly anesthesia and radiology groups, are experiencing significant trouble recruiting and retaining their professional staff due to increasing compensation demands combined with declining reimbursement.

The solution is financial support from the facility and some of the keys to receiving it are the subject of this past Monday’s blog post, 7 Key Steps to Successful Hospital-Based Group Stipend Negotiations. You can follow the link to read the post online, or just keep reading.

The French dramatist Jean Cocteau stated, "We must believe in luck. For how else can we explain the success of those we don't like?" But why rely on luck, or worse yet, the goodwill of hospital administration, when it comes to obtaining substantial hospital or even surgical center financial support?

What then should you do?

First, there are more fallacies concerning stipend negotiation than there are ways to order a drink at Starbucks. Some "experts" believe that the issue is as simple as making a presentation that states that financial support is warranted. Or worse yet, they take the position that because other groups get support, yours should, too. Although that might be a ham-fisted attempt at explaining market forces, it has no persuasive value.

Here are seven of the key steps that all hospital-based groups must understand and implement to achieve lasting, exclusive contract relationships that include sufficient levels of financial support.

1. The most effective process takes time, and it has already begun. Every interaction between your group and the hospital and its related parties, for example, nurses and surgeons and administrative staff, have an impact on your relationship with the hospital and on the outcome. In other words, negotiation is not simply a back-and-forth, face-to-face discussion between your representatives and the facility’s administration.

2. Even though the need for financial support might be the impetus for negotiation with a facility, especially in the case of a hospital, it’s not close to the universe of what will be negotiated in order to obtain it. That’s because financial support from any facility is an integral part of the multiple elements of an exclusive contract, and can’t be separated from them.

3. Although the negotiation process takes time, it does not involve a timeline. Progress in positioning the group and conducting the negotiation is not linear. It involves an ongoing series of interrelated strategies and tactics. Instead of the image of a timeline, picture an atom: Each of the electrons revolves independently, but they all revolve around the nucleus.

4. Frame the issues. Not only is telling the better story essential, but choosing the theme of the story is required.

5. A fair market value analysis is not the negotiation of stipend support. A fair market value analysis is a necessary part of determining the permissibility of the amount of stipend support, but it is not the same as the process of convincing a hospital that a stipend is warranted or the process of actually establishing the amount of the stipend. Informing the hospital that a consultant opines that your physicians are being undercompensated by $100,000 each does little or nothing to convince the hospital that it should make up the difference.

6. Supercharge your degree of control. Create negotiating leverage from various allies within, and as appropriate, outside, the medical staff.

7. Directly engaging a valuation or other consultant in respect to stipend support exposes a group to significant legal risk as it absolutely makes all communication to and from the consultant, including any reports, discoverable. It increases the odds that the consultant will become an unwitting witness, or even motivated whistleblower, against you. Do what the hospital is going to do and engage all consultants engaged in valuation and/or stipend issues through legal counsel.