Last Updated on April 29, 2023 by asifa
Table of Contents
A Complex Situation
Payor contracting works like this: a medical practice or other company—typically smaller operations—engage the assistance of a larger company, or a more financially endowed individual in some cases, to take on a certain amount of the cost involved in a given medical business. In many cases, this company or individual also shares a certain amount of profit.
Essentially, payor contracting is technical terminology for a group or individual acting in a funding capacity for certain businesses, and assuming particular financial responsibilities. When it comes to medicine, there is a high degree of stability associated with competent medical services provision, but there are always complications.
Unique Requirements For Particular Contracts
Different payor contracts will have different requirements. Where payor contracting differs from traditional investment is in terms of directly associated expenses. For example, a medical institution may have individuals entitled to one service or another for which the company who has invested in a given medical institution is liable.
Treatment options can be expensive, so can services, and savvy businesses who enter into a contract with a medical institution are going to be leery of this. As contracting commences, there could be wording which makes the financial risk assumed by the company different than what the medical operation thinks they have secured with payor assistance.
Notable Value In Negotiation Enhancement
The value of payor contract negotiations to independent medical practitioners is definitely considerable. Plenty of “snags” exist even in the most straightforward deals. Many of these “snags” aren’t perceivable except by those who have been in that situation before, and understand how to either contend with or overcome the issue.
Also, there are long-term collateral exigencies to consider. The trajectory of a medical institution, legal requirements surrounding the services they provide, technological changes in the market, and the financial stability of the entity assuming some of the financial responsibility for a healthcare operation all come into play.
Avoiding Business Landmines
A consultant’s value is in the hidden landmines they help you avoid. As a medical business starting out, you’re blindfolded stumbling through a business minefield of unexpected issues.
Certainly you might survive a few “mines”, but not if you keep tripping into them. Unless you already know where the mines are buried, you need a guide—that’s where negotiation professionals come in.
Also, having the advice of such individuals lends legitimacy to your practice. Many companies who provide financial solutions for burgeoning medical practices have done this sort of thing before. When your small business makes all the right moves from the contract phase out, they know you were a wise operation to finance; it’s good for the business relationship.
Furthermore, when investment solutions from exterior investors who take on part of your financial burden result in successful operations, it’s a cumulative upward spiral for your healthcare business. You can serve existing clients better, branch out, and even assume the financial burden of new products and services in medicine.
Keeping Pace With Changes In The Industry
Technology and medicine have a symbiotic quality. Retaining competitive viability in the market where you’re providing solutions may mean branching out into new treatments or services. That may require training, new staff, acquiring new equipment, or any of a number of costly endeavors.
Upgrading to an MRI facility on-site may itself be cause enough to put together a payor contract and secure someone who can take on the financial responsibility involved in addition to what your healthcare business is already managing. For these and many other similar situations, payor contract negotiations can be quite valuable.