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ByNathaniel Arana

Can a small physician practice negotiate higher reimbursement rates?

Can a small physician practice negotiate higher reimbursement rates?

Traditional belief is that small practices (1-5 physicians) are not able to negotiate their reimbursement rates because they don’t have any leverage

Why do people believe that small physician groups can’t negotiate their reimbursement rates? Years ago this was thee case. However, the changing healthcare environment has meant many small and medium sized practices have joined larger groups - and insurance payers don’t want that!

On the flip side, payers actually prefer that these physicians remain independent. The reason? Those large groups have a lot more negotiating power an often have higher rates. The downside is that even when smaller groups do join larger groups, they physicians often don’t see an increase in pay and lose their autonomy.

Furthermore, payers want you to remain independent because they know that better clinical outcomes are tied to physician autonomy. The corporate practice of medicine found in larger groups with employed physicians has been shown to result in lower clinical outcomes and lowered patient satisfaction.

This also means that when you go to the negotiating table, the payers might be willing to give you some better rates to ensure that you do remain independent.

If you are a solo physician, or even a group of 5 physicians, I recommend that you look at negotiating your reimbursement rates. Benchmark your rates against Medicare. If you haven’t negotiated your rates recently, they are certainly going to be low and you’ll likely find room for improvement. If you want to know how to benchmark your reimbursement rates, I have a guide on how this can be done.

Once you benchmark your rates, you can identify those payers that are underpaying you and where you might have some leverage. A 10% increase for one of your larger payers could result in thousands of extra dollars per year - and these are dollars that don’t require additional cost or overhead.

Want to learn how to benchmark your rates? Download the guide below!

Download the GUIDE

About the Author

Nathaniel Arana

Nathaniel Arana is nationally recognized healthcare business consultant with experience ranging across many different specialties. He is a physician advocate and has helped practices become more profitable by allowing his clients to focus on patient care.