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Negotiating with third party payers: one community pharmacy's experience
Kimberly Fridy1, Renee M DeHart, Mary R Monk-Tutor
1Wal-Mart Pharmacy, Clanton, Ala, USA.
Journal of the American Pharmaceutical Association (Washington, D.C. : 1996)
|September 25, 2002
Summary
Independent pharmacies face challenges negotiating insurance contracts, as one study found no companies accepted proposed changes. Pharmacists should focus efforts on contracts with potential for successful negotiation due to time and cost factors.
Area of Science:
- Health Services Research
- Pharmacy Administration
Background:
- Independent pharmacies often operate with tight margins, making favorable insurance contract terms crucial for financial viability.
- Negotiating with third-party payers is a complex process that can impact a pharmacy's profitability and operational efficiency.
Purpose of the Study:
- To assess the feasibility and outcomes of negotiating financial and legal terms in insurance contracts for an independent pharmacy.
- To determine the time investment and associated salary costs involved in contract negotiations.
Main Methods:
- A single independent community pharmacy in Alabama initiated negotiations with nine insurance companies.
- A standardized contract negotiation form was utilized to record negotiation factors and time spent.
- Proposed contract modifications were submitted, followed by direct negotiation attempts via phone and mail.
Main Results:
- None of the nine insurance companies accepted any proposed contract modifications.
- Negotiation time per contract averaged 48.4 minutes, ranging from 28 to 74 minutes.
- The calculated salary cost for negotiating each contract ranged from $14.68 to $18.73.
Conclusions:
- Contract negotiations with third-party payers proved unsuccessful for the participating independent pharmacy.
- The study highlights the significant time and financial costs associated with contract negotiations, often yielding no favorable changes.
- Independent pharmacists must strategically prioritize contract negotiations, focusing on those with a realistic potential for positive outcomes.