Part One: The View From the Other Side

Strategies for obtaining favorable hospital contracts have been a recurring focus of this column. David Wofford and Robert Rowland of ECG Management Consultants in Seattle, Washington <www.ecgmc.com> have assisted numerous hospitals and their anesthesia groups in negotiating anesthesia services agreements. In the article below, Mr. Wofford and Mr. Rowland invite anesthesiologists to understand the factors and perspectives that motivate hospital executives. A subsequent article will cover “Conducting an Effective Negotiation.”

The 18th century Scottish poet Robert Burns offers wise words to live by, and nowhere do they ring truer than in interactions between anesthesiologists and hospital administrators. In our experience with many negotiations, the inability of either party to see the other’s viewpoint — and to appreciate how the other side views them — is one of the most common roadblocks to successful relationships.

Consider the following scenario: A newly-elected anesthesiology group president is conferring with his shareholders about negotiating an exclusive agreement with the hospital.

“We’re sick of all this waiting around in the operating room,” says one anesthesiologist. “Turnaround times are ridiculous, and there are constant delays and cancellations. If the hospital wants anesthesia coverage on demand, it needs to pay us for our downtime.”

“And obstetrics coverage too,” adds another. “There just aren’t enough deliveries in that unit to make it worth our while to support them.”

A third physician chimes in: “Don’t forget evening and weekend coverage. Those patients may need an obstetrician or a general surgeon or an orthopedic surgeon, but they always need an anesthesiologist. No one else provides in-house staff or gets called in like we do.”

“And now they’re opening three more rooms,” says another. “Who knows how long it’ll be before those rooms get busy? But we’ll be expected to staff them just the same, and just take the income hit so that the surgeons and the hospital are happy.”

And so it goes. The list of grievances grows longer, the physicians’ ire grows stronger, and the group president is sent off to do battle against the hospital chief operating officer (COO), feeling more than a little nervous about what his colleagues expect of him to be able to negotiate for the group.

The meeting takes place. It does not go well. The group president explains all the reasons why he cannot recruit and retain physicians and how this will force them to curtail services unless the hospital provides them some relief. The COO is taken aback by the anesthesiologists’ demands, becomes defensive and digs in his heels. Nothing is decided, and the group president leaves the meeting convinced that the COO just doesn’t “get it” and will not be offering any help unless the group pushes harder. He reports to the group that the COO “was a total hardhead, unwilling to even consider our needs.”

Later, back at the hospital, the COO reports out to the executive team:

“You would not believe the conversation I had with Dr. Payne last week,” he begins. “The anesthesiologists claim they’re getting robbed on just about everything they do here — surgery, OB, call coverage, you name it. They say if we don’t start paying them for all this stuff, they’re going to start cutting back on services.”

“So just what do they want?” asks the chief executive officer (CEO).

“Well, apparently lots of money, but beyond that he couldn’t offer specifics and didn’t mention any numbers. He just started spewing venom about how unfairly they’re treated and how much we ask of them and how they just can’t go on like this because they’ve lost four anesthesiologists this year and they’re having trouble recruiting replacements.”

“That’s nonsense,” says the chief financial officer. “We’re offering them an exclusive agreement at the biggest hospital in town. This is an extremely valuable franchise. Who wouldn’t want to practice here? They ought to be paying us for the constant flow of business they get.”

“Right,” adds the director of surgery. “Our volumes are up again this year. Granted, most of the increase is Medicare, but you could do a lot worse.”

“What I need to know,” asks the CEO, “is how big an issue this is. We have a ton on our plate right now: It’s budget season, the Joint Commission is coming, we’re trying to create a hospitalist program, there’s a surgery center opening across the street, and I’m negotiating with five specialties over call stipends. Where does this fit into our priorities?”

“I think it’s a back-burner issue, boss,” says the COO. There’s no upside in taking this on right now. These guys don’t know what they want and are just feeling sorry for themselves, as usual. Let’s just wait and see what they do next. I bet this will blow over.” Everyone agrees, and the meeting concludes.

Now what are the odds that this will work out well for the anesthesiologists? Could this happen to your group? If it sounds a bit overblown, consider yourself fortunate, because this scenario plays out all the time. A fundamental problem is that neither side really understands the other’s perspective. The hospital administrator is not necessarily irrational or lacking intelligence, but he or she will almost certainly view things differently than you and is likely to be confronted with many other issues that influence how he or she deals with the task at hand. Therefore the more you can anticipate about the other side’s concerns, viewpoints and priorities, the better positioned you will be to get what you need.

With that in mind, there are several things that anesthesiologists should assume up front about their hospital counterparts and be prepared to deal with when addressing issues of financial support from the hospital.

They know little about your world. Physicians are in a different business than hospitals, and this is particularly true in the case of anesthesiology. Most administrators are unaware of the national shortage that is currently playing out, and when this becomes an issue at their facility, they are caught off guard. Further, most administrators have minimal experience with the roles and culture of anesthesiology groups because they have had a low profile in the past. It is little surprise, then, that they often are slow to accept that anesthesiology’s issues are real and will not go away any time soon.

They have many other pressing concerns. As our COO above lamented, the range of operating issues, competitive pressures and regulatory issues that hospitals face is truly daunting. These matters frequently prevent hospital administrators from paying sufficient attention to anesthesia and occasionally are used as excuses for not dealing with the problem at hand.

They make decisions differently than you do. Physicians are trained to practice medicine one patient at a time, and this often translates to a tendency to make nonclinical decisions on a case-by-case basis as well. Hospital administrators, on the other hand, are far more concerned with issues of precedent and policy and how they can justify decisions to multiple constituents (their boss, the board, other physicians, legal counsel, etc.). The result is that even though administrators appear to have considerable power to make decisions, they are always careful to consider how they might be second-guessed by others. To physicians this often makes administrators appear weak-kneed and indecisive.

They view the anesthesia service differently than you do. To the anesthesiologist, the hospital may represent a seemingly endless demand for anesthesia support, with or without compensation; a beast that requires feeding. To an administrator, it is an extremely valuable franchise for an anesthesia group to have as the exclusive provider. “Down” time, OB coverage and 24/7 availability have been provided in the past as part of the franchise, so the administrator will ask, “What has changed so much?” Similarly administration will have very different perceptions about the hospital’s efficiency and how that relates to the amount of support that the hospital must provide.

They view you differently than you do. Hospital administrators are frequently approached by physicians asking for financial support, and some of these requests are more legitimate than others. One might forgive them for becoming jaded and eventually viewing any such request with suspicion. Although they will seldom say so, their suspicion is greatly exacerbated by the fact that anesthesiologists earn considerably more than they do and have more time off and vacation than many specialties. It may not be right for an administrator to take this view, but it definitely is consistent with basic human nature.

Given all of the above, it is little wonder that hospital managers and anesthesiologists often cannot see eye to eye despite their many shared interests. To get beyond these differences, anesthesiologists need not only to understand the hospital’s point of view but to clearly articulate their own needs in a way that their hospital counterparts can understand and identify with. In our next installment, we will address how to do just that.


Part 2: Conducting an Effective Negotiation will appear in the March issue of the NEWSLETTER.