Negotiations 101: For Healthcare Administrators
As a healthcare administrator you negotiate every day. How many times have you come to the point in a negotiation when you say, "We've reached an impasse! There is no way to continue! The negotiation is over!" My observation of hundreds of negotiations leads me to believe that more often than not there are ways over, under, around, or through that obstacle causing the impasse. However, at least one of the parties must be willing to have an open mind and explore possibilities. Here are 25 creative alternatives when an impasse occurs in a healthcare transaction:
1. Recess
Sometimes something as simple as taking a break can help you relax, release tension, and cause the creative juices to flow. The length of the break should be appropriate to the circumstance but within reason; the longer the better. Allowing negotiators to sit back for a while, with the pressure off, often enables them to approach the problem from a different perspective.
2. Recap or Summarize
The process of healthcare transactions is often a detailed and complex one. When an impasse is reached, it often helps to go back and review the progress and the agreements up to that point. It is often encouraging to note how much has already been accomplished in the negotiation. This can build positive momentum.
3. Doomsday Tactics
Although it focuses on negative rather than positive, explaining the dire consequences of not reaching an agreement can sometimes shock the other party into a concession or an agreement. In using this tactic to overcome an impasse, consider how it might be presented in a positive way. As an example, it may be your sincere concern for the other party that will cause you to point out the dire consequences in the first place. Even when discussing negatives, you can often do it in a way that builds, rather than destroys, relationships.
4. Express Feelings
This is a great technique taught by many who understand the importance that emotion plays in human behavior. Both parties expressing feelings can often clear the air for further progress. Remember you do not need to agree with or endorse the other party's feelings or position. However, recognizing feelings can go a long way in your understanding of the other person and their feelings.
5. Introduce Another Issue
Most healthcare negotiations are complex. When an impasse is reached, try switching temporarily to another issue. Move to an easier issue, one on which you are likely to get agreement. Build momentum that may have been temporarily lost in reaching the impasse. Momentum plays a major factor in most negotiations. Use it to your advantage.
6. Agreement in Principle
Here is another technique to build momentum: Get agreement on anything you can get agreement on--even if it is only agreement in principle. For instance, you might agree that in the past both parties have always been able to come to a mutually agreeable solution. Or you might agree on a mutual deadline time for completing negotiations. You might even agree on an objective procedure to resolve major differences if they occur. All these represent examples of getting agreement in principle to help rebuild the momentum of the negotiation.
7. Disclose Something
Whether or not to disclose confidential information in a healthcare negotiation is always a difficult decision. Obviously, for legal and other reasons, there are many reasons why certain confidential information should never be disclosed. However, when an impasse is reached, many times the disclosure of some portion of confidential information may lead to a win/win solution. This is particularly true when you feel the other party has demonstrated a truly cooperative attitude. Your disclosures may also encourage similar disclosures from the other party, particularly when accompanied by a question such as:
- "Do you think there is information both of us has, that may be helpful to share to reach equitable agreement?"
- "Do I know everything I should know in regard to this matter?"
8. Hypothetical Situation
Presenting a hypothetical situation such as:
- "Suppose that...", or
- "What would happen if…" or
- "What would you do if…"
will often stimulate creative thinking in the other party. You can use it to encourage their thinking in a direction more favorable your position or proposal, by helping them see situations and circumstances they had not considered before.
9. Use Empathy
The use of empathy is particularly effective with open, relationship-oriented people. Expressing empathy, particularly to this type of individual, strengthens relationships and stimulates a win-win environment. Consider this example " Bill, I know how you feel. Just last month I was that situation myself when…"
10. Adding Something
One of the most effective strategies is to have something to sweeten the deal when an apparent impasse is reached. A good negotiator will often keep something of value that they can offer at an impasse for that very purpose.
11. Appeals to an Ally
Who can be your best ally? If it is a team negotiation, start there. Is there someone on the other team that seems easiest to work with or most open to compromise. If so, direct your negotiations to that individual. In other words, seek the path of least resistance through the opposing team. Is there anyone outside the negotiation who can influence the other party, such as a mutual friend, business associate, or anyone close to the other party? Could they directly or indirectly influence the other party?
12. Use Humor
Everyone agrees that properly applied humor can go a long way toward releasing tension and loosening up a tight or stalled negotiation.
For example, when one party suggested that a previously imposed 5 PM deadline was Pacific Standard Time since they were from California rather than Central Standard Time (which is where they were negotiating) it brought a laugh from everyone, loosening the tight negotiation, and, as a consequence, provided an extra hour of negotiating time. We compromised on Mountain Standard Time, as it was right in between us. The good negotiator uses humor whenever possible to loosen a tight negotiation and to overcome an impasse.
13. Illustrate
Reducing facts and figures, agreements and disagreements, to writing provides clarification, often making an impasse easier to overcome. The creative use of a flip chart, overhead projector, a power point presentation, or simply putting it on paper so all parties can see it is often an alternative that provides the slight edge in overcoming an impasse.
I was once hired to counsel a professional golfer who seemed to not be reaching his full potential on the tour. I asked him to reduce to writing where he wanted to be in one, five, and 20 years. After having great difficulty with this for several weeks, and a lot of prodding on my part, he finally completed the assignment, his comment was, "Writing crystallizes thought, and crystallized thought motivates action." Both crystallized thought and motivated action are what we want in overcoming an impasse in a negotiation.
14. Conditional Concession
An impasse is a very appropriate time to consider a concession, particularly if it can get you something more valuable in return than what you are giving up. As you consider a conditional concession... giving something on the condition of getting something in return… remember the concept of relative value. Relative value simply means different items in a negotiation may have different value to the parties involved. If you can concede something with a relatively low cost to you (but high value to the other side), while receiving something in return that has a high value to you (but low cost to the other side), you have accomplished a great solution.
EXAMPLE--I was negotiating an office space lease and had reached an impasse. I didn't want to pay the amount the landlord wanted. I tried a conditional concession to overcome the impasse. I offered to rent a larger suite of offices for a longer period of time if he would make a price concession. The conditional concession worked and was a great deal for both of us. The longer lease was obviously an advantage to him, but also to me because I didn't want to have to move again as long as we had room to expand as we grow. I could easily lease the additional offices initially, when we don't need them. Additionally, I could control the length of the sublease, so I can plan my expansion without having to move offices—a true win-win situation.
The next four alternatives involve the "change" of one or more elements of the negotiation.
15. Change Locations
A change of scenery can often stimulate creativity. At an impasse, consider changing the location of the negotiation to provide a new and stimulating environment. Different rooms or room arrangements, seating positions, lighting, and table shapes and sizes can often make a small, but important change of setting to help overcome the impasse.
16. Change the Shape of the Money
When money is involved in a healthcare negotiation, consider changing its shape when an impasse occurs. This could involve changing:
- The payment schedule
- The interest rates
- The amount of down payment
- Smaller payments with a balloon payment at the end.
Or build variables or options into any of the above. Creativity is the key here, combined with relative value. Ask yourself: What can we change about the shape of the money that will provide a better situation for one or both parties?
17. Change Specifications
A rearrangement of the specifications or the terms of an agreement can often provide a creative alternative at an impasse. In what way might the specifications be altered that could provide an advantage to both parties How might the terms of the agreement be changed to provide mutual advantage? Be creative. Keep an open mind.
18. Change the Negotiator or Team Member
Obviously a new personality to a negotiation can provide a fresh, new approach. It allows you to almost start over in the negotiation.
The selection of the individual inserted is highly important. What must be accomplished to overcome the impasse? Select the individual carefully, taking into account their behavioral style, their perceived expertise, and their credibility.
19. Provide (or Get) a Guarantee
This alternative is particularly effective when one party perceives the risk to be greater than it actually is. Sometimes a party is reluctant to agree, not because of the particular terms of the agreement, but because they lack confidence that certain terms of the agreement may be fulfilled. Simply eliminate the risk by providing (or asking for) a guarantee.
20. Bring in an Expert
The added power and prestige that an expert can provide is an excellent alternative at an impasse. In addition to the new ideas presented and the credibility provided, an expert often provides additional momentum to the negotiation. You might use....
- An attorney for legal expertise...
- A CPA for accounting expertise...
- An engineer or scientist for technical expertise...
- An M.D. for medical expertise...and so on...
Select the expert to uniquely meet the needs of the party who's at the impasse.
21. Changing Levels
When you reach an impasse, it sometimes helps to shift to another level. Instead of negotiating with the same person, it might be better to negotiate with someone at a higher or lower level if that option is available. This needs to be approached carefully to avoid being offensive.
Consider calling on the person at time when they might be unavailable, particularly if it might put you in touch with someone who can influence the final decision. In a company situation, you might consider returning to your organization and asking someone at a higher level to contact his or her counterpart at a higher level in the company. It's usually more effective to change to a higher level, but don't discount the possibility of changing levels down.
Recently, we considered the purchase of a new copy machine. It became apparent to me that the salesman had changed levels downward. He quickly realized that I was the ultimate decision-maker, but he also realized the strong influence my office manager would have on my decision. He concentrated his sales pitch on her when I wasn't around and convinced her that she really needed this machine. In the end, it became obvious to me that if I wanted to keep my office manager, I needed to purchase the copy machine she wanted. This was a very effective way to change levels in a downward direction.
22. Refer to a Joint Study Committee
In major healthcare negotiations, one alternative when an impasse occurs is to refer the matter to a joint study committee, which can provide additional ideas and options. The use of non-negotiating personnel in this regard, who can explore all possibilities with an open mind, often creates win/win solutions arrived at in no other way.
23. Use of a Mediator or Arbitrator
Getting a third party involved is often a great choice, particularly when the stakes are high for both parties. Agreeing ahead of time, or even when stalled; to put some or all of the decision making power in the hands of a third party can be a wise decision. This is particularly true when not reaching an agreement is a disaster for both parties. Many work stoppages and strikes fall into this category.
A mediator tries to bring the respective sides to agreement, whereas an arbitrator generally has the power to make decisions should the parties not reach agreement on their own. A great technique to bring parties closer together is for an arbitrator to ask both sides to bring their proposal for the most reasonable settlement. The arbitrator then chooses one or the other. Obviously this eliminates high balling or low balling by either party. This procedure brings both sides closer to each other, with each realizing the arbitrator is going to select the most "reasonable" position.
24. Add Options
Creativity is the key here. Here's a great example:
The agent for a particular outstanding rookie quarterback was negotiating a proposed three-year contract with my favorite NFL team. They were hundreds of thousand of dollars apart and it was the day before training camp began. The team asked the agent why this quarterback was worth what he was asking. After a brief pause, the agent said, because of playing time…. and he proceeded to list the playing time he was confident the quarterback would get in each year of his three year contract. The team asked for a brief recess and quickly came back with a proposal.
The proposal was for the base pay the team had previously offered with an OPTION based on playing time. How could he refuse? It was the perfect use of an option to overcome an impasse. The rookie had a signed contact that day and was in training camp the next morning. A several hundred thousand dollar gap was bridged in less than an hour with the creative use of an option.
25. Postpone
When all else fails, don't necessarily assume that the negotiation is over. In many cases, you can postpone the negotiation, indefinitely if necessary, rather than terminate it completely. The passage of time itself may provide solutions to overcome the impasse.
Healthcare negotiations present unique challenges and often have high stakes. Keep this list handy. Review it often. Keep it available in a negotiation. One or more of these alternatives may just overcome your difficult impasse.