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Value-Based Contracting: How Payers Leverage Technology to Negotiate Agreements with Attainable Outcomes

Authored by: Ian Wayton

While attending conferences lately, I’ve noticed a trend. There’s a lot of talk about value-based contracting, how to keep up with the changes, and for payers, how to use data more effectively to negotiate pricing.  

Here’s a few examples of what I’ve been hearing: 

  • We know there is a better way to work with our providers, but we’re not sure how to do it.  
  • We have all the necessary data, but we need help interpreting it.  
  • How can we make the data presentable to payers so we can make our case in contract negotiations?  

They’re great questions. But, there’s one more to ask. After all, if you have the right tools to gather, interpret and display the data and information, you can easily build stronger negotiations for value-based contracting.  

How can my organization better leverage technology? 

Justify Your Case with Data  

As a healthcare payer, you likely have a massive amount of data. Having enough data is rarely the problem — it’s how to harness it successfully. Technology can help you solve the “harnessing” piece of the puzzle.  

When negotiating value-based contracts, the right technology can help you:  

  • Create a stronger case. You’re not arbitrarily setting fees; you have data-driven reasons for why you’re proposing specific fees, efficiency incentives, and sharing risk.  
  • Build credibility. Data is a credibility builder, so you can show providers that you’ve done your research, and contract negotiations are thoughtful and backed by data.  
  • Show providers value. Once you get a few negotiations under your belt, you’ll have even more data to drive your capitation, bundled payments, or shared risk contracting strategies. 

This brings me to my next point, which is how you can build a ripple effect with negotiations.  

Create a ‘Ripple Effect’ with Data-Driven Contracting  

When you cast a stone into the water, the results are felt much farther away than the initial impact. Even if small, that first impact can have widespread effects. Once you complete a few successful contract negotiations, you’ll have use cases to share with future providers. They can see how value-based contracting worked for others in the past and how it can work for them too.

And this is powerful as you work to negotiate a more significant number of contracts using this model in the future. With data you’ll understand what to adjust and rely on as your plan, member, and organization goals change with the industry. 

However, before you move forward, you need a solid starting point.  

Begin with the End in Mind  

With any new project, it helps to begin with the end in mind. Setting clear outcome  objectives at the start allows you to create a plan to work backwards to meet them.  

What outcome do you hope to achieve from a value-based contract? 

What data points do you plan to use to justify value-based contracts to providers?  

The answers allow you to reach out to potential technology partners to find out which of them can help you determine how to pull together and use the data points you have to strengthen your position when negotiating value-based contracts with providers.  

The right technology partner will help you figure out how to get from where you are now to where you need to go. Then, you can build momentum, leveraging each success forward with future providers. 

Brave Uncharted Territory 

Value-based contracting is uncharted territory. It’s still emerging, and every healthcare payer is figuring out the best way to address it. Technology is a tool that can help you with blazing a trail to work more efficiently with your providers, provide better service to your members and support stronger partnerships in the future.  

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