Tue., August 21, 2012 5:14pm (EDT)

Brinksmanship Marks Health Contract Talks
By Joshua Stewart
Updated: 2 years ago

ATLANTA  —  
Complex contracts, more-or-less equal market power and financial pressures often lead to last-minute contract negotiations between health care systems and health insurance companies. Negotiations between Northeast Georgia Health System and insurer UnitedHealthcare are down to the wire, with the current contract set to expire at midnight Tuesday. This is the second contract between a Georgia provider and an insurer to go to the last minute in as many weeks. (Photo Courtesy of forwardcom via stock.xchng.)
Complex contracts, more-or-less equal market power and financial pressures often lead to last-minute contract negotiations between health care systems and health insurance companies. Negotiations between Northeast Georgia Health System and insurer UnitedHealthcare are down to the wire, with the current contract set to expire at midnight Tuesday. This is the second contract between a Georgia provider and an insurer to go to the last minute in as many weeks. (Photo Courtesy of forwardcom via stock.xchng.)
Contract negotiations between Northeast Georgia Health System and insurer UnitedHealthcare are down to the wire, with the current contract set to expire at midnight Tuesday. This is the second contract between a Georgia provider and an insurer to go to the last minute in as many weeks. And it likely won’t be the last.

At stake is in-network access at the Gainesville-area system's hospitals and doctors’ offices for UnitedHealthcare policyholders.

“Both sides have more or less equal market power, which means that neither side could walk away from the contract without paying a heavy cost. So as a result, they negotiate it as hard as they can all the way to the wire," said Bill Custer, who studies health care financing and insurance at Georgia State University.

Custer said both sides are under financial pressure.

“The hospitals and health systems are facing cuts from almost every payer, or at least negotiating a cut reimbursement, and they are feeling the pressure to maintain an income stream they view as sustainable,” he said. Meanwhile, insurers are facing pressure from clients to keep health care costs down.

The contracts are also more complex than just prices for services. They include more pay-for-performance requirements and quality measures, making contract talks more involved.

Last week, BlueCross Blue Shield of Georgia and the Georgia Health Sciences Health System in Augusta had to extend talks two days past the end of the old contract to come to an agreement.