How to Gain a Better Managed Care Contract
for your Independent Laboratory

September 2011
Management Home Page 

By Mick Raich, President, Vachette Pathology

Many labs are struggling to get contracted with payers in their area. These are strong practices and good pathologists who just want to provide a quality outcome for their patients while making a decent living. Gaining these contracts allows the lab to gain market share and, if done correctly, increase their revenue. If your problem is getting managed care companies to sign contracts, here are some real hard core tactics that work. This step-by-step process will help you get managed care contracts or renegotiate poor contracts.

1. Pick the right payer. Review your referring physician list and talk with your billing people. They will tell you which payers you need to work with. Use the 80/20 rule and start with the biggest volume payers.

2. Contact the payer and get a face-to-face meeting. This will be the most difficult step. Payer Representatives are busy and change jobs often. Expect to make at least 20 phone calls. Once you get the meeting set, expect them to cancel it several times.

3. Prepare for the meeting.

a. Publications: You should have every article that you and your partners have ever published ready to present. Have these on the table for the meeting and they should be an item on the agenda.

b. Have all your community projects ready to present. This means all town or local committees, board memberships, parent teacher association, library, coaching positions etc. Itís imperative that you show you are part of the local community.

c. Be prepared to show them your quality control plan; note your quality and processes and how you maintain industry standard quality.

d. If you have a bar code system, show them how this works and why it helps prevent errors.

e. Build a graph that shows your lab process and turn around time (TAT). Make sure they understand that your referring physicians get a 24 hour TAT on their cases. Be prepared to explain why this is important. Have a story about a patient and how your diagnosis solved their case.

f. Have your CVís ready. Show them your schooling and your training; make sure they understand any specialty training. Explain how this helps their enrollees get better health care.

g. List all your hospital and university affiliations. All these should be presented and explained.

h. Have a plan to show them your accessibility. Note that all your referring physicians have your cell phone numbers, show them your business cards, and explain how this helps your referring physicians.

i. Show them your EMR and how it allows your customers to access their cases and makes the patient process more efficient.

j. List your use of special stains and compare this to others in the industry.

k. Show them cases where others have used you as a consultant and then tell why.

l. Get some letters of reference. Have some of the big referring physicians write letters noting your quality and their desire to work with you.

4. Have the meeting at your lab. Start with a tour of your laboratory; note your technology and how you do what you do. Explain the entire process and give it a personal touch. Follow one piece of tissue through the process from excision to final diagnosis. Have a story and use it.

a. Present your case. List the details and processes noted above. Go through this very thoroughly. A PowerPoint presentation works well. Give them time to ask questions and get a good understanding. Have a two-headed scope ready, show them what they are paying for, have a story under the scope and let them see what you do every day.

5. Tell them you want a better contract. Be sincere and direct and note your terms up front. Show them where they compare to other payers, without releasing names, and then gently asked to be treated fairly.

6. Follow up after the meeting. This means a face-to-face meeting again talking with the payer representative and asking them for a new contract. You must ask for the contract or rate increase.

7. Finishing up. Now that youíve presented your case and asked for the contract, you must continue to follow up on this task. Follow up should take place face-to-face whenever possible. It will take work to gain a new contract or fix an old one.

Quarterly meetings with these reps are a must; you should bring them in and let them see your new equipment and see why you purchased this and how much time and effort it costs to do the testing correctly.

In conclusion, remember this process takes time and energy and it may very well happen that over the time it takes to get the contract, the payer representative will change. This means you have to develop a new relationship with the next payer representative to step into the breach. Above all, remain focused and determined.

Mick Raich is the President / CEO of Vachette Pathology, the nations leading pathology and laboratory auditing and management firm. He can be reached at 866-407-0763 or at Please feel free to call with any questions.