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Your Local Hospital is About to Go Out-of-Network. Here’s How to Prepare.

negotiating hospital pricing for network

The provider network is selected carefully, with strong consideration given to the in-network facilities and the doctors. However, rising labor costs, adverse investment outcomes, and general inflation are causing hospitals to pursue substantial price increases during network contracting. This is causing significant disruption for employers as more providers and carriers fail to contract leading major institutions to go out-of-network for the patients they serve. The result: members in danger with limited healthcare options, and stymied cost management strategies for employers.

Hospitals leave carrier networks when they feel they are not being compensated fairly for the services they are providing. Currently, several major hospital systems that are renegotiating contracts are holding out for higher compensation from networks, even as their existing terms expire. For example, in Cincinnati, OH, Anthem Blue Cross Blue Shield (BCBS) customers faced the prospect of no longer being in the Christ Hospital Network; an agreement was at last reached right on the date the previous contract was set to expire. In Fresno, CA, Community Health System moved out-of-network with Anthem BCBS when negotiations were unsuccessful. And the University of California warned its health systems users they will experience higher fees in mid-April due to its negotiations with Aetna having reached a stalemate.

A breakdown in network negotiations isn’t something easily avoided nor predicted. Major negotiations often start 12-18 months in advance of their effective dates – long before the economic view of what each party requires is clear. The role of staff and local constituents can be a wildcard. One carrier used one of their largest union clients to set up a picket line outside a hospital during a contentious negotiation. Another hospital was driven to tough negotiations with a carrier in the first place due to strong backing from their nurse union. The contemporary transition of health systems away from hospitals and into ambulatory settings often muddies the analytical models from both sides trying to calculate what subtle terms and conditions being negotiated equate to in unit price.

In this environment, what is most important for brokers and employers is to take several steps to prepare for possible network changes or increases, including:

  • Understanding the situation: Employers should stay informed about any network changes with local providers, even if these changes are with other networks and the Employer is not immediately affected. An unsuccessful negotiation with one carrier may foreshadow a difficult negotiation with another carrier. Many Hospitals are on three-year contracts with the carrier network and it may just be a matter of time before the next negotiation begins.
  • Communicating with employees: Employers should communicate regularly with employees about potential network changes, including the reasons behind the changes and the impacts they may have on benefits.
  • Working with a TPA: Employers can work with a TPA to manage their employee benefits communication and navigate any network changes. A TPA can stitch together national networks with regional networks and facilitate direct contracting between the employer and providers that go out-of-network.
  • Evaluating other network options: Working with a TPA partner, brokers and employers should evaluate different network options, including narrow and broad networks, to determine which best meets the plan’s and employees’ needs. They should also consider alternative networks and “network add-ons”, such as telemedicine or direct primary care, that can provide cost-effective options for routine care.
  • Negotiating with the hospital: Employers can negotiate directly with the hospital or healthcare provider to try to mitigate any potential network increases. They can work with their broker and TPA to leverage their bargaining power and negotiate favorable terms on behalf of their employees. Also, TPAs can negotiate and manage contracts directly with healthcare providers on behalf of their clients to garner more favorable terms, including lower rates and better services. This can help save money and ensure employees have access to high-quality care at affordable prices. In the case of Community Health, the County of Fresno negotiated a standalone contract directly with the system so employees did not experience any disruption in care.
  • Implementing cost management tools: Cost management tools can help employers make informed decisions about healthcare spending and identify areas where they can reduce spend or prevent loss without sacrificing quality. The right TPA can help manage costs by auditing and processing claims promptly and accurately. What many Employers fail to realize is that discount differentials between networks ranging 1-5% can be fully overcome through effective fraud, waste, and abuse and claims excellence programs – without sacrificing measurability. Using Clinical Care Management programs can provide nurse resources to at-risk members, helping to manage larger claims. If a facility or provider change requires a standalone contract or higher fees through a network to maintain current contracts, being good stewards of the money available helps provide the necessary margins so benefits can be maintained while the employer remains financially secure.

While there are many well-founded hypotheses as to the reason for hospital losses and the push for higher compensation, the reality is that a loss is a loss. Hospitals will seek to recompense those losses regardless of how they occurred. It’s important that brokers and employers prepare for possible network changes or increases so employees continue to have access to high-quality, cost-effective healthcare. A TPA can be a valuable partner, providing expert guidance on healthcare negotiations, managing healthcare costs, and helping to ensure employees receive the best possible care at the most affordable prices.

Chad Harris

Chief Executive Officer


Chad Harris serves as the CEO of HealthComp and is a value-driven healthcare leader with over twenty years of experience running business process and information technology businesses as a senior executive. Chad has a reputation for creating and controlling rapid growth by focusing on the intersection of customers, market dynamics, and the new digital world.


Chad has held many senior executive positions and led global teams of more than 10,000 people across dozens of counties. Chad has grown both large and small businesses, from those with less than $100M of revenue to those producing multiple billions of revenue, focusing on delivery, customer satisfaction, and innovation to create market leadership.


Chad's philosophy is to inspire change by doing what comes naturally, putting the needs of others before his own, working incredibly hard, and focusing on "how" to accomplish things, never "if they can be accomplished."

Thomas Martel

EVP of Partnerships and Strategic Accounts


Tom serves as the EVP of Partnerships and Strategic Accounts at HealthComp. In this role, Tom focuses on strategic initiatives aimed at accelerating HealthComp’s growth nationwide. His passion lies in assessing market and enterprise structures and creating efficiencies that enable teams to deliver best-in-class performance.


Previously, Tom led Cigna’s largest employer segment, largest region which was comprised of several health plans including the two largest health plans. He worked closely with Market Presidents and their leadership teams to develop and execute local market strategy and deliver growth for the enterprise. Tom earned his degree from Saint Anselm College and holds certifications from The Wharton School and the Darden School of Business at the University of Virginia. In his spare time, he enjoys sailing and holds a Master Captain’s license with the U.S. Coast Guard. He is also active in community outreach programs including local food bank and shelter services.

Sanoj Balakrishnan

Chief Technology Officer


Sanoj Balakrishnan serves as the Chief Technology Officer at HealthComp. In this role, he oversees the company’s overall technology strategy and architecture, building secure and highly scalable distributed systems.


Most recently, Sanoj served as Head of Healthcare Digital Business and Technology at Cognizant, working with payers and providers in developing solutions that reduced healthcare costs and provided a best-in-class experience for members. Earlier in his career, he worked at technology organizations in a variety of software engineering and architecture roles. Sanoj earned his B.S. from University of Mumbai and Computer Systems Management from National Institute of Information Technology.

Justin Tran

Chief Growth Officer and EVP of Product Strategy


Justin serves as the Chief Growth Officer and EVP of Product Strategy at HealthComp. He has 8 years of experience in developing and delivering solutions that reduce health care costs, improve quality, and provide a best-in-class experience for members. Most recently, Justin was an Associate Partner and business unit leader at McKinsey & Company where he helped large carriers and healthcare technology companies build new clinical services and solutions for fraud, waste, and abuse. Justin earned his B.S. in Accounting and Data Informatics from Indiana University, Bloomington.

Tucker Stein

Chief Financial Officer


Tucker serves as the Chief Financial Officer of HealthComp. Tucker previously worked for The Boeing Company in a number of finance and strategy roles, most recently as a finance lead for the Transactions and New Business Development group. In this role, Tucker led investments and strategic partnerships for Boeing’s Space and Communications portfolio. Tucker earned his MBA at Stanford’s Graduate School of Business and his Bachelors of Science at the University of Redlands.

Tom Georgouses

General Counsel


Tom is involved in multiple areas of HealthComp including Operations, Compliance and Legal Affairs. Tom was admitted to the California Bar in 1990 and started his legal career with Stammer, McKnight, Barnum and Bailey, LLP. When he left the firm to join HealthComp in 2014, he was the Managing Partner (he had represented HealthComp since 2003). In private practice, Tom’s areas of focus included healthcare and transactional work. Tom holds a Bachelor of Science Degree in Business Administration-Finance from California State University Fresno and received his Juris Doctorate from San Joaquin College of Law.

Rishab Bansal

Chief Transformation & Operations Officer


Rishab serves as the Chief Transformation & Operating Officer at HealthComp. Rishab focuses on transforming and modernizing HealthComp’s operations to provide delightful and distinctive experiences to its members, providers, and clients. His agenda includes integrating all entities towards a One HealthComp vision, driving profitable growth, and delivering value and business outcomes.


In his former work over the last 2 decades, he has helped clients across industries to transform themselves by bringing industry-leading practices and digital and data-led disruption. As the trusted advisor to the C-suite, Rishab helped his clients leapfrog on their transformation journey to accelerate business outcomes and helped them unlock new opportunities to drive profitable growth, profitability, and enhanced experience for their employees and clients.

Elaine Davis

Chief Human Resources Officer


Elaine Davis is a seasoned executive with deep experience in human resources, mergers and acquisitions, divestitures and transformation in large and small companies. Elaine has over 25 years of experience in human resources, marketing and communications in a range of industries that include information technology/business process services, life sciences/medical devices and financial services. Elaine brings focused expertise in governance, leadership coaching, branding and messaging with a focus on supporting female and minority leaders and emerging leadership talent.

Judy Schott

Chief Operating Officer


Judy Schott serves as the Chief Operating Officer and is a customer-focused healthcare leader who transforms operations to simplify the experience and deliver excellence. With deep knowledge of third-party administration, claims, eligibility, customer service centers, and compliance, Judy’s focus will include integrating all entities of HealthComp while driving profitable growth.

Kim Randazzo

Chief Customer Officer


Kim Randazzo serves as the Chief Customer Officer. In this role, she oversees account management for all divisions and HealthComp clients. Kim brings a wealth of strategic experience in account management to the HealthComp executive team, along with a practical understanding of the insurance business and what it takes to be the nation’s leading TPA.

Prior to joining HealthComp, Kim oversaw sales, account management, wellness, marketing, and implementation teams for Gilsbar LLC’s self-funded, association and affinity clients, and worked as an underwriter with Ochsner Health Plan and as an account representative with USI Services, Inc. She has over 26 years of experience in the healthcare insurance industry. A graduate of the University of New Orleans, she received her Bachelor of Science in Management in 1997 and her Master of Business Administration in 2002.

John McGurk

Chief Information Officer


John is a global business, operational, and technical leader with more than 35 years of enterprise IT services experience. He has proven successes in IT strategy and transformations, coupled with successful operating results for Fortune 500 companies worldwide. John has worked for some of the largest IT services firms in the world and has delivered enterprise solutions to the healthcare market for many years. He is a creative problem solver with the ability to work in multiple disciplines and cultures with positive customer outcomes. John is responsible for IT services and Security at HealthComp, supporting all aspects of the business. A graduate of Louisiana State University, he received a BGS in 1992.