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How To Negotiate Higher Physician Reimbursement Rates

As a physician, your primary concern in your practice is providing excellent patient care. However, as a practice owner, you are also an entrepreneur. Thus, you must have the knowledge and skills necessary for running a successful business. 

A significant part of doing so is maximizing revenue. For medical practices, that means upping your reimbursement rates as much as possible.

Most of your clients are represented by large insurance companies whose aims are to maximize profits. Consequently, they will offer the lowest possible reimbursement rate that is still fair.

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When negotiating with a new payer, you might accept their first proposal to get new patients through your doors. However, your reimbursement rates should not remain the same forever. As your practice grows, you become more valuable to your payers. Your rates should rise accordingly.

Your payers won’t reimburse you more unless they have to, though. If you don’t take action to increase your reimbursement, your revenues will stagnate — and by extension, so will your practice’s growth.

To increase your reimbursement rate, you’ll have to negotiate with your payers.

Negotiating higher reimbursement rates is no easy task. Not only are payer contracts complex, but you’re engaging directly with parties that have control over your practice’s revenue.

Fortunately, you can follow these tips to make the negotiation process a little easier.

1. Know The Value You Provide

Payers will be hesitant to increase your reimbursement rate if you don’t provide a sufficient reason why they should pay you more. To persuade your payers, you must gather adequate data to demonstrate the value you provide to them.

Businesses use Strengths, Weaknesses, Opportunities, and Threats (SWOT) analyses to evaluate where they stand relative to competitors and to create a concrete blueprint for growth. Using SWOT analysis data, you can articulate how you provide value to payers.

Here are brief explanations of each factor in a SWOT analysis.


Strengths are the positive internal attributes of your clinic. For example, you may have a particular field of expertise that’s rare in your locality, a strong brand name, or high patient satisfaction. 

Gather data to back up your strengths whenever possible. For instance, administering surveys to patients can help you gauge their satisfaction with your care.


Opposite of your strengths are your weaknesses. These are areas in which your practice lacks. Staffing issues, outdated equipment, and poor location are all examples of weaknesses. 

You need to plan on steps to improve these internal weaknesses to stay competitive and keep up with other clinics in your area.


Opportunities are external factors that have a significant influence on your clinic’s success. For instance, there may be changes in government regulations that might have a positive impact on your practice.

In many cases, your strengths position you to take advantage of opportunities. 

Let’s say there’s an underserved niche market for a particular type of service. If one of your strengths is expertise in that service, then you can seize this new opportunity by marketing your practice to that market.


Threats are uncontrollable risks external to your practice. For example, a practice within your specialty that opens across the street is a threat to your practice because they could acquire your patients. The best way to prepare for threats is to have contingency plans in place in case they occur.

Involve your staff members to maximize the accuracy of your SWOT analysis. They can provide additional perspectives on what you’re doing right in your practice and on what you can improve.

Be prepared to discuss weaknesses and threats in negotiations should your payer bring them up. If you can demonstrate that you are working on your weaknesses and prepared to address threats, they will trust you more. In fact, acknowledging some minor weaknesses first and then promptly explaining how you will deal with them can increase your payer’s trust in you.

2. Check Your Current Contracts

Unless you’ve negotiated with payers before, it’s highly likely that you’re still getting the reimbursement rate from the original contract — after all, payers won’t pay more than they have to. You shouldn’t accept the same reimbursement rate because you have to account for inflation. Each dollar you’re paid decreases in value each year, so you’re losing money if you don’t ask for a higher rate.

An excellent way to address this issue is to review your current contracts and identify the payers that haven’t sent updated terms of agreement. Make sure that you know each contract’s expiration date and how much time you need to send your suggested changes.

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3. Ask For a Cost-Of-Living Increase at Minimum

Another way to negotiate for higher physician reimbursement rates — if you can’t get your payers to agree to other data points — is to ask for a cost-of-living increase. Your cost of living encompasses the rent, staff salaries, and other operational costs.

Few payers can argue against paying you more if running your practice became more expensive. If you go out of business, patients insured through that payer will no longer be able to visit your practice.

4. Ask For Help From Your Lawyer

Lastly, enlist a lawyer to assist you with documents that payers send to you. Your lawyer can help you decipher legal jargon in your reimbursement contracts and spot potential problems that you may encounter in the future.


If you’re running a clinic or practice, and you are having difficulties staying profitable, it may be time to negotiate with your payers for higher reimbursement rates. You can prepare for negotiations by doing your research and creating a comprehensive report that highlights the value that you provide to patients.

You must also monitor your current contracts to see which arrangements can be modified with a higher fee. At the very least, negotiate for a cost-of-living increase to cover your clinic’s overhead expenses. Moreover, don’t forget to consult your lawyer for every legal document that you send and receive.

Lastly, be friendly but firm in negotiations. An adversarial attitude won’t get you far, but you cannot give in if the payer puts up resistance. Approach the situation as if you are trying to find common ground, not as if you are on the offensive.

The Editorial Team at Healthcare Business Today is made up of skilled healthcare writers and experts, led by our managing editor, Daniel Casciato, who has over 25 years of experience in healthcare writing. Since 1998, we have produced compelling and informative content for numerous publications, establishing ourselves as a trusted resource for health and wellness information. We offer readers access to fresh health, medicine, science, and technology developments and the latest in patient news, emphasizing how these developments affect our lives.

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