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The role of the physician executive in negotiation.

"Let us never negotiate out of fear. But let us never fear to
--John F. Kennedy

"Negotiation is the art of letting them have your way."
--Daniel Vare

A hospital anesthesiology department is steeped in financial troubles. Department leaders approach senior hospital administrators seeking additional funds.


Department leaders say without funding they will lose staff and be forced to close operating rooms. The administrators take the position that if they provide funding to the anesthesiology department, every

department will demand it.

Furthermore, the anesthesiology department has enjoyed the privilege of having an exclusive contract. If rooms are closed, the hospital may entertain looking at other anesthesiology practices.

The senior vice president for medical affairs is called in to mediate. A meeting is set up to negotiate a solution.

Scenarios such as these play out in hospitals across the country. Physician leaders are being asked to negotiate solutions. There are few situations that create such universal anxiety and bad feelings as negotiations, especially when money is involved.

Typically each side takes a position, argues strongly for it, and possibly makes concessions to reach an eventual compromise. One party will walk away from the negotiation feeling as if they gave in to reach the compromise. A compromise may get the parties out of the negotiating room, but may not offer a long-term solution.

The Harvard University Negotiation Project looked at the question as to whether there was a better way to negotiate. The result was the method called Principled Negotiation, or Negotiation on the Merits. A book was published as well: Getting to Yes: Negotiating Agreement Without Giving In. (1)

There are five basic components to this negotiation method.

1. Separate the people from the problem. Both parties must work together to attack the problem, at hand, and not each other.

2. Focus on interests, rather than on tightly held positions.

3. Develop a series of options before deciding how to best solve the problem.

4. Insist that the final outcome be based on some objective standard rather than emotion.

5. Since not all negotiations may result in a desired outcome, each party should know its best alternative to a negotiated agreement (BATNA), before the negotiation process begins.

Armed with this knowledge, how does a physician executive who is asked to mediate these negotiations proceed?

The first component of principled negotiation is to attack the problem over which the parties are negotiating. The further apart the positions, the more likely emotions will obscure the objective merits of the problem. Most negotiations are as much about emotion as they are money. The negotiation process will deteriorate rapidly if each side firmly settles into their respective positions.

If the anesthesiology group and hospital administration settle into their respective positions of closing rooms and denying the anesthesia group their exclusive contract, the negotiation soon will become a series of personal attacks.

The first step is for the physician executive to acknowledge that negotiation is an emotional undertaking. As mediator, he or she should encourage each party to consider what they would be thinking if they were on the other side of the table? The point is to get both parties to address the problem and not to react immediately to emotional outbursts.

Relationship building and the "spirit of the deal" are important factors to keep in mind. The way to accomplish this relationship building is simple. Lay down the ground rules so that each party agrees to show the same degree of honesty, respect and fairness that they would demand from others.

The ultimate objective of any negotiation is to satisfy the underlying interests of each side in the best way possible. As mediator, the physician executive must get each party to recognize the importance of each other's interests.

What are the interests of each group in our example? For the anesthesiologists, it may be increasing salaries to retain current staff and recruit new staff, while not having to work unreasonable or unsafe amounts of time to achieve this goal. For the hospital, it may be maintaining or even increasing operating room time to retain and attract high volume surgeons.

The point is that each side has multiple interests. Positions, such as "We will close down an operating room," obscure the underlying interests. Both parties must be cautioned to recognize and avoid any pre-conceived perceptions they may have about the other party.

For example, not all anesthesiology groups seeking stipends are greedy. Not all hospital administrators are clueless to clinical issues. No attempt should be made to offer any solutions until there has been a discussion of the problem and interests at hand.


With the interests articulated and understood, the physician executive should begin to look at options. How do you find these options? First, look for shared or common interests.

In our example, it is a common interest for both the anesthesiology group and hospital to keep the operating rooms open and running, since both derive revenue from the cases. Many people believe that the key to successful negotiation is to find common ground among the underlying interests of the negotiating parties.


Unfortunately, it may be difficult or impossible to find common ground in many situations. As a result, capitalizing on differences may hold the key to developing options for achieving agreement.

For example, the hospital may state that in order to provide a stipend, the anesthesiology group must be willing to expand operating room coverage in the evenings. The anesthesiology group may claim they do not have the staff to expand coverage and there is no need for expansion.

Could there be a solution in the disagreement? If both sides agreed to look at both decreasing room turnover time and more accurate posting of procedure times by surgeons based on historical data, the interest of the hospital in providing time for high-volume surgeons, and the anesthesiologists' interest in not expanding evening coverage, might be achieved. Remember that agreement often can be based on disagreement.

Once you begin looking at options, the problem can be discussed based on objective criteria. The physician executive must have both parties prepare objective data to present prior to negotiating a solution.

For the anesthesiology group, they should be prepared to have benchmarks as to current salaries, workload and operating room staffing models. The hospital should know how other institutions handle stipends, the legal implications and objective criteria used to judge performance.

Not every negotiation will be win-win and result in agreement. As a result, before the negotiation process begins, each side must develop its best alternative to a negotiated agreement or BATNA.

Developing a BATNA is important because it is the standard that any proposed agreement is measured against. The physician executive mediator should know as much as possible about each party's BATNA, as well as developing a BATNA of his or her own if the negotiation should fail.

In general, the stronger the BATNA, the better the strength of that party in the negotiation process. For example, if the hospital had another anesthesia group willing to step in if negotiations failed with the current group, they would be negotiating from a very strong position.

No matter how well you prepare for a negotiation, the unexpected may occur. Since negotiating is an emotional undertaking, at times the physician executive must just go with his or her gut feelings.

Experienced negotiators and mediators learn to quickly assess each party and adjust their tactics accordingly. If the situation does not feel right, it most probably is not. Ask for a break. Regroup your thoughts and attempt to analyze what has transpired. It is better to reschedule the negotiation than to move ahead only to later regret the outcome.


1. Fisher R and Ury W. Getting to Yes: Negotiating Agreement Without Giving In. New York: Penguin, 1991.

By David P. Tarantino, MD, MBA

David P. Tarantino, MD, MBA, is the executive medical director of Shock Trauma Associates, P.A., a 50+ physician, multispecialty practice associated with the University of Maryland School of Medicine. In addition, he is the chief executive officer of The MD Consulting Group, LLC, a health care management consulting firm in Baltimore. He can be reached by phone at 410-328-2036 or by e-mail at
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Article Details
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Title Annotation:Nuts and Bolts of Business
Author:Tarantino, David P.
Publication:Physician Executive
Geographic Code:1USA
Date:Sep 1, 2004
Previous Article:Reviewing your physician compensation plan.
Next Article:Characteristics of a sophisticated job candidate--Part II.

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