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April 2020 no 8

M

MindFull

Ton up Member
Hi Tutors,

So the answer to this question includes a point about how with higher sales volumes, the insurer is able to negotiate lower fees with hospital groups. I am not familiar with this process. Can you explain what a negotiation would look like?

Thanks much.
 
MindFull said:
Hi Tutors,

So the answer to this question includes a point about how with higher sales volumes, the insurer is able to negotiate lower fees with hospital groups. I am not familiar with this process. Can you explain what a negotiation would look like?

Thanks much.
Click to expand...
Hi Mindfull

The hospital will have a menu of prices for each different treatment. It will use this price list when charging individuals.

An insurer may be able to negotiate a better deal on the grounds that it will be bringing a lot of business to the hospital. So the insurer will set up a meeting with the hospital and they will use their relative bargaining power to agree a discount for the insurer on the published price list, let's say 10%. If the hospital is unwilling to give the discount that the insurer wants then the insurer may instead take its business to a competitor hospital.

Best wishes

Mark
 
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