“The Art of the Deal” was a popular book in the ‘90s that demonstrated how a business shark can weave through Wall Street deals and come out on top. Or, even become president of the United States.
Most of us in the ‘90s were busy in medical school or college, where negotiation skills were limited to maybe buying a car for under invoice and hoping to eliminate that darn “destination” fee. Now, in the medical field, our interactions with patients and staff typically involve a narrow range of options. There’s not much room for choice or compromise.
On the other hand, those of us in practice also deal with vendors, and in those interactions, we get plenty of opportunity for choice, compromise and wiggle room — also known as “negotiation.” Here are some tactics to aid in your approach.
LOOK IN THE MIRROR
First, before discussions with a vendor, it is mission critical to precisely define the product you need and your budget. Isolating the product specifics will allow you to be objective about what is best for your practice or patients without enduring sales techniques or pressure. Often, the defining process involves asking vendors for information and demonstrations or asking the company to define the scope of work and services it can provide — but limit this initial phase to learning the product and services. Do not discuss price or other details. Speak with any references the vendor provides and independently solicit other practice’s opinions — they are great resources. Be certain to ask questions about service and training provided by the company as well.
This due diligence process will allow you to determine if that purchase is what your practice needs. When I wanted to buy a new OCT machine for my practice to image the optic nerve and macula, I set up appointments at a national meeting with three companies to learn about their products. These meetings included some key decision makers: our retina and glaucoma specialists.
To ward off sales pressure, inform the vendor that you are merely investigating now and are not ready to discuss price, much less consider purchasing.
It is reasonable at this point to let the vendor tell you the cost of the machine and inform you of any specials, but be careful not to ask or discuss price just yet. Often, without solicitation on your end, you are given a brochure and a hand-written price on a business card at the end of each meeting.
Back in the office, we reviewed our choices and decided which device would be ideal. We now had the details of a specific product and vendor, along with an understanding of which options were important to include.
LET THE VENDOR TALK FIRST
Knowing your product or service puts you in a strong position to negotiate. Now, it’s time to circle back for a price.
Be careful not to offer a price you are willing to pay — or even to speak too much — especially if it is a contract without a set price. Speaking less and listening more prevents you from offering to pay more than is necessary. I ask for the vendor’s best price and make it clear that I will not use this to leverage price with other vendors. This way, they know they have one chance to earn my business.
You may be enticed to upgrade or bundle some services, but stick to your product decision. Such changes can muddy the waters, weakening your position to negotiate price. Sometimes when going into the discussion, you may know you want a second item or a longer-term contract. If so, once you have a price for your original request, ask what the cost would be if you bought another or upgraded.
Once I was cited a price on the OCT we wanted, I asked the total cost if I were to buy one for our other office. Then I asked how much a visual field machine would cost if I bought all three devices. I find the pricing is better when adding products one at a time.
LOOK AT THE BIG PICTURE
Expensive purchases can be put into better perspective by looking at the monthly payment in a longer-term lease or service contract. Make certain you negotiate the total cost. Vendors know a monthly amount is important to you and have an advantage if you only focus on this.
It also gives you leverage when you know how big this deal is to the vendor. For example, the contract to buy a practice management program with EHR may cost $8,000 a month for five years once negotiated. Over time, this is a contract actually worth $480,000 to the vendor. Knowing and working off this total is more powerful.
HAVE THE WILL TO WALK
You are in no position to negotiate when the other side knows you need to sign a contract. Excessive enthusiasm or even a whisper of intent weakens your position. Start by controlling information among your practice decision-makers and staff regarding the status of the deal, so no one can casually mention to the sales rep that he or she likes a certain product best. It is critical to ask yourself if you are willing to walk away if you cannot arrive at the deal you want. Factor this into your business plan and also decide on an alternative choice or strategy. This will allow you to negotiate from a strong position.
DON’T KNOW ‘NO’
Notice the way vendors often pose questions that are open-ended or offer you a limited choice of answers that favor them.
For instance, the sales rep may ask if you would like to take delivery in a week or a month instead of asking if you are ready to buy. Try to structure you own questions similarly. Instead of asking if the price could be lower, ask if the vendor sold this product to other doctors in the area for a lower price recently. Avoid asking for things if the answer could be no.
Try a purposeful pause after receiving an answer to a question or hearing the vendor’s price. Our instinct is to overexplain, overjustify or just overtalk to avoid awkward silence. However, less is more here. The pause emphasizes your negotiating strength without uttering any words that could be used against you.
LEARN THE LANGUAGE
In your negotiation, try to learn the language of the vendor. You already know what is important to you in this contract or why you need this equipment. However, in early discussions try to understand the “language” and decision-making structure of the other side. That is, discover in specific terms how the vendor sees the deal (cost structure, program levels, how the vendor values your business, etc).
For example, when negotiating a service contract for outsourcing billing, I was focused on a percentage of collections but discovered the higher gross yearly billing would impact this number, lowering the percentage. The sales representative was paid on this gross number and not the details of the contract percentages. After learning this, we added the retinal injections into the contract with a lower percentage for these procedures. The representative had a higher gross billing number and we got an overall lower percentage, so both sides walked away with a win. Understanding a vendor’s incentives increases your leverage.
CULTIVATE A POKER FACE
Be careful not to get caught up emotionally in a purchase or service. Your enthusiasm is best reserved for the investigation stage. Emotion “worn on your sleeve” not only clouds your judgement, but it gives the other side a tremendous advantage. So monitor your emotions and observe theirs.
WHAT WINNING LOOKS LIKE
Negotiating does require at least some concession on your part. Keep in mind that “pigs get slaughtered.” And winning may not always be about price — it could be about value, such as a longer service contract, more in-service training hours or more features on a product.
Negotiation requires a plan, patience and some counterintuitive instincts. Do your homework, set your expectations, listen more than talk and stick to your plan. OM