Creating Leverage When You Have Nothing to Lose

Leverage covers a much broader spectrum. Unskilled negotiators seek victory through power, force and coercion. Real power is found in creativity, nuance, and reframing the problems. In some ways its using martial artistry, i.e., using your opponent’s strengths against them. In this case a dominant payer would seem to hold all the cards and yet, the very fact they were dominant, exposed a weakness.

The following is based on a true story – although names, and other identifying terms have been changed or omitted out of respect.

In the high-stakes world of healthcare, a small Independent Practice Association (IPA) found itself in a tight spot. With an insurer losing interest in their partnership, and that partnership vital to survival, the IPA had little leverage. Enter ‘Tommy’, a former shareholder and advisor, suspected of having insider ties with the insurer’s key decision-maker, ‘Stan’.

Faced with the risk of losing the business and being so dependent on a single payer, the IPA crafted a strategy. They prepared a harshly-worded letter criticizing the insurer and Stan, filled with inflammatory remarks – just the kind of letter that often makes headlines. They showed this letter to Tommy, seeking his advice. Predictably, Tommy urged against sending it. Little did he know, this was a ruse.

The real letter, sent to IPA members, was a stark contrast: respectful and acknowledging the insurer’s historic support. It encouraged members to write letter to urge Stan for renewed negotiations. This move set the stage for an intense encounter.

Stan summoned the IPA leadership to a hot, cramped office in the insurers high rise; he made them wait for 20 miunutes before bursting into the room fueled by rage from receiving numerous letters from local doctors. He ranted for several minutes, waving a handful of unopened letters. He threw them on the table and demanded that the IPA team, explain themselves. Stan was under the impression that the IPA had sent the inflammatory letter. The IPA leadership sat calming through Stan’s fit of rage; when he was finished, the Chair of the board removed a copy of the actual letter and handed it to Stan revealing their actual respectful correspondence; Stan’s expression transitioned from bitter anger to bewilderment to anger again as he realized that his covert activities with Tommy had been uncovered.

Further, the fact that Stan did not simply walk away implied the IPA actually did have leverage – not in terms of market power nor traditional negotiating leverage. Stan’s reputation as a ‘good guy’ in the community and the worry that a scandal might blow back on his employer revealed the ember that could be fanned into a flame.

While Stan was not immediately swayed toward making a favorable deal. The IPA could now see a narrow path through the critical situation and so, employed various strategies – from seeking acquirers to engaging in a high-profile government healthcare program. This garnered significant media attention, and the IPA leadership was attributing its success to the support of its arrangement with Stan and his company. Far from trying to hurt Stan, the IPA was celebrating his wisdom, foresightedness and partnership. Doing so placed Stan in a position where he concluded that terminating the IPA would be detrimental to the reputation of his company and himself, while embracing the IPA allowed him and his company to enjoy the positive press.

Through these efforts, the insurer, wary of a public relations issue, offered a deal. It wasn’t ideal, but it was enough to keep the IPA in business and to buy time to diversify the payer mix.

From this experience, several key lessons emerge:

1. Creativity in Asymmetrical Power Dynamics: In a situation where power is unevenly distributed, creative strategies are essential. Direct confrontation might have only hardened the insurer’s stance.
2. Friend or Foe? Need-to-Know Strategy: Understanding allies and maintaining a tight circle is crucial. Tommy’s ambiguous role highlighted the importance of controlled information sharing.
3. Strategic Opponent Analysis: Stepping back to assess the opponent’s values and fears can guide strategy. Leveraging their vulnerabilities or offering them support can be more effective than confrontational approaches.
4. Commitment to the Cause: In high-stress negotiations, particularly where one party is at a disadvantage, resolve and willingness to endure are vital. Compromising too early can have long-term strategic consequences.
5. Always Allow your Opponent to Claim Victory: Ego can be a poison or a potion in negotiations, the Hollywood notion of crushing the opponent, and bending them to your will may sound appealing but in practice, you lay the ground work for the next conflict. It is better to be humble in victory

This story of the IPA is a testament to the power of strategic thinking, resilience, and adaptability in the face of daunting challenges.