Educate & Equip Your Medical Transportation Business to Deal with Brokers, Part II

For new transportation providers or when a new broker enters the market, a common strategy that I continue to see all over the country time and time again is brokers contacting transportation providers with proposed rates of reimbursement and then encourages the provider to sign as soon as possible. The broker positions themselves to appear as though they are doing the transportation provider a great service. Brokers tell the providers that they can “start immediately” once they have received the signed contract.

Again, I cannot tell you how many times I witness this “expeditious” strategy in working with clients. The more I see it the more I am beginning to think that all these brokers operate off of the same “script” or that they maybe even go to the same sales school or something!

The reason why brokers appear to be your friend and act as though they are doing you a favor by encouraging you to sign as soon as possible is because they want to lock you into your rates before you have the ability to seriously evaluate and analyze the legitimacy of their proposed rates! They don’t want you to seriously evaluate the profitability or lack thereof of their proposal, hence, the reason they stress the expeditious nature and the potential sales volume.

Sadly, novice transportation providers jump at the first chance to sign these proposals enticed by what they think are possibilities! The broker, in typical fashion, will promise providers that they will send them considerable business. And many times, when brokers are able to get these naive transportation providers, they will use them and send them as much business as possible. Why – because the proposed rates are always low-balled, unprofitable transports that provide little to no profit margin for the transportation providers but healthy profits for the brokers.

Rest assured, brokers are well experienced and well funded. Further, brokers are NOT stupid. They are well versed with the costs associated with supporting logistics and transportation. And they know when and how to take advantage of transportation providers. So you might be asking yourself, why would brokers do this? Why wouldn’t they seek to provide greater, more reasonable rates of reimbursement to transportation providers so that providers can be more stable to provide greater, more reliable and longer lasting service?

Well there are a few things that you have to consider. First, when it comes to the brokers, it is all about the numbers. This is big business and business is a numbers game. To brokers, it makes more sense for them to low ball naive transportation providers. It’s easier to leverage small time, mom-and-pop gypsy services. Brokers “gamble” that those naive enough to accept such nominal rates of reimbursement will not be around long. Brokers will, in turn, give these gypsy services what I refer to as “nickel and dime” transports – short, local transports that are nominal in cost and reoccurrence yet still profitable for the broker. When these gypsy services go out of business because they are not profitable, brokers have little invested, made a lot of money over that period of time, and simply await the next gypsy businesses.

Secondly, brokers always tell providers that they do not negotiate their rates and that everyone is paid the same. Trust me. This could not be further from the truth! I have worked with providers in the same region on several occassions and I can assure you that they are NOT all receiving the same rates of reimbursement. Further, yes, brokers do absolutely negotiate when you position and force them to negotiate!

Brokers not only negotiate with legitimate and credible transportation providers, but with all honesty, they will actually respect you and treat you more like a legitimate strategic partner when you reject their proposal and counter with substantiated and realistic numbers. I stress the word substantiated because it’s important that you demonstrate that you “know your numbers,” the cost and expenses associated with doing business.

Furthermore, when you engage in legitimate negotiations with brokers and you demonstrate that you know your numbers not only do they identify such transportation providers as more legitimate but they also award such providers with more regular and profitable transports such as dialysis patients and distance transports.

As you can imagine, negotiating on a serious and legitimate level does require a great deal of skill and even “guts.” As the old saying goes, you need to “know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.” Negotiations do require an effective “poker face.” And, it can take serious time. You have to use skill and be patient to allow things to develop. I can’t tell you how many times I have advised providers to walk away, end communication, and await for the brokers to return with a counter offer. With all sincerity, I can’t tell you how many times I have been right and the broker returns and accepts our counter offers – further illustrating that yes, brokers DO negotiate! You just need to know how to position and package yourself and know your points of leverage.

If you are or you’re planning on working for a broker, I welcome the opportunity to assist you in your application and negotiation process. If you would like to enlist my help, One-on-One, Click Here to learn more.

Also, if you would like to learn even more about the details of positioning yourself, learning about the Medicaid/brokerage system, then I would definitely encourage you to invest in my “Boot Camp Seminar” DVD Series. This is an outstanding six (6) disc set that is definitely going to educate and enlighten you while further teaching you about diversifying and investing your business horizontally.

Click Here to learn more about my Boot Camp Seminar DVD Series.