Constructive Tactics for Effective Budget Negotiation

Based on a presentation by Liz Christianson, Client Engagement Manager

This blog has been developed for educational purposes only and does not constitute legal advice. It does not look at any unique circumstances in your particular organization.

Budget negotiations can become complex if a negotiator doesn’t come fully equipped. To expedite the process, every negotiator should have a plan in place prior to sending the first communication to their negotiation counterpart. This blog will detail useful strategies for effective and efficient budget negotiations.

Before sending out the first email to your negotiation counterpart, it’s important to personally prepare from a technical perspective. To do so, I recommend following five important preliminary steps.

Step 1 - Organize an “all hands on deck” feasibility meeting: The goal of this meeting is to consult with all the applicable ancillary departments and vendors to understand their operational and budgetary needs prior to budget building or beginning negotiations.

    • As a general rule of thumb, prior to this meeting, make sure you have all of the current ancillary/vendor fee schedules saved somewhere handy. Reviewing these prior to the meeting will afford you a good estimate of what each department is going to need to be successful on a study.

    • Additionally, having a comprehensive, study-specific feasibility meeting is going to prevent big-ticket expenses and/or operational logistics from being missed. Having foresight can help prevent wasted time and money.

    • During this meeting, you should not only discuss what supplies will be needed, but you should also discuss scheduling. You might find it beneficial to role play a patient moving through the study from start to finish to understand what that will look like for all parties involved. You should know how much time will be needed from each member of your staff.


Step 2 - Complete an internal budget that is site-specific:

When working with a new hospital client on budgeting processes, we often get asked, “Why would I spend time building an internal budget when the sponsor has already provided us with a template? Isn’t that a huge waste of time?” First off, it shouldn’t take very long. If you’re preparing a coverage analysis, which you should be, it can be as easy as copying and pasting that grid into a new tab and then refining with budgeting data. If you’re using a CTMS to perform your coverage analysis, they almost all have budgeting functionalities that will allow you to tie prices to the items in the grid you’ve already built for the coverage analysis. Additionally, you should not rely on the sponsor’s budget template or protocol Schedule of Events to recognize all billable items and site expenses. Generally, less than 50% of potentially billable items are actually identified in the sponsor budget. Building an internal budget will give you the details you need in order to formulate valid negotiation arguments for your costs and for any additions or deletions in the sponsor budget template.


Step 3 - Use pre-developed, standard research pricing – for instance, a percentage of Medicare rates or percentage of Chargemaster rates.

    • Be consistent with your requests – do NOT change pricing from study to study.

    • Changing your process too frequently will trigger questions from sponsors, cause significant delays in negotiations and may make your site appear difficult to work with.


Step 4 - Invest time prior to engaging in study-specific work to develop a standard Administrative Fee Schedule with justification included on institutional letterhead.

There has been a trend toward more sponsors/CROs requiring documentation for administrative fees:

      • Inconsistent fees for each study will spark questions and delays from sponsor/CROs.

      • Sending the documentation right away instead of waiting for the request is going to cut your negotiation time down significantly.

      • Documentation may also allow the CRO to approve certain fees without escalating to the sponsor which will cut your negotiation time down.

      • Developing this schedule preemptively, and keeping it on hand, is going to cut time by minimizing the questions you have for ancillary departments with each study.


Step 5 - Put a process in place preemptively to address any impasses, so that you don’t get stuck when that time inevitably comes.

·        For example, perhaps provision of full start-up fees is a sticking point for your institution. If you don’t get the full start-up you’ve requested, you know the powers that be at your institution won’t approve participation in the study. Document this for your negotiator so they can flag the appropriate decision maker if and when this situation arises. Knowing the sponsor won’t cover start-up will allow the site leader to quickly make the call to drop the study. The team moves on to the next opportunity without wasting valuable time.


Once we’ve completed these five preparatory steps, we’re clear to send out that first communication. As we move into the next stage of negotiation, our goal should be to keep communications as clean, concise, and efficient as possible in order to come to an agreeable conclusion in a timely fashion. Here are a couple of tips that may help you achieve “clean communications”:

1.      Be aware of IRB deadlines, goal dates, and signatory schedules. These deadlines and goal dates can be included in each email communication. For example, include in the subject line of your first email “Goal to Finalize by 17Jun2019”. I also recommend knowing when the signatory is available. You don’t want to end negotiations the first day of their three-week vacation.

2.      Present all comments in the same communication platform throughout each round. You don’t want to respond to some items in email bullet points and to other items in draft document comments.

·        Establishment of one platform eliminates the opportunity for approvals/communications to be forgotten, not addressed, or not escalated, especially if negotiation changes hands or gets stalled for some time.

Once the first email is sent, please remember to date and personalize your edits in subsequent rounds. Do not provide new comments to your negotiation partner in a document with the same name as one that was previously sent. This creates opportunity for error and miscommunication. Version control is key.

Lastly, I’ll say that I’m a big fan of good, old-fashioned, phone calls. In order to push the communication process along, pick up the phone if:

1.      The site’s needs are vastly different than the sponsor’s initial offer –Typically this means there’s a misunderstanding about protocol requirements

2.      Email negotiation rounds exceed three and if the time between email replies exceeds approximately one week


The biggest takeaway here is to understand that it’s your duty to adequately prepare for negotiations if you expect an agreeable and timely conclusion. Failure to do so can result in money left on the table, time wasted, and/or bridges burned. The steps we’ve outlined should prove to be useful when preparing for and navigating your next negotiation. Best of luck!