The negotiation with North Creek took place in three different stages. There are three main processes involved in the talks: the opening phase, the bargaining phase, and the closing phase (Kukreja, 2020). The opening phase consists of creating rapport with one another and sets the tone for the entire process (Kukreja, 2020). The negotiating parties failed to develop a rapport with one another, and the tone they set influenced the negotiation process and outcome. The bargaining phase was very competitive, with neither side willing to cede their ground. Notably, the CFO did not have clear objectives. She went into the negotiations, unsure of how much she was ready to cede. As the negotiations continued, however, the CFO gathered more relevant information with Cheryl's help and understood the issues needed.
The negotiators had a good mastery of their leverage. Leverage is the power or advantage that one side has to influence the other party to cede their position (“How to gain and use leverage in every negotiation,” 2016). The CFO kept reminding her partner of the benefits North Creek gets from doing business with them, and vice versa.
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The negotiations discussed each party's market share and what each stood to gain when they agreed to continue working together. They also discussed what terminating the contract would cost each side in the market share. They negotiated the contract terms concerning the wordings and language and the implications of retaining or changing specific phrases within the contract for both parties' good. They also discussed the overall rates, specifically the inpatient charges, which was the main focus area as it impacts the final rate. They negotiated the rates based on three different payment bases; cost, fee schedule, and price related. Generally, the negotiations were about the value of patient care that North Creek would need to pay the local hospital for the services discharged to its patients.
They agreed on a 9% burger from the rates of the previous contract. Initially, the CFO had proposed a 22% increase to bring the rates to 94.5%. Settling for a 9% increase means the agreed on a rate of 13% less than her proposal. That means they decided on a percentage of 81.5%. They closed convinced that each side was poised to benefit.
References
How to gain and use leverage in every negotiation . (2016, November 18). icma.org. https://icma.org/articles/article/how-gain-and-use-leverage-every-negotiation
Kukreja, S. (2020, September 14). Characteristics of Negotiation . Management Study HQ. https://www.managementstudyhq.com/characteristics-and-steps-of-negotiation-process.html#:~:text=Steps%20of%20the%20Negotiation%20Process,opening%2C%20bargaining%2C%20and%20closure
