Are Your Payer Contracts Fit?

Larry Furia, the senior advisor to Shared Vision, LLC, shares why gyms should have payer contracts, and where the industry is headed.

It’s widely accepted that COVID-19 has reinforced the need for fitness clubs to be diversified with their revenue centers. Fitness clubs not only need to keep members and clients fit, but also need to make sure their organization is fiscally fit as it relates to payer contracts with health insurance providers and industry aggregators.

First and foremost, it’s recommended fitness clubs have contracts with healthcare payers such as Tivity Healthcare (SilverSneakers, PRIME), OPTUM (Renew Active, Rally Health), Peer Fit, and American Specialty Health (Silver & Fit/Active & Fit). If clubs don’t already have contracts with these providers, it would be wise to contract with them immediately. If your club does have these contracts but has become complacent with accepting a rate negotiated five to 10 years ago, it’s suggested you contact a professional to assist you in negotiating updated contract rates and terms.

Over the next five years, the payers will be marketing new programs and services to the commercial member population. It’s no secret the growth within the commercial space will dwarf that of the Medicare Senior Advantage Products. Currently, over 90% of all seniors or active adults are enrolled in a Medicare Advantage Plan that provides a fully subsidized fitness membership to this population.

The fastest growing market segment for the major insurance payers is their commercial product line. The three market leaders in the commercial space are OPTUM/United Healthcare, Tivity Healthcare and American Specialty Health. Within five years it is quite conceivable over 50 million people will have a fully or partially subsidized fitness membership from one of these three mentioned companies. It is prudent to negotiate favorable rates with these payers and to lock in long-term agreements now.

Be cautious of industry aggregators such as ClassPass, GymPass and Global Health. These companies are attempting to place themselves in the middle of fitness clubs as well as small, medium and large corporations. They’re trying to compete with the big three payers mentioned above. It’s not yet known whether these companies will provide real business to the fitness clubs at fair rates, or whether they will become predatory and drive membership rates down.

Rather than race to the bottom, quality fitness clubs should race to the top and price their product for the true value they offer a member. It is not financially feasible for mainstream fitness to sell a monthly membership below $20 and expect to survive over the next five years.

Prepare yourself for outcomes-based reimbursement programming to start in the next year. This will pay fitness clubs based on programming costs for providing services such as diagnostic testing, nutritional programs, group training, medical assessments, health coaching, meal planning and therapeutic exercise. Fitness clubs and enrollees will also receive significant bonus payments based on member attendance and successful outcomes. 

Finally, ask yourself this question: Are your payer contracts fit?