Hospitals in MENA: Mastering price negotiations with private insurers

In a pivotal commercial cycle for hospitals, contracts with private insurers are typically renegotiated every one to three years, covering coverage, reimbursement and other terms. These negotiations are inherently complex – yet when carefully prepared and executed, they can deliver significant gains, write Marc Matar, Tim Kohtes and Arto Derderyan from Simon-Kucher.

In the MENA healthcare environment, private hospitals generally serve three core customer segments: private insurance companies, cash-paying patients and public insurance entities. Among these, private insurers usually account for the largest share of hospital revenue – making price negotiations with insurers critical to sustaining profitable growth.

Discussions with private insurance companies can span a wide range of issues, including reimbursement rates, service coverage terms, contract conditions, quality and performance metrics, patient volume arrangements and risk-sharing or value-based payment models.

Notably, private insurers tend to enter these processes very well prepared, often deploying sophisticated contracting strategies and negotiation tactics. For healthcare providers, this underscores the need to be equally prepared – strengthening their negotiating position through a strategic and structured approach that spans preparation, execution and ongoing monitoring.

In our experience at Simon-Kucher, successful negotiations with private insurers are best achieved through a clear four-step approach:

1) Negotiation preparation & process

A lack of a clearly defined negotiation preparation process often creates ambiguity around roles and responsibilities across functions. This uncertainty can put critical timelines at risk.

For example, private insurance contracts may lapse before new agreements are finalized. In these situations, hospitals may operate under outdated contract terms, leading to financial losses, or experience patient flow disruptions due to temporary coverage gaps.

To prevent this, areas of focus for hospitals include:

• Establishing a standardized negotiation process that clearly defines each stage from preparation through implementation. This includes clear assignment of functional responsibilities and detailed activity planning.
• Initiating negotiation preparations proactively well ahead of contract renewal dates. Depending on strategic importance and relationship history, preparation may start up to six months before expiration.
• Developing a clear roadmap for cross-functional collaboration, with Revenue Management leading negotiation coordination while the Finance team provides profitability insights and the Key Account Management team handles client-facing interactions

This structured approach supports alignment, efficiency, and consistency, strengthening long-term relationships with insurers.

2) Value-based negotiation strategy

In the MENA region, negotiations between hospitals and private insurers often become narrowly focused on numerical targets for price increases, overlooking the value proposition that justifies these adjustments. But when discussions center only on percentages without clearly articulating the underlying value, hospitals offering superior clinical quality may find themselves at a disadvantage.

Examples of how hospitals can enhance their negotiation outcomes include:

• Highlighting superior clinical outcomes and patient satisfaction: Supported by pricing benchmarks, relevant accreditations, strategic partnerships and key opinion leaders.
• Providing expert support to Key Account Management teams throughout the negotiation process.

By shifting the discourse with insurers from numerical benchmarks to negotiations that recognize enhanced clinical outcomes and the impact on patient care, providers can achieve an incremental 4% increase in private insurance revenue.

3) Price increase allocation approach

After agreeing on the overall price increase with each private insurer, hospitals typically allocate the increase equally across services and branches, regardless of growth potential. This limits the effectiveness of negotiations and leaves meaningful revenue opportunities untapped. Strategically aligning price adjustments with expected growth areas within the market strengthens the financial impact of hospitals’ pricing decisions.

At Simon-Kucher, we have developed a methodology that enables hospitals to systematically optimise the allocation of price increases. The model draws on growth forecasts to prioritise price adjustments for services and locations with the greatest growth potential:

Among others, the model integrates strategic factors such as physician recruitment plans, infrastructure upgrades, demographic shifts, and targeted marketing initiatives into allocation decisions.

This internal insights-driven approach amplifies pricing impacts, generating incremental growth of 1% on the private insurers’ revenue.

4) Price performance monitoring

Hospitals in MENA often lack a systematic approach to price performance monitoring. This results in difficulties ensuring and assessing price consistency and effectiveness. Challenges range from ensuring top-tier clients receive the most favorable terms to objectively evaluating the success of pricing decisions.

Hospitals can strengthen their price performance and monitoring by:

• Defining meaningful KPIs and establishing a monitoring scorecard to ensure clarity and trackable metrics.
• Assigning clear responsibilities for monitoring across teams and defining tracking frequency, balancing effective monitoring with operational feasibility.
• Developing a playbook to regularly assess and adjust the pricing approach based on business impact and evolving needs.

This structured monitoring process significantly enhances pricing governance, compliance, and strategic decision-making.

Wrap up

Securing price increases from private insurers in the MENA healthcare market demands a clear strategy and a disciplined, end-to-end approach – spanning preparation, execution and ongoing performance tracking.

Our experience at Simon-Kucher indicates that applying these principles can generate an uplift of more than 5% in return on sales in the first year, while simultaneously strengthening pricing capabilities to underpin sustainable revenue growth and reinforce competitive positioning across the region.