Budget Negotiations: Capturing Your Heart and Revenue PART 2
2-minute read | Part 2 of 2
How can you powerfully negotiate your site’s clinical trial budget with your sponsor/CRO? Our recent webinar shared insights from resident BTC Network experts, Adam Schear, Senior Clinical Financial Analyst and Joey Nguyen, Clinical Financial Analyst I. This is Part 2 of 2.
Setting an overhead of 35% for your studies and adhering to that established standard institutes a precedent for budget negotiations. It also helps build metrics for historical data and sets the standard for future studies with the same sponsor.
“Concessions should only be made on a one-time basis. If you do this, clearly explain to the sponsor/CRO that you’re accepting a lower overhead, one time and one-time only,” Joey emphasized.
Adam added “Sponsors revert to prior budgets to save time in subsequent budget negotiations. Develop site-specific overhead policies that are documented and that you submit with each new budget. Currently, sites are looking for 30 to 35% overhead and sponsor/CROs are looking for 15 to 25%. When you make a concession at a lower rate for overhead, there is a big impact on your bottom line.”
It is important to remember the essentials when preparing a study budget to present to the Sponsor/CRO—identify areas where the revenue is generated outside of patient visits; minimize expenses for conducting and managing a clinical trial; standardize costs for your site when conducting trials based on therapeutic areas.
This loss of percentage is a loss of revenue that creates a ripple effect that hurts sites over the long term.
Adam explained, “That lost revenue is money you can use to modernize and update your facility, add equipment and build your business. Make your overhead rate exceed what you know the value of your site is.”
Key points to consider when determining your overhead policy:
- Staff size and salaries
- Whether you own or rent your facility
- Location – city or suburban – may be more difficult to enroll patients in the latter due to transportation issues
- The indication or therapeutic area – some studies have lower costs and budgets from the sponsor/CRO
- The complexity of the trial – some are more labor intensive
- Fringe expenses such as utilities, staff health insurance and 401K benefits
- The direct and indirect costs in operating a business
Another consideration in budget planning is the impact of conditional procedures and pass-through fees that may range from protocol amendments, reconsenting to advertising. All very important elements to be aware of in preparing for and conducting a clinical trial.
“Protocol amendments can be a huge ordeal, especially when you have more than one person working on a protocol. You have to make sure that the PI, site manager and other staff are trained appropriately,” Adam cautioned.
Re-consenting takes time and can introduce anxiety to patients and caregivers. Reassuring and explaining things to them are essential and this extra time incurs additional expense on the part of the site.
“Think about cost from a global perspective and really get down to the nitty gritty. Rigorously negotiate fees with your outside providers and sources. Rigorously read the protocol and understand the fine print. To minimize expenses, you have to identify all the expenses you are going to incur,” said Adam.
Including a strategic advertising plan and associated budget, sites have the opportunity to build their awareness and the specific clinical trial in the community. Advertising campaigns may include billboards on public transportation, print flyers, newspaper, radio or online ads, or hiring an outside expert to provide digital media advertising strategies.
“The commercial availability of advertising is a huge ordeal. Think about ways
you can tie into the patient pool,” said Adam.
Patient participation and retention is critical to the clinical trials enterprise. This is driven by fair and reasonable stipends, so negotiating wisely and fairly without being coercive in this area is important. “Look at it from the patient’s perspective, states Joey. What is it they have to go through? The number of visits? The distance they have to travel? And more importantly, what types of procedures they may have to undergo.”
Joey affirmed that “When you move into an advocacy role with keeping the patients’ best interest in mind, you keep your revenue in line.” Be sure contract language relative to patient travel stipends reflect government regulations.
If a sponsor/CRO is reticent to provide reasonable travel reimbursements to patients and caregivers, reinforce that the subject data is the value to the sponsor. Maintaining study enrollment is the most
cost-effective way to keep subject data clean and heavily populated as possible.
"If you’re not thinking about the patient and the patient drives the data, the sponsor/CRO
is not going to get the data they want,” Joey explained.
To keep a steady stream of revenue with a steady stream of patients, understand and evaluate the protocol requirements. Calculate your overhead with every line item and expense in mind. Anticipate
the unexpected. Leverage your site’s track record and choose studies where you can perform exceptionally well. Provide clear and consistent communication throughout the process. And
remember the importance of providing reasonable stipends to patients and a level of personalized support like travel and meals when participating in a clinical trial to ensure a positive experience. Negotiating a smart and comprehensive budget is the first and most important step to site success.
Article Brief covers the “Budget Negotiation” webinar presented by Adam Schear, Senior Clinical Financial Analyst and Joey Nguyen, Clinical Financial Analyst.
Authored by Melissa Daley, Marketing Content Specialist.
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Post by Melissa Daley -
Melissa develops social media and marketing content strategies and produces a variety of collateral with creative, effective messaging. Melissa has served as an educator in higher education for close to two decades.