Our 5 Tips for Budget Negotiation
There is not much room for error when it comes to negotiating budgets for clinical trials. Through the experiences of the sites in our network, we have seen it all and we have learned that there are a handful of common practices that lead to successful budget development.
- Establish internal fair market value. You can calculate this by multiplying the time associated with a given procedure by the billable rate of the person completing it. Include overhead costs with the “time associated” – overhead is constantly increasing based on inflation and other external factors so be sure to always be cognizant of this!
- Build a relationship with your sponsor/CRO. You should be talking with your sponsor from the very beginning. Ask them honestly where they stand in terms of their budget range; it is better to know this early on than at the eleventh hour. If you spend time building a positive relationship with your sponsor from the get-go, you will increase the likelihood of maximizing your budgetary terms.
- Don’t lowball your budget. You have heard this before – “for every action there is a reaction.” That holds true in budgeting as well. Low budgets affect everyone involved, including the sponsor. New sites especially tend to approve lower budgets, thinking either that their sponsor won’t approve a budget that is “too high,” or that they might seem more impressive if they are able to operate with a small budget. However, this approach drives down overall range. Sponsors will increase or decrease their budget ranges based on requests from sites – don’t be afraid to ask for a little more than you think is necessary! Remember – it is usually more expensive for a sponsor to find a new site so they always want to try to keep you in.
- Don’t start the job without your tools. Always obtain the full study protocol, including the time and events schedule, before you even think about building your budget. Clarify what the use of vendors will be and how supply reimbursement will be handled. This will help you avoid the panic of uncovering so-called “hidden costs” down the road.
- Think big picture instead of worrying about each line item. When deciding if a budget and study are right for your site, never get hung up on one line item. If you are struggling to get your start-up to a place that covers all of your costs, try to build that cost into other pass through items or procedural costs. Often the person negotiating with you may have fixed ranges on certain line items but more room to negotiate on others – always look at the full picture to determine if a study is worth taking!
Are you interested in learning more about how to improve your site's financial health? Take a look through our webcast library to see what other tips we have to offer: