Question

The local healthcare market's dynamics are changing and evolving due to the increased competition between healthcare providers and systems. Things are looking up for Community Memorial as it tries to transition to a value-based care delivery system! But one day, just before lunch, you get a call from Bill Jacobs, the human resource director at Commercial Intertech (CI), the largest employer in the community. Bill says, "I wanted you to hear it from me first. We signed a contract yesterday with MegaPlan Health. It will be the managed care organization for all 4,500 of our employees and their families. About 9,000 patients total. I'm sure that you will want to get a contract with MegaPlan as soon as possible. I noticed that your hospital is not in its preferred provider network (PPN), and I am pretty sure that you will want to be so that our employees can continue using the facility." By the time you thank Bill for the heads up, the acid is already churning in your stomach. In the hospital world, MegaPlan is known for cutthroat tactics, negotiating steep discounts with hospitals, and fighting every claim the hospital makes. Commercial Intertech has every right to contract with any health insurance provider it likes, but now you have a problem. If you cannot get a decent contract with MegaPlan and become part of its PPN, many local patients may bypass your hospital and go the closest PPN facility. Delivered to your office this afternoon, by no coincidence, is a contract proposal from MegaPlan. It calls for the hospital to provide a 35% discount from charges to MegaPlan and all of its members. And it includes service preauthorization requirements that will make life very difficult for your business office. You know from experience that the hospital loses money whenever the discount from charges exceeds 20%.

You are the hospital CFO, trying to solve the managed care problem, so what will you do? Whose advice makes the most sense to you in this situation, and how will you proceed?

Present your comments in a one- to two-page paper, explaining how you will proceed.

Answer 1

Health care is very sensitive matter. No good person want to correlate commercial aspect with these, but as health care has relation with Medicine, hospital facility, Doctors & staff etc. This all need to be done only with good management of funds.

Insurance policy has been taken with objective to meet emergency requirement of health. No person wants to make issue at the time of need. CFO of hospital is responsible for many matters, some are as under:-

1. Fair Policy of hospital
2. Claim instruction should be clear and visible
3. Make hassle free documentation
4. Good management of patients claims
5. Flexible working hours so that patients can be approach easily

In the instant case insurance company, wish to pose its terms and hospital is also need to be run smoothly. It is also true that if a hospital not is network of insurance companies, patients try to bypass those hospitals. As CFO following steps can be taken to provide good facility at reasonable cost for very good cause.

1. No compromise should be done with the core values of hospital
2. Make it transparent that this hospital is not running with the objective for profit making from sick and needy people.
3. Provide list of services and their charges to everyone so that comparison with others can easily be made
4. Goodwill is very important in the case of health care sector- share good things of hospital with others. No one want cheaper treatment at the cost his health or costly treatment for valueless services.

If hospital becomes successful to make its reputation there is no way that patient will not come to hospital. It is also true that insurance companies ask heavy discounts from hospitals because hospital makes claims with much higher % of markup. If a hospital carry good image with good customer base insurance companies may also can be convince to ask heavy discounts.

In this case advices of insurance claim managers, relationship managers, hospital management advice are very valuable. As insurance claim managers can state what best possible they should provide to community. Relationship manager can communicate things to patients and provide their feedback etc. Hospital management can take necessary step to way forward to resolve the issue with best possible way.