Solving a Managed Care Problem
The hospital’s Chief Financial Officer needs to find a solution to the managed care dilemma that is advantageous for the facility. Developing a working partnership with MegaPlan, the managed care organization that Commercial Intertech has decided to work with, is one of the available choices. On the other hand, the hospital ought not to sign the contract they have sent, as doing so would not be in the hospital’s best interests.
As a result of the fact that the Commercial Intertech employees and their families will be upset if they are denied access to the hospital, the hospital holds some sway in this scenario. If the hospital cannot agree with MegaPlan, the HR department at the factory will likely be upset. Because of this power, the hospital can negotiate a more favourable deal with MegaPlan.
The hospital ought to come up with an alternative proposition for MegaPlan to take into consideration. The counterproposal must be reasonable and guard the hospital’s legal rights and financial interests. It is not in the hospital’s best advantage for the hospital to sign a contract that is not in the hospital’s best interests.
The Chief Nursing Officer, Nancy Stritmatter, thinks that the hospital should go ahead and sign the delivered contract. However, the hospital would not benefit from this in any way, shape, or form. It is not in the hospital’s best advantage for the hospital to sign a contract that is not in the hospital’s best interests.
The hospital’s business office manager, Linda Freed, thinks the medical facility should not sign the deal with MegaPlan. She is under the impression that it will be impossible to get claims authorized under MegaPlan and that the hospital will not be able to receive an equitable payment. She also believes the plant workers will rise against their management if the hospital does not sign the contract. It is not in the hospital’s best advantage for the hospital to sign an agreement that is not in the hospital’s best interests.
The chief of staff at the hospital, Dr John Evans, believes that the institution should partner with MegaPlan. He thinks the hospital should develop an alternative proposition for MegaPlan to consider. He believes that the hospital possesses some authority in this circumstance and that the workers at the plant will be dissatisfied if the hospital cannot agree with MegaPlan.
The Chief Executive Officer, Katrina Eaton, agrees that the medical centre should collaborate with MegaPlan. She thinks the hospital ought to devise an alternative plan for MegaPlan. She believesospital possesses some degree of power in this scenario and that the workers at the factory will be dissatisfied if the hospital is unable tcannotgreement with MegaPlan.
The hospital’s Chief Financial Officer needs to find a solution to the managed care dilemma that is advantageous for the facility. Developing a working partnership with MegaPlan, the managed care organization that Commercial Intertech has decided to work with, is one of the available choices. On the other hand, the hospital ought not to sign the contract they have sent, as doing so would not be in the hospital’s best interests.
As a result of the fact that the Commercial Intertech employees and their families will be upset if they are denied access to the hospital, the hospital holds some sway in this scenario. If the hospital cannot agree with MegaPlan, the HR department at the factory will likely be upset. Because of this power, the hospital can negotiate a more favourable deal with MegaPlan.
The hospital ought to come up with an alternative proposition for MegaPlan to take into consideration. The counterproposal must be reasonable but should also guard the hospital’s legal rights and financial interests. It is not in the hospital’s best advantage for the hospital to sign a contract that is not in the hospital’s best interests.
The Chief Nursing Officer, Nancy Stritmatter, thinks that the hospital should go ahead and sign the delivered contract. However, the hospital would not benefit from this in any way, shape, or form. It is not in the hospital’s best advantage for the hospital to sign a contract that is not in the hospital’s best interests.
The hospital’s business office manager, Linda Freed, thinks the medical facility should not sign the deal with MegaPlan. She is under the impression that it will be impossible to get claims authorized under MegaPlan and that the hospital will not be able to receive an equitable payment.
She also believes the plant workers will rise against their management if the hospital does not sign the contract. It is not in the hospital’s best advantage for the hospital to sign an agreement that is not in the hospital’s best interests.
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Question 
SCENARIO:
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.” When 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 to 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 on charges to MegaPlan and 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%.
Solving a Managed Care Problem
YOUR ROLE:
You are the hospital CFO, trying to solve the managed care problem.
KEY PLAYERS:
Dr John Evans ( Chief of staff) – We need to form a relationship with MegaPlan if Commercial Intertech has selected it. I would suggest preparing your contract proposal for MegaPlan to look at. Be reasonable, but make it something we can live with. Remember, we have some power in this situation ourselves. If the Commercial Intertech employees and families cannot use our hospital, they will be forced to travel a long way for care and may even have to change doctors. That will not make them happy at all. You can bet that the HR folks at the factory will get an earful from their employees if we cannot come to terms with MegaPlan. Make your counterproposal, and don’t panic.
Katrina Eaton (CEO) We need to form a relationship with MegaPlan if Commercial Intertech has selected it. I would suggest preparing your contract proposal for MegaPlan to look at. Be reasonable, but make it something we can live with. Remember, we have some power in this situation ourselves. If the Commercial Intertech employees and families cannot use our hospital, they will be forced to travel a long way for care and may even have to change doctors. That will not make them happy at all. You can bet that the HR folks at the factory will get an earful from their employees if we cannot come to terms with MegaPlan. Make your counterproposal, and don’t panic.
Linda Freed (Business Office Manager) We cannot work with MegaPlan. I went through that at another hospital. They make it impossible to get claims approved, and when the payment finally comes, it is usually wrong. And then we have to fight for the rest of our money. Don’t sign! Tear the contract up and mail it back to HR at the factory. The employees will revolt at the factory when we say no, and MegaPlan will be sent packing down the road!
Nancy Stritmatter (CNO) Well, as you know, my husband works at Commercial, and quite a few nurses here are in that situation. What happens if we cannot even use our hospitals for medical care? I am with Dr Evans; you’d better sign the contract they sent and do it today so that no rumours about this situation get started around the hospital. Our people will panic if they cannot get healthcare here in town! I could even lose some of my best nurses!
ACTIVITY – So what will you do? Whose advice makes the most sense to you, and how will you proceed?
Present your comments explaining how you will proceed.