Scenario: Back to the Drawing Board!
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%.
Your Role
You are the hospital CFO, trying to solve the managed care problem.
Key Players
Dr. John Evans
Chief of Staff
Katrina Eaton
CEO
Linda Freed
Business Office Manager
Nancy Stritmatter
CNO
Assignment
Given the scenario, your role, and the information provided by the key players involved, it is time for you to make a decision. If you are finished reviewing this scenario, close this window and return to this week’s You Decide tab, in Canvas, to complete the activity for this scenario. You can return and review this scenario again at any time.
Activity
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.