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How to evaluate managed care contracts.

J B Lewis1

  • 1University of New Hampshire, Durham.

Healthcare Financial Management : Journal of the Healthcare Financial Management Association
|November 5, 1990
PubMed
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Hospitals can now analyze managed care contracts to avoid losses and identify profitable opportunities. A new analysis model helps evaluate current and proposed contracts for better financial outcomes.

Area of Science:

  • Healthcare Management
  • Health Economics
  • Contract Analysis

Background:

  • Early managed care adoption led to hasty hospital contract agreements without thorough review.
  • This resulted in suboptimal financial outcomes for some healthcare organizations.

Purpose of the Study:

  • To introduce an analysis model for evaluating managed care contracts.
  • To estimate the financial impact (contribution or loss) of proposed contracts.
  • To guide healthcare organizations in selecting viable contract proposals.

Main Methods:

  • Development of a financial analysis model for managed care contracts.
  • Application of the model to assess current contract performance.
  • Utilizing the model to project the financial outcomes of new contract proposals.

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Main Results:

  • The analysis model provides insights into the profitability of existing managed care contracts.
  • It quantifies the potential financial gains or losses associated with new contract proposals.
  • Enables data-driven decision-making for contract negotiations.

Conclusions:

  • Healthcare organizations can leverage this analysis model for strategic contract evaluation.
  • Informed decision-making leads to improved financial performance in managed care.
  • The model supports identifying and pursuing high-value contracts with various health plans.