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How to evaluate managed care contracts
1University of New Hampshire, Durham.
Summary
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.
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.