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Related Experiment Videos

Avoiding managed care pricing pitfalls.

D Schwartzben1, S A Finkler

  • 1Maimonides Medical Center, New York, NY, USA.

Healthcare Financial Management : Journal of the Healthcare Financial Management Association
|June 6, 1997
PubMed
Summary
This summary is machine-generated.

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Managed care contracts can lead to unexpected financial pitfalls for healthcare providers, even if they initially seem profitable. Careful analysis of marginal costs is crucial for long-term financial health.

Area of Science:

  • Healthcare Management
  • Health Economics

Background:

  • Healthcare providers increasingly negotiate managed care contracts to secure market share.
  • Economic theory suggests short-term profitability from contracts exceeding costs.

Purpose of the Study:

  • To analyze the long-term financial consequences of managed care contracts for healthcare providers.
  • To identify unexpected pitfalls in managed care contracting.

Main Methods:

  • Case study of Maimonides Medical Center (MMC).
  • Analysis of various payment terms: discounts, global pricing, per-diem rates, capitation.
  • Examination of contract decisions made on the margin and in response to market prices.

Main Results:

  • Contract decisions that appeared favorable in the short term did not always ensure long-term financial improvement.

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  • Maimonides Medical Center encountered unexpected issues such as dual discounting and adverse risk selection.
  • The marginal costs associated with managed care contracts can have significant financial implications.

    • Conclusions:

    • Healthcare providers must look beyond short-term revenue gains when negotiating managed care contracts.
    • A thorough understanding of marginal costs and potential risks like dual discounting and adverse selection is essential for sustainable financial performance in managed care environments.