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Rural hospitals: organizational alignments for managed care contracting.

N L McKay1

  • 1University of Florida, USA. nmckay@hp.ufl.edu

Journal of Healthcare Management / American College of Healthcare Executives
|February 6, 1998
PubMed
Summary

Rural hospitals can choose from three organizational alignments for managed care contracting: independence, formal contracts, or informal agreements. Independence suits hospitals with strong patient bases, while financial pressures may drive formal contracts.

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Area of Science:

  • Health Services Management
  • Rural Healthcare Policy
  • Managed Care Organization (MCO) Strategies

Background:

  • Rapid expansion of managed care in rural settings necessitates strategic responses from healthcare providers.
  • Rural hospitals face unique challenges in adapting to evolving healthcare landscapes and payer dynamics.

Purpose of the Study:

  • To provide a comprehensive overview of organizational alignments for rural managed care contracting.
  • To aid rural hospitals in evaluating strategic options based on their specific needs and objectives.

Main Methods:

  • Categorization of organizational alignments into three distinct models: independence, contractual arrangements, and informal agreements.
  • Examination of the advantages and disadvantages associated with each alignment strategy.

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  • Presentation of empirical evidence on the observed effects of different contracting approaches.

    • Main Results:

    • Independent contracting is most viable for rural hospitals with a robust patient base.
    • Financial pressures significantly influence rural hospitals' decisions to enter formal contractual arrangements, often outweighing concerns about autonomy.
    • Informal agreements serve as a valuable intermediate step for exploring collective action before formal commitments.

    Conclusions:

    • Strategic alignment in managed care contracting depends on individual rural hospital circumstances, patient volume, and financial stability.
    • Phased approaches, starting with informal collaborations, can mitigate risks associated with formal managed care contracts.
    • Understanding the trade-offs between autonomy and financial incentives is crucial for successful rural managed care participation.