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Establishing patient contracts: as easy as ABC.

Peter Valenzuela¹

¹Department of Family & Community Medicine, Texas Tech University Health Sciences Center at the Permian Basin, 800 W. 4th Street, Odessa, TX 79763, USA. peter.valenzuela@ttuhsc.edu

The Journal of Medical Practice Management : MPM

|March 18, 2009

Summary

Small businesses can save money and reduce insurance issues by directly negotiating with physicians for employee healthcare services. This article explains how to use activity-based cost analysis to evaluate this approach.

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Area of Science:

Health economics
Business management
Healthcare administration

Background:

Rising health insurance premiums challenge small businesses' ability to offer employee benefits.
Direct negotiation with physicians for healthcare services is an emerging alternative.
These direct agreements offer potential financial savings for employers and administrative relief for providers.

Purpose of the Study:

To evaluate the feasibility and financial viability of direct physician-employer healthcare agreements.
To provide a methodology for practices to assess the suitability of offering direct care services.

Main Methods:

The article details the application of activity-based cost analysis (ABC).
ABC is used to determine the true cost of providing preventive and acute care services.
This analysis aids in decision-making for practices considering direct contracting.

Main Results:

Properly implemented direct agreements can lead to significant cost savings for employers.
Providers may experience reduced administrative burdens associated with insurance claims.
Activity-based cost analysis provides a clear financial framework for evaluating these arrangements.

Conclusions:

Direct negotiation between employers and physicians presents a viable model for employee healthcare.
Activity-based cost analysis is a crucial tool for practices to determine the profitability of direct care models.
This approach can benefit both small businesses seeking affordable healthcare solutions and medical practices looking to streamline operations.