Establishing patient contracts: as easy as ABC.

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.