Situation:
You sat in the CFO chair, studied a real world hospital Accounts Receivable (AR) problem with your team, and came up with a Process Improvement Plan to reduce Days in Accounts Receivable and improve cash flow to you hospital. Well the great news is that your plan worked! This morning your Days in AR stand at 67. Not perfect.... but much better, and you have five payrolls of cash on hand right now. Things are looking up for Community Memorial! And then just before lunch you get a call from the Bill Jacobs, Human Resource Director at Commercial Intertech (CI), the largest employer in the community. Bill says, "I wanted you to hear it from me first. We signed a contract yesterday with MegaPlan Health. They will be the managed care organization for all 4,500 of our employees and their families. About 9,000 patients total. I'm sure that you will want to get a contract with MegaPlan as soon as possible. I noticed that your hospital is not on their Preferred Provider Network (PPN), and I am pretty sure that you will want to be, so that our employees can continue using the facility." By the time you thank Bill for the heads up, the acid is already churning in your stomach. In the hospital world, MegaPlan is known for cut-throat tactics, negotiating steep discounts with hospitals, and fighting every claim the hospital makes. Commercial Intertech has every right to contract with any health insurance provider they like, but now you have a problem. If you cannot get a decent contract with MegaPlan and become part of their Preferred Provider Network (PPN), many local patients may bypass your hospital and go the next closest PPN facility. Delivered to your office this afternoon, by no coincidence, is a contract proposal from MegaPlan. It calls for the hospital to provide a 35% discount from charges to MegaPlan and all of its members. And it includes service pre-authorization requirements which will make life very difficult for your business office. You know from experience that the hospital loses money whenever the discount from charges exceeds 20%
Your Role
You are the hospital CFO, trying to solve the managed care problem
Assignment
Given the scenario, your role and the information provided by the key players involved, it is time for you to make a decision. If you are finished reviewing this scenario, close this window and return to this Week's You Decide tab, in eCollege, to complete the activity for this scenario. You can return and review this scenario again at any time
Y O U D E C I D E
Activity
So, what will you do? Whose advice makes the most sense to you in this situation, and how will you proceed?
Create a 1-2 page paper, explaining how you will proceed.