Hospital CFO You Are the Hospital CFO,

Hospital CFO

You are the hospital CFO, trying to solve the managed care problem. Based on the scenario and advice provided. What will you do?

The first step is to see if Mega Plan can live with a 20% discount. The way that this can be achieved is this amount could be applied to the hospital (which is in line with the profit margins for the facility). The other 15% will be passed onto to members. If this kind of approach was used it will address the concerns of Mega Plan and ensure that these programs are economically viable. (Wolper, 2011) (Young, 2003)

To reach this goal means negotiating with Mega Plan and asking them to take this kind of discount. At the same time, staff members and actuaries from accounting will need to have an open discussion about how some kind of compromise can be reached. During this process, there will be a focus on the way procedures could be implemented that will deal with bookkeeping related issues. This will ensure that Mega Plan patients continue to utilize the facility and it will address any kind of financial challenges. (Wolper, 2011) (Young, 2003)

To help deal with the increased amounts of paperwork, some of the operations could be outsourced to third party information providers and collection agents. This will help to increase the profit margins of the hospital by reducing paperwork and staff. When this happens, the facility will see a rise in productivity and a decrease in costs. (Wolper, 2011) (Young, 2003)

In the event that Mega Plan rejects the 20% discount, the facility will be forced to accept the deal. However, outsourcing and new technology will be utilized to streamline the process internally. To improve upon bill collection, an independent contractor will work with the company and address these issues. This will reduce the burden on accounting and bookkeeping personnel. Over the long-term, the facility will need to find another provider that can service Commercial Intertech. This could be used as leverage to convince them to switch carriers (while continuing to use the same facility). When this happens, the improved internal practices will help to make the hospital more flexible in dealing with a host of challenges. (Wolper, 2011) (Young, 2003)

Whose advice makes the most sense to you in this situation, and how will you proceed?

The advice that makes the most sense is from the Chief of Staff, CEO and CNO. This is because the hospital is the closest location for Commercial Intertech employees. Since Mega Plan is their carrier, any kind of refusal to accept these services will lead to a loss of customers. This means that a new agreement must be reached with them. (Wolper, 2011) (Young, 2003)

The best way to proceed; is to see if the company is willing to accept a 20% discount (versus the 35%). If they continue to insist on the 35%, then this should be reluctantly accepted. While this is occurring, new internal procedures need to be utilized that are focused on reducing costs and increasing productivity (such as: technology). At the same time, the collections and additional paperwork could be outsourced. This will keep the amounts of stress on accounting and bookkeeping down. (Wolper, 2011) (Young, 2003)