hgmt ch 9

When would a joint venture be considered a preferable integration strategy?

result when two or more institutions share resources to create a new organization to pursue a common purpose - each of the participants in a joint venture continues to conduct business independently - used to diversity services by joining instead of competing

Briefly explain the four main models for organizing an HMO. Discuss the advantages of an disadvantages

An HMO is distinguished from other types of plans by the following main characteristics: Staff, Group, Network, and IPA models. Staff Model employes its own salaried physicians. Compared to other HMO models, staff model HMOs can exercise a greater degree of control over the practice patterns of their physicians. An advantage to this model is that it offers the convenience of "one stop" shopping for their enrollees. Disadvantages to the Staff model is the fixed-salary expense can be high, requiring these HMOs to have a large number of enrollees to support operating expenses. Group Model contracts with a single multi-specialty group practice and contracts separately with one or more hospitals to provide comprehensive services to its members. An advantage to this model is able to avoid large expenditures in fixed salaries and facilities. The disadvantage is that if the contract is lost, the HMO will have difficulty meeting its service obligations to the enrollees. The Network model contracts with more than one medical group plan. An advantage is that it offers a wider choice of physicians than the staff or group model. The disadvantage is the dilution of utilization control. The last model is Independent Practice Association which contracts with both independent solo practitioners and group practices. An advantage to this model is that it acts as a buffer between the HMO and physicians. The disadvantage is that if contract is lost, the HMO loses a large # of participating physicians.

To what extent has managed care been successful in containing health care costs?

reducing the inapproprite use of high cost srvices in 1990s however ot baclash from providers

What is a point-of-service plan? Why did it initially grow in popularity? What caused its subsequent decline ?

Point-of-service plans combine features of classic HMOs with some of the characteristics of patient choice found in PPOs. Often called hybrids or open ended PPOs. • When introduced, there was a two-pronged objective; retain the benefits of tight utilization management found in HMOs, but offer an alternative to their unpopular features of restricted choice. • They grew in popularity due to the gap that they filled. • As HMOs changed to close the gap a bit, there was less of a need for the point-of-service plans and they declined.

State the main strategic objectives of horizontal and vertical integration.

Strategic objectives of horizontal integration: reduce costs and gain efficiencies by consolidating duplicative activities, capitalizing on potential scale and scope economies Strategic objectives of vertical integration: provide a greater range of health services and products through vertical integration (better care coordination), capturing succeeding transaction Horizontal integration involves integrating many hospitals to provide the highest quality care for patients while keeping costs down (pool resources, technology, etc.) [CONSOLIDATING LIKE COMPANIES] and vertical integration involves integrating a patients entire care, from hospital to ambulance to any post-acute care.

What is the difference between a merger and an acquisition? What is the purpose of these organizational consolidations? Give examples

acquisition refers to the purchase of one organization by another - mergers involve a mutual agreement unifying two or more organizations into a single entity - the separate assets brought together are put under a new name - the former entities cease to exist, and a new corporate is formed - acquisitions and mergers can also help an organization expand into new geographic markets

What is an accountable care organization (ACO)? Describe its current status in

consists of providers who are jointly held accountable and at risk for: -quality improvement -reduction in the rate of spending growth -population health, satisfaction with care

What is organizational integration? What is its ultimate aim? Why did health care organizations integrate?

enabled hospitals to expand into new markets - intensified competition among health care providers - enabled large health service organizations to win sizable managed care contracts or to offer their own health plans - become more complex and difficult to manage

Has the quality of health care declined as a result of managed care? Explain

managed care has been cost effective, by lowering the use of hospital and expensive resources - findings, though, point to lower access and lower enrollee satisfaction for HMOs compared to non-HMOs

What is an HMO? How does it differ from a PPO?

• Health Maintenance Organization - promotes maintaining health, not just treating somebody who is ill; enrollee is required to choose a PCP from a specific panel of physicians; provider receives a capitated fee; all health care must come from in-network hospitals, physicians, etc. • PPO - Preferred Provider Organization - allows open-panel options for enrollees and offers non-capitation payments to providers. Enrollee agrees to use a network that the PPO has made agreements with. Instead of capitation, PPOs make discounted fee arrangements with providers.