Transition to capitation. Core competencies for physician practice success

The growth of managed care--with the resulting consolidation, cost control, and profit-oriented players entering the market--is a major source of concern. Largely due to this market evolution, physicians find themselves in the position of working within a single management paradigm and attempting to apply it in two different contexts: capitated payment systems and traditional fee-for-service medicine. This article identifies, compares, and contrasts the competencies necessary for successful practice in a managed care, as opposed to a fee-for-service, environment.     

An information system model for negotiating capitation contracts

Capitation contracts require health care organizations to negotiate on a much more sophisticated and risky level. Understanding whether a capitation contract will allow a hospital to remain financially viable while providing quality care requires estimating the number of patients to be served, the amount and types of services to be offered, and the cost to provide them. This article presents an information system model designed to assist a large hospital, not only in determining true patient cost, but also in aggregating the cost information in different ways, such as conducting a case-mix analysis, to perform a more informed quote analysis for capitated contracts.     

Using incentives to address cannibalization

In a decentralized multi-product firm, different products within the firm sometimes compete with one another for the same customers. This paper proposes managing such cannibalistic behavior with incentives. Designing the appropriate incentives requires detailed information on how the sales of one product impact the profitability of other products. As this paper shows, the only additional information required is the second choice preferences of buyers. Drawing on successful development by General Motors, this paper shows how this information can be collected and used to develop cannibalization incentives. While developed for the automotive industry, this approach is applicable across industries.     

Utilization management key to HMO success.

Utilization management has a long history in prepaid health programs, especially in capitated, prepaid risk programs that were the precursors of HMOs. Utilization management is commonly considered to be that set of systems and procedures used to ensure that a patient's medical needs are met at the least cost possible consistent with adequate quality. Examples of measures taken in managing utilization include avoiding unnecessary surgery, unnecessary hospitalization, excessive hospitalization, and unnecessary diagnostic and therapeutic measures, and encouraging use of less expensive means of care, such as home health care services. Also included, and of great importance, is obtaining those services at the least possible cost through favorable contracting for services.     

Aligning Needs and Capacities to Boost Government Competitiveness

National competitiveness indices are often theoretical underdeveloped, limiting their engagement with academic literature. Because many are based on neoliberal ideology, a new approach is needed to incorporate governance and administration theory, and to enhance relevance to developing countries. This article introduces government competitiveness, a concept that recognizes overlooked factors like the role of social organizations, the use of diverse policy inputs and policy development processes, and the imperative to address human needs at all development stages. The conceptual foundation draws from systems theory, needs theory, and intervention stages theory to inform a comprehensive framework that bridges development scholarship and practice.

     

Aligning DNA Sequences to Minimize the Change in Protein

We study an alignment model for coding DNA sequences recently proposed by J. Hein that takes into account both DNA and protein information, and attempts to minimize the total amount of evolution at both DNA and protein levels. Assuming that the gap penalty function is affine, we design a quadratic time dynamic programming algorithm for the model. Although the algorithm theoretically solves an open question of Hein, its running time is impractical because of the large constant factor embedded in the quadratic time complexity function. We therefore consider a mild simplification named Context-free Codon Alignment of Hein's model and present a much more efficient algorithm for the simplified model. The algorithms have been implemented and tested on both real and simulated sequences, and it is found that they produce almost identical alignments in most cases. Furthermore, we extend our model and design a heuristic algorithm to handle frame-shift errors and overlapping frames in coding regions.     

Undermining incentives: CEO reactions to compensation rebalancing

Directors commonly “punish” CEOs for overly risky behavior by rebalancing their compensation to include more restricted stock and fewer stock options. This paper extends the behavioral-agency model to describe how CEOs will manage their holdings of stock and stock options in response to this form of compensation rebalancing. In doing so, it finds that CEOs respond by selling existing stock holdings and accumulating option holdings. This behavior achieves the opposite incentive structure that such rebalancing intends to create, raising questions about the effectiveness of compensation rebalancing in reducing risky decision making.     

Author Correction: Aligning Needs and Capacities to Boost Government Competitiveness

Public Organization Review - The original version of this article unfortunately contained a mistake. The missing acknowledgements of the original article is provided below: Acknowledgements This...     

Secrets of management success.

Research has shown that certain characteristics set successful managers apart from their less successful colleagues. Research that is just beginning shows that most of those characteristics also set successful physician executives apart. This article is based on presentations at the College's 1989 National Conference in Washington, D.C., and introduces concepts that will be reported on in more detail in upcoming issues of Physician Executive.     

The Transition to Work for Italian University Graduates

This study is focused on the transition from university to first job, taking into account the graduates’ characteristics and the effects relating to degree subject. A large data set from a survey on job opportunities for the 1998 Italian graduates is used. The paper uses a non‐parametric discrete‐time single‐risk model to study employment hazard. Alternative mixing distributions have also been used to account for unobserved heterogeneity. The results obtained indicate that there is evidence of positive duration dependence after a short initial period of negative duration dependence. In addition, a competing‐risk model has been estimated to characterize transitions out of unemployment.     

Financial incentives for cost control under moral hazard

A distinguishing feature of contracted production is that the contractual terms must be agreed upon before the product exists. If the specified product is the result of an innovative and complex process, uncertainties as to its production cost estimates can be enormous. This renders the traditional cost-plus-fixed-fee and fixed-price contractual arrangements increasingly untenable. An alternative contractual arrangement that is currently gaining greater acceptance is the fixed-price-incentive contract, which may be as simple as a linear cost-sharing formula or as complex as a state-contingent reward penalty structure. The problem from the viewpoint of the contractee (principal) is to identify the optimal incentive structure in order to minimize his expected cost; the incentive affects the contractor (agent) through his risk aversion and his propensity for “moral hazard”, due to the co-insurance effect of cost-sharing incentives. Taking as premise the contractee's risk-neutrality, the problem is formulated as a constrained optimization problem, with the constraint arising from the returns to each of the parties to the contract. It is thereby demonstrated that the currently popular linear incentive mechanism is ineffective from the viewpoint of the contractee before the introduction of the problem of moral hazard. We then show that, the problem can be segregated into independent components of the contractor's risk aversion and his propensity for moral hazard. Having established this, we proceed to examine the incentive form as related to the “monitoring mechanism” instituted by the contractor during the performance of the contract. Acceptance of the conclusions necessitates that the contracting parties can interpret their objective as the maximization of the ratio of their expected profits to target profits, which is demonstrated as being equivalent to the minimization of the certainty equivalent of costs.     

A success index to evaluate e-Marketplaces

The internet offers companies many opportunities to implement new business models, in short called e-Business, and to reinforce their competitiveness in the market. Despite the great interest and demand shown towards e-Business, the number of successful applications is quite few. This study suggests a framework to monitor and appraise the success of a particular e-Business operation, e-Marketplaces. To achieve this, we propose a measure, namely the e-Marketplace success index (e-MSI) to quantify the performance of e-Marketplaces. e-MSI can be effectively employed for benchmarking among digital marketplaces whether they are competing or not. More importantly, the factors shaping e-MSI are also educative – the weaknesses and strengths of e-Marketplaces with respect to key success dimensions come right to the fore. We believe that e-Marketplaces can take advantage of this information to improve their effectiveness and, at the same time, actual and/or potential companies may benefit from a uniform, objective and robust assessment of e-Marketplaces.     

专用性人力资本投资激励研究

研究委托人如何激励代理人对专用性人力资本进行投资 .代理人对人力资本投资的激励来自对未来报酬或职业发展的考虑 .但当投资是代理人的隐藏行动 ,而产出是委托人的私有信息时 ,由于出现双边败德行为 ,基于产出的报酬契约不能诱导代理人对专用性人力资本的投资 .职位提升机制能在一定程度上激励代理人的投资 ,但当委托人不提升从效率角度而言该被提升的代理人时 ,仍未能走出双边败德之困境 .当产出低时解聘代理人的解聘机制能消除委托方的机会主义行为 ,当人力资本的专用性较大 ,或投资的边际成本较小时 ,能诱导 Pareto有效的投资     

Risk incentives of executive stock options for undiversified managers

The starting point of this paper is twofold. First, managers are often undiversified. Second, an increase in systematic risk could increase the market’s discount rate and consequently effect a contemporaneous change in the underlying stock’s market price. The paper makes comparative static analyses of these circumstances by using Meulbroek’s (Financ Manag 30:5–44, 2001) executive stock option model together with the dividend discount model, and shows that options do not provide incentive to increase the proportion of systematic risk to firm-specific risk, as commonly argued. The paper also demonstrates that the option’s value to the manager can be monotone decreasing, but may also show an inverted U-shape with respect to firm-specific risk. The option’s value exhibits a similar pattern against the total risk. In addition, the study finds that total risk incentives may under some conditions lower the shareholder value; executive options may thus encourage managers to act against principals’ interests.     

Vehicle scrappage incentives to accelerate the replacement decision of heterogeneous consumers

Vehicle scrappage subsidy programs have been widely applied by governments to replace old cars by newer, more fuel-efficient ones. While these programs have been implemented to provide motivation for replacing vehicles earlier, they may not be as effective as expected. From a cost-benefit perspective, the consumers who would have replaced anyway, even without the program, must be considered when evaluating the net benefits of the program. This requires accounting for variations in consumers’ willingness to replace. Considering consumer heterogeneity in net trade-in valuation, this study investigates a dynamic vehicle-replacement problem based on a life cycle optimization (LCO) approach. We theoretically demonstrate that although increasing the subsidy level does motivate low-value consumers to replace earlier, it also induces consumers with a high net trade-in valuation to replace later in order to become eligible for the subsidy program. We have also developed a simulation program based on real data, to demonstrate the application of our general model. According to the simulation results, ignoring consumer heterogeneity could result in an overestimation of the net benefits of the scrappage program.     

Packaging for success: a practical approach to complex international projects1

Frequently international power projects are dependent on the availability and sources of financing. Different contracting approaches are used (e.g., turnkey, island, and multipackage) to implement these projects, depending on prevailing circumstances and Owner's goals. This paper addresses selection considerations for the various project approaches, as well as their characteristics. A recommended multipackage approach to international power projects is presented, based on the authors' experience on a recently completed, highly successful international power project. The recommended approach uses an experienced and capable architect engineer/project manager (AE/PM) integrated with the Owner's organization.