A computerized financial planning model for a health maintenance organization

The time and resource costs needed to plan and start a prepaid medical program or health maintenance organization (HMO) are extensive. It can take up to 3 years to bring one on line and another 3 to 4 years to reach financial stability. Depending on the type of prepaid medical plan designed, the cost can reach $6 to $8 million before breakeven occurs. Because the financial stakes are so high, a systematic and sound business approach must be taken to find that one ‘best’ design that will survive in the market place. Thousands of hours are required to study all of the possible HMO design configurations. This paper describes how a corporation constructed a computerized financial planning model to simulate the financial behavior of a prepaid medical program with different organizational formats, operational policies and pricing and compensation schemes in varying market, economic and cost environments. Model development and application was a corporate affair. The computerized model provided a special design team with the capability to evaluate the economic impact of many different designs by asking ‘what if’ questions dealing with several key design and operating variables concerning different health benefit options, service utilization rates, staffing patterns, inflation rates and price and premium schedules. Thousands of hours of design time were saved and the corporation was able to find the ‘best’ possible design in a reasonable time and at a reasonable cost.     

Risk management in an IPA setting--Part I

Over the past several years, HMO enrollment has grown the most in independent practice association (IPA) and network models. HMOs in general have expanded as a means to control the cost of health care. Key customers, including large employers and government agencies such as the Health Care Financing Administration (HCFA), require such control. IPA and network models retain a greater sense of choice on the part of participating physicians and patients than do closed-panel group- or staff-model programs. As physician and patient choice increases, however, the HMO's control over health care diminishes. Thus, customers require HMOs to manage health care. The HMO must market, develop delivery systems, meet regulatory requirements, and make profits. It must control both the quality and the cost of health care. Doing so without the level of control found in staff-model HMOs has created unique challenges for IPA HMO managers. IPA-model HMOs adapt quality improvement programs to this lesser level of control. Staff-model HMOs and hospitals closely link quality assurance to risk management. Programs designed to improve quality will naturally also reduce the risk of providing care below standards. This relationship is less clear in IPA- and network-model HMOs, in which the HMO does not provide the care. Thus, IPA-model quality improvement programs often do not address their risk management implications. This two-part article examines the differences between staff-model and IPA-model HMOs in liability and in ability to manage risk. In the first part, the nature of the risks is described. In the next issue of the journal, the management of those risks will be discussed.     

Risk management in an IPA setting--Part II

In the first part of this two-part article, the author explored the nature and significance of differences in the levels of risk in IPA and network managed care settings. In this concluding part of the article, he describes and assesses methods that may be undertaken by the IPA-model HMO to control and minimize risk elements. In short, what follows are the elements of a risk management program in such an environment.     

What is quality, and how is it measured?

There is currently no universally accepted definition of "quality of care." This article describes two aspects of measurement that contribute to an assessment of quality--the perception of quality of care held by patients and comparisons of clinical care to established standards. Ongoing monitors that lead to this assessment of quality in a large HMO are described in detail. They include patient satisfaction surveys, quality of care evaluations, comparative medical expense reports, cost-effectiveness studies, and a unique physician incentive bonus plan.     

Provider satisfaction: an analysis based on expectation

Provider organizations will need to be in closer touch with their medical staffs in order to successfully anticipate and react to the many changes that lie ahead in the financing and delivery of health care services. This will mean understanding both physicians feelings and expectations. If you were asked today how satisfied your physicians are with your HMO, what would be your reply? How would you know? This staff-model HMO conducted a formal survey of its physicians to determine their expectations of the organization and their level of satisfaction with their work and environment. Such a tool is recommended for others interested in maintaining good relations with their physicians.     

Physician perspectives on the structure and function of group practice HMOs

This article explores physicians' perspectives regarding how their HMOs function and their satisfaction with and loyalty to HMOs. Three HMOs were studied: a mature (28-year-old) staff model, a 16-year-old staff model, and a 13-year-old group model with both HMO and fee-for-service patients. While these HMOs were found to vary somewhat in terms of emphasis on patient care versus costs, methods used to control costs and degrees of centralization of decision making, they all received high overall satisfaction and loyalty scores. The staff model HMO with a more decentralized decision making structure received the highest satisfaction/loyalty score from its physicians. The degree to which physicians perceive the HMO to be effective and supportive and the use of educational programs and peer review to influence resource use were also found to be significantly related to physician satisfaction and loyalty.     

甲供资源约束条件下南水北调工程项目群工期-费用优化模型研究

在研究项目群工期—费用优化问题时，首先剖析了项目群工期—费用优化机理。然后建立了甲供资源约束条件下项目群实施前的工期—费用优化模型，对初始网络计划进行优化，使业主支付款净现值最小。但由于项目群中各合同项目间存在资源竞争和工期冲突等矛盾，可能引起某一合同项目的工期延误。基于此，构建项目群实施过程中的工期—费用优化模型，对实施前优化后的网络计划进行动态调整。最后结合南水北调某X项目群对比了不同工期—费用优化下的结果。结果显示：两阶段的项目群工期—费用优化可实现项目群的费用控制目标，为项目经理确定项目群中各合同项目的起始时间提供依据。     

Specialty capitation and effectiveness assessment

In 1988, the Southern Region of Blue Cross Blue Shield of Florida undertook a major initiative involving Health Options, Inc., its HMO subsidiary. The intent was to convert specialty contracting from a discounted fee-for-service methodology to capitated payment. Each specialty network is radically transformed into a freestanding IPA, independently incorporated and contracted to the plan for the provision of all included services. The project has financial and legal implications, and maintenance of quality and member satisfaction has been a paramount consideration.     

Preparing to tack: when physicians change careers

Because of the progressive health care revolution that gives all the power to the managed care insurance companies, the usurpation of physician autonomy, and the replacement of the physician-patient relationship with HMO policies, doctors are looking at other career choices. Many doctors have never considered life after medicine and have made no plans for that time in their future. Despite their ample education, some doctors say, "I don't know how to do anything else. I am trapped in this system, and I can't get out. If I knew what else I could do, I would definitely change careers." Many doctors feel that it is too late in their lives to make such a change. However, it is becoming more and more acceptable to switch or modify a medical career. A number of physicians have switched careers successfully without disgrace and have discovered that there is indeed a life after the first career choice. It isn't always easy, but it can be done.     

Issues to consider in internalization of a service

In a staff-model HMO, the demand for services may be greater in one area than in another. Services with little demand and/or high cost are usually contracted to an external provider or institution. Equipment purchases or renovation of a facility to accommodate a new service sometimes go hand in hand with internalizing a service, and capital budgeting is an integral part of the process. The decision on when it is feasible to internalize services has to be considered on two levels: service and finance. This article will look at what issues affect the organization on these two levels and will consider the cost-benefit and legal issues that need to be considered when making such a decision. A work sheet that may be used as is or modified is included.     

Implementing a quality assessment program

It is difficult to imagine a more stressed organization than today's hospital. If the scope of change is not a sufficient challenge, the rate of the change is staggering, especially in quality assessment. Now we are poised for continuous quality improvement, whereby outcomes identified by quality assessment become the focus for system and process review and modification. It is imperative that a good quality assessment program be in place before implementing and integrating a continuous quality improvement process. The purpose of this article is to show how a quality assessment system can be implemented in a community hospital, regardless of size or scope of services. Key to the process is making all staff members part of the system's development and operation.     

Locum tenens solve staffing problems.

The use of locum tenens physicians (physicians who work temporary assignments) began decades ago when primary care physicians arranged coverage for their private practices while on vacation. Today, the placement of locum tenens physicians has evolved into a national business. The reason for the increase in the use of locum tenens physicians is because of the benefits they can offer. They can prevent a hospital, HMO, clinic, or physician practice from losing market share due to a gap in medical coverage.     

Our doctors are joining a labor union!

Are physicians going to join a union at your hospital, multi-specialty group, or HMO? Having recently lived through such an experience, the author shares the lessons that he has learned. This article outlines what physician executives need to do to prepare for the increasingly likely eventuality of physicians at their hospitals making a push for unionization. The best way to avoid a union is to manage people fairly, communicate with them constantly, and develop consensus for difficult decisions whenever possible. But if a petition lands on your desk, it is crucial to understand the laws governing union campaigns and the possible outcomes. From how to respond to a petition to election campaign strategies to the negotiation phase, physician executives need to be prepared for the very real possibility of physicians at their organizations deciding to unionize.     

A Model for Planning Resource Requirements in Health Care Organizations

In this paper we present a general model and solution methodology for planning resource requirements (i.e., capacity) in health care organizations. To illustrate the general model, we consider two specific applications: a blood bank and a health maintenance organization (HMO). The blood bank capacity planning problem involves determining the number of donor beds required and determining the size of the nursing and support staff necessary. Capacity must be sufficient to handle the expected number of blood donors without causing excessive donor waiting times. Similar staff, equipment, and service level decisions arise in the HMO capacity planning problem. To determine resource requirements, we develop an optimization/queueing network model that minimizes capacity costs while controlling customer service by enforcing a set of performance constraints, such as setting an upper limit on the expected time a patient spends in the system. The queueing network model allows us to capture the stochastic behavior of health care systems and to measure customer service levels within the optimization framework.     

Lehrexzellenz – Lehrkompetenz: Herausforderungen für Neuberufene mit Coaching begegnen

Excellence and competence are terms referring to recent developments in higher education especially concerning the quality of teaching. The discussion about teaching excellence can be interpreted as increasing stress upon universities. Teaching competence on the other side is extensively a matter of the individual lecturer. As such they are expected to focus on their educational beliefs, their teaching conceptions, and their disposable teaching methods on new mission statements that are committed to teaching excellence. This article deals with the question how the recruitment of new professors is carried out in universities of applied sciences considering the mentioned teaching excellence. The coaching program for professors that have recently been appointed at the Cologne University of Applied Sciences is presented as a forceful in-house procedure that is oriented toward the development of teaching competence.     

Court decisions hold implications for managed care plans--Part one

The managed care industry--and HMOs in particular--is now facing the realities of a maturing business. Maturity has brought a competitive tension to the HMO/managed care field, one consequence of which is increased litigation, not only among HMOs but also between HMOs and their suppliers, customers, and indemnity insurers. Entanglement in the legal system is an outgrowth of efforts to gain or preserve a competitive edge, reduce costs, and attract customers. This article highlights selected legal developments from the past two years that reflect the causes and effects of this environment. Additional cases will be discussed in the March-April 1990 issue of the journal.     

Interface Style and Training Task Difficulty as Determinants of Effective Computer-Assisted Knowledge Transfer*

The transfer of expert knowledge to novices is one means of improving decision quality. Research needs to identify (1) the knowledge to be transferred to novices, and (2) the best method for transferring that knowledge. Studies that compare the judgment behavior of experienced and novice auditors address the first issue. The present study addresses the second issue in the context of using a computer-assisted training (CAT) program. CAT was selected for study because of evidence that it can both improve the effectiveness and reduce the costs of training. An experiment was conducted in which two factors were manipulated: (1) the design of the human-computer interface of the CAT program, and (2) the content of training tasks. The judgment of interest involved causal reasoning about the relationships between various internal control procedures and possible errors. The results indicate that alternative styles of interaction with a CAT program differ in terms of learning effectiveness. In addition, there was also evidence that training task content affected learning.     

Selling yourself in a tough health care market

Physician executives are vying for top positions in health care organizations. With so many qualified candidates in the marketplace, how can you differentiate yourself as a strong contender? Recruiters search through hundreds of résumés, not the ten or 20 that many hospital and HMO CEOs have seen. Recruiters--the people who actually find specific candidates--were interviewed to find out what they are looking for. Here are the top items on their checklists: Articulated focus, documented results, competitive intelligence, professional growth, good references, appearance and social skills, responsive and timely, and technical skills.     

Optimal Price and Quantity of Refurbished Products

Many retail product returns can be refurbished and resold, typically at a reduced price. The price set for the refurbished products affects the demands for both new and refurbished products, while the refurbishment and resale activities incur costs. To maximize profit, a manufacturer in a competitive market must carefully choose the proportion of returned products to refurbish and their sale price. We model the sale, return, refurbishment, and resale processes in an open queueing network and formulate a mathematical program to find the optimal price and proportion to refurbish. Examination of the optimality conditions reveals the different situations in which it is optimal to refurbish none, some, or all of the returned products. Refurbishing operations may increase profit or may be required to relieve a manufacturing capacity bottleneck. A numerical study identifies characteristics of the new product market and refurbished products that encourage refurbishing and some situations in which small changes in the refurbishing cost and quality provoke large changes in the optimal policy.