I have a question need your help. Please see the attached file....

I have a question need your help. Please see the attached file.

Week 6 – You decide
Scenario : In Week Two, 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.
Key Players :
Dr. John Evans, Chief of Staff : I know you are not going to like this, but probably 1/3 of
my practice comes from Commercial Intertech. ...employees, spouses, kids. I have had
multiple generations of patients who all work out there. You need to sign a contract with
MegaPlan and soon. I looked at a contract for my own office. It is not great, but if I don't
sign I could risk losing many of my long-time patients. And sorry to say this, but if the
hospital does not sign. ..... frankly I might have to take my patients elsewhere.
Katrina Eaton, CEO : Well, we do need to form a relationship with MegaPlan if
Commercial Intertech has selected them. I would suggest preparing your own contract
proposal for them to look at. Be reasonable, but make it something we can live with.
Remember, we have some power in this situation ourselves. If the Commercial Intertech
employees and families cannot use our hospital, they will be forced to travel a long way
for care, and may even have to change doctors. That will not make them happy at all. You
can bet that the HR folks at the factory will get an earfull from their employees if we
cannot come to terms with MegaPlan. Make your own counterproposal, and don't panic.