Course Project Task 3—Payment for Services

When hospitals are paid for services, it is through payment structures. Payment structures include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and capitation rates.

In this assignment, you will use the information from M2: Assignment 2 and
M3: Assignment 1 to develop a strategic plan for the hospital to begin managed care contract negotiations. You can use the SMH data file, which you had downloaded from the Doc Sharing area, to create your plan.

Based on your understanding of the costs, you will develop a plan for contract negotiations with a managed care provider. Include in the plan:

• A strategy for contract negotiation
• Details on each facility’s costs and expected margins
• Comparisons between the three organizations, indicating which is in a stronger or weaker financial position

Using the SMH data file, you will do the following:

• Calculate inpatient gross profit for the major payers at the hospital.
• Calculate GP and GP percentage by payer.
• Comment on the results of your GP calculations.
• In this example, we assumed that patients from each payer incurred costs at the same rate. Is this assumption correct? What level of detail in cost identification should the hospital attempt to obtain? Provide your comments.
• Based on your understanding of your costs, you will develop a plan for contract negotiations with a managed care provider. In your plan, outline a strategy for contract negotiation.
• Based on your comparative analysis of the SMH, FP, and NFP facilities, is SMH in a better or worse position when it comes to contract negotiations? Provide your comments.
• Payers always want to move procedures from an inpatient setting to an outpatient setting. Why might this not be the best strategy for your financial situation? Provide your comments.

Write a 3- to 5-page paper in Microsoft Word format. Apply current APA standards for writing style to your work.