week 3

767 Words2 Pages
bulb-icon

Recommended: Successful mergers between hospitals case study

1. If you were a hospital administrator, how would you react when a number of patients and companies began to ask to bargain about prices, including presenting quotations from companies like IndUShealth?
First off, bargain purchase is the cost that is less than the fair market value of its net assets. “Differential bargaining power is commonplace and does not necessarily provide a rationale for public oversight or even intervention since such intervention also inevitably has unintended adverse side effect.” (Frank A. Sloan, Donald H. Taylor, Jr., Christopher J. Conover, 2000) If I was a hospital administrator I would keep in mind the idea that more transparency is always better for consumers and price disclosure enhances hospital bargaining. Also spreading pricing information to the necessary vendors will help answer any questions that companies and patients may have and that joint decision-making is done by physician-hospital on which vendor to purchase its products from that will satisfy physicians' clinical preferences and improve the hospital's finances.
I would explain that the “price is fair if the cash flows yield a rate of return equal to the cost of capital. Since the net value to the community includes a range of social benefits, some of which are intangible, comparisons of private rates of return with cost of capital provide an inadequate indication of value of the transaction to the seller.” Hospitals are mostly concerned with the number of patient volume they encounter and ways to minimize their spending through reimbursement and payments they receive from payers. Also when using transparent cost insurance companies can and will use competitor’s price information as bargaining leverage to negotiate lower prices on b...

... middle of paper ...

...cessful.

Works Cited

Brand, K., Gowrisankaran, G., & Nevo, A. (2012). Mergers When Prices Are Negotiated: Evidence from the Hospital Industry. Federal Trade Commission.
Floyd, E. (2013, November). Transparency Regulation, Bargaining, and the Price of Healthcare.
Frank A. Sloan, Donald H. Taylor, Jr., Christopher J. Conover. (2000, January). Hospital Conversions: Is the Purchase Price Too Low? . Retrieved from National Bureau of Economic Research: http://www.nber.org/chapters/c6758.pdf
Horowitz, M. D. (2007, November 13). Medical Tourism: Globalization of the Healthcare Marketplace. Retrieved from MedGenMed: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2234298/
Luigi Bertinato, Marina Canapero. (2008, January). UNWTO World Tourism Barometer. Retrieved from Asian Hospitals and Healthcare Management: http://www.asianhhm.com/healthcare_management/health_tourism.htm

Show More
Related

  • Analysis Of Five Forces Analysis Walgreens

    715 Words  | 2 Pages

    Bargaining Power of Buyers. This is the most concerned force because many companies in the drugstore industry start to do the same thing as Walgreens.

    Read More

  • Healthcare Financial Measures

    944 Words  | 2 Pages

    Supposedly, the national average occupancy rate of hospitals is lower than it should be because of rising costs of hospital care. Factors causing variations in occupancy rates are hospital size, product diversification, and urgent versus non-urgent

    Read More

  • Medtronic Case Analysis

    2105 Words  | 5 Pages

    The current health care landscape has been characterized by large scale consolidation and vertical integration of payers and providers. This has led to a handful of dominate players with substantial influence, and an increasing overlap in responsibilities between payers and providers. Although payers and providers have traditionally been on opposing sides, battling each other about quality of care versus cost-effective care, they are shifting to working together to achieve better value.

    Read More

  • Lowering Healthcare Costs and Global Medical Tourism

    2074 Words  | 5 Pages

    As healthcare costs continue to escalate in the United States, employer healthcare plans are looking for alternatives pricing plans to lower healthcare insurance costs for their employees. Blue Ridge Paper Products (BRPP) is one company in Canton, North Carolina who is attempting to decrease healthcare costs for their employees by offering health promotion incentives and more cost effective provider reimbursement options (McLaughlin & McLaughlin, 2008). McLaughlin and McLaughlin (2008) explain while the health promotion strategies they have instituted have been successful at lowering BRPP’s healthcare claims, they have found it difficult to negotiate lower costs with local healthcare providers. In this paper, I will discuss possible consumer and provider bargaining strategies with regarding to lowering healthcare costs; the benefits of a large academic medical center and a large tertiary community hospital; and finally, how medical global tourism will affect state and national healthcare policies.

    Read More

  • The Merger of Two Competing Hospitals: A Case Study

    3362 Words  | 7 Pages

    A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.

    Read More

  • Hospital Corporation of America

    1494 Words  | 3 Pages

    Hospital Corporation of America (HCA). Staff Analysis Statement of Problem HCA, after following a conservative financial policy since its establishment, has entered the new decade preparing to make some changes in order to realign their financial strategy and capital structure. Since its establishment, HCA has often been used as a measure for the entire proprietary hospital industry. Is it now time for the market to realign their expectations for the industry as a whole? HCA has target goals that need to be met in order to accomplish milestones in the future.

    Read More

  • Physician-Hospital Organization Case Study

    1119 Words  | 3 Pages

    Through this organization hospitals and small group practices can be provided with better reimbursements, efficient claim management and better delivery of care by negotiating with the payors and obtaining better health plan contracts. PHOs serve a messenger role between the providers and payors by submitting the fee schedules to the network physicians and enabling efforts to have contracting terms between the providers and payors. Traditionally, the contracts were between the hospitals and payors or small group practices and payors with PHOs as a third party or messenger, but with the emerging trend of clinical integration between the physicians and hospitals PHO enables both the parties involved in the contact agreement which provides better bargaining leverage in negotiation as the collaboration will lead to controlling hospital costs and improving the quality. With the current Medicare and Medicaid payment models involving bundled payments, global payments and episode based payments along with clinical integration between the physicians and hospitals, this Physician – hospital organization arrangement reduces the adversarial or confrontational risk involved by making contracts less complex and reducing the costs by greater cohesion and cooperation between the both parties compared to traditional PHO independent contractual agreements with the insurance companies and payors. Most important concern with the PHO service model is the potential of antitrust liability in the establishing fee schedule and contracting as price fixing arrangements in between the competitors is considered offensive and with the clinical integration between the physicians and hospitals can resolve such issue. Under these arrangements, ownership and governance of the PHO is given emphasis enabling that both the

    Read More

  • Porter's Five Forces Model Of Erlanger Health System

    1090 Words  | 3 Pages

    It is possible for a patient to want to go to a local competing hospital if they have exceptional customer service or if they feel that staff are more courteous in another facility. If a patient knows that a rival hospital does not have a large volume of patients in the emergency room, a patient may feel that they will be seen faster in this hospital versus a large trauma hospital where they may spend hours waiting before being seen by a doctor. At smaller hospitals there will be fewer patient rooms; therefore, the nurse to patient ratio is significantly lower than our large facility. If a smaller for-profit hospital were to employ a well-known highly skilled doctor to their facility, it is possible that patients will want to seek medical treatment from this doctor or surgeon because of their credibility. For example, if a surgeon was the first to successfully implant a total robotic heart chamber, which would be a new highly advanced technology device, I could only imagine that our hospital would lose many heart patients wanting to come to our facility because our surgeons have never completed such an advanced treatment for heart care. It would cause a threat to substitute one hospital’s products over

    Read More

  • Issues Bonds Generally Go Through A Series Of Steps

    732 Words  | 2 Pages

    Health care is a capital-intensive business and most health care institutions survive on traditional equity and debt financing. Healthcare institutions consider leasing for various reasons: to avoid the lengthy process of capital budget requests, to avoid technological delays, to benefit from maintenance services and for convenience.

    Read More

  • Pros And Cons Of Medication Errors

    1215 Words  | 3 Pages

    With medical errors increasing the length of stay and cost of care, hospitals are facing even smaller margins. Struggling to turn a profit they only way hospitals can grow is to improve the quality of care and reduce errors. It was not until recent legislation that hospitals were being reimbursed for poor quality of care leading to longer patient stays or further hospital-acquired infections. The recent health care reform legislation, the Patient Protection and Accountable Care Act, has stopped hospitals from receiving reimbursement for readmissions due to error or nosocomial infections. Not only does this act prevent reimbursement for poor quality care, but also hospitals that deliver lower standards of care will not be able to participate in the Medicare and Medicaid programs (Andel et al.,

    Read More

  • Cost Shifting

    571 Words  | 2 Pages

    According to the Delivering Health Care in America, cost shifting is a method used by insurance companies to balance inadequate payments, mostly to bridge the gap from low government reimbursement (Shi & Singh, 2015). Cost shifting is when private insurance companies charge people more to make up for the money they lose. Hospitals and other health care providers are able to compensated for the services they provide for uninsured patients by increasing payments to private insurance (Coughlin, Holahal, caswell& McGrath, 2014). Government programs such as, Medicare and Medicaid reimburse hospitals at a very low rate, according to Potter (2015) the only way hospitals can be able to keep providing care and make up for their looses

    Read More

  • Racism In Miami

    1251 Words  | 3 Pages

    The tourism of health is the idea of offering an individual a medical treatment in form of vacation, such as cures and relaxation, or also cheaper cost of surgeries and medicines being more advantageous (Goodrich, 1993). Cuba is located in the southern hemisphere; its climate has favourable weather condition throughout the year with beautiful landscapes and a vast variety of exotic plants, fruits and animals. The tourism of health in Cuba has allowed many other sectors to co-exist, thus creating a backbone for the tourism industry by maintaining the gazing experience. The landscapes, scenery, and sensations such as touch, smell and sounds are the elements that form the gazing experience. However, each individual has a different idea of the tourist gaze.

    Read More

  • Explain What It Means To Have Market Power In Healthcare

    533 Words  | 2 Pages

    Kirkwood (2016) noted the dangers of allowing big healthcare firms to merge. Using the examples of large insurance companies that entered into mergers, they only increased competitive risks by enhancing barriers to entry which resulted in monopsony power over small providers, higher market power, and greater premiums through their discriminatory advantage over less powerful insurance companies (Kirkwood,

    Read More

  • Wellness Tourism Essay

    883 Words  | 2 Pages

    Walker, R. (2017, February 07). Wellness tourism blossoms in Asia as resorts offer integrated health experiences and lifestyle coaching. Retrieved February 15, 2017, from

    Read More

  • Medical Tourism Benefits

    1089 Words  | 3 Pages

    Originally medical tourism referred to traveling patients from underdeveloped countries to more developed countries in the pursuit of treatments not yet available in their homeland. Today medical tourism has expanded to a destination with the main purpose of receiving beneficial medical care. Today medical tourism can be seen as any travel to a destination with the main purpose of receiving medical care. The reasons people choose to seek healthcare abroad are never ending. The procedures can include anything from treating cancer to getting wisdom teeth pulled. Medical tourism can be an economically effective and advantages opportunity for both companies and individuals.

    Read More

More about week 3

Open Document