Summary Financial Resource Management in Healthcare – C428 Final Pape
Financial Resource Management in Healthcare – C428
A1. Fiscally Sustainable Strategies
A financially sustainable strategy that can be discussed is switching from a fee-for-service
plan to a managed care plan. There are three different types of managed care organizations:
Health Maintenance Organizations (HMOs)
Preferred Provider Organizations (PPOs)
Point-of-Service Plans (POS)
HMOs are the most common type of managed care organizations. HMO’s are business
engagements between physicians, insurers, and hospitals. HMOs usually have little to no
deductible and low-cost premiums, however HMOs are restrictive in when and whom the
patient can see for care. HMO’s require patients to pick a primary care provider (PCP) in-
network and see that provider for all their care. If a patient wants to see a specialist, they need
to first get a referral from their PCP. HMOs keep costs low by restricting whom the patients can
see as all services are kept within the network and out-of-network visits are usually denied
passing the whole cost onto the patient, except for emergency care.
Preferred Provider Organizations are another common managed care organization that is
growing in popularity. Healthcare insurers contract with a large network of providers and
hospitals to create the preferred provider network. With PPO insurance, you’ll have access to
more doctors, specialists, clinics, hospitals, and other healthcare facilities. You will not be
required to select a primary care physician, although it is highly recommended that you do, and
you do not need physician generated referrals to see a specialist. To provide such flexibility and
the greater pool of providers and facilities, a PPO with generally have much higher premiums
, Financial Resource Management in Healthcare – C428
deductibles, and copays than an HMO. PPOs will also usually cover out-of-network care but at
a discounted rate, commonly around 60-70% with the other part being the responsibility of the
patient.
Point-of-Service plans are a hybrid of the previous two plans, as with the HMO patients
must choose and in-network primary care provider but can choose to receive care outside the
network as well. POS plans will pay less for out-of-network appointments, but more if you are
referred to an out of network provider by your PCP. For example, you have a POS plan that pays
80% of an in-network visit, 60% for out-of-network visits, and 75% of out-of-network visits that
your primary care provider referred you to. You get the benefits of lower premiums like the
HMO, but the flexibility of choosing your providers like a PPO.
A1a. Recommended Strategies
Determining which plan to move to in the future, Seamus Company must examine the cost-
savings, tax implications and advantages and general fiscal management improvements that
each managed care organization (MCO) presents. Seamus Company must also balance such
cost savings benefits with the quality of life improvements, or lack thereof, that may come with
each plan.
In looking at the 3 different plan options with switching to an MCO, in terms of sheer cost-
savings the HMO is the better plan. HMOs have much lower deductibles that both the PPO and
POS plan, decreasing the portion of costs that Seamus Company is responsible for. Every plan
discussed however will bring a lower cost responsibility for Seamus Company in terms of
deductibles and fixed premiums. With large HMOs and PPO plans the insurance companies will
Financial Resource Management in Healthcare – C428
A1. Fiscally Sustainable Strategies
A financially sustainable strategy that can be discussed is switching from a fee-for-service
plan to a managed care plan. There are three different types of managed care organizations:
Health Maintenance Organizations (HMOs)
Preferred Provider Organizations (PPOs)
Point-of-Service Plans (POS)
HMOs are the most common type of managed care organizations. HMO’s are business
engagements between physicians, insurers, and hospitals. HMOs usually have little to no
deductible and low-cost premiums, however HMOs are restrictive in when and whom the
patient can see for care. HMO’s require patients to pick a primary care provider (PCP) in-
network and see that provider for all their care. If a patient wants to see a specialist, they need
to first get a referral from their PCP. HMOs keep costs low by restricting whom the patients can
see as all services are kept within the network and out-of-network visits are usually denied
passing the whole cost onto the patient, except for emergency care.
Preferred Provider Organizations are another common managed care organization that is
growing in popularity. Healthcare insurers contract with a large network of providers and
hospitals to create the preferred provider network. With PPO insurance, you’ll have access to
more doctors, specialists, clinics, hospitals, and other healthcare facilities. You will not be
required to select a primary care physician, although it is highly recommended that you do, and
you do not need physician generated referrals to see a specialist. To provide such flexibility and
the greater pool of providers and facilities, a PPO with generally have much higher premiums
, Financial Resource Management in Healthcare – C428
deductibles, and copays than an HMO. PPOs will also usually cover out-of-network care but at
a discounted rate, commonly around 60-70% with the other part being the responsibility of the
patient.
Point-of-Service plans are a hybrid of the previous two plans, as with the HMO patients
must choose and in-network primary care provider but can choose to receive care outside the
network as well. POS plans will pay less for out-of-network appointments, but more if you are
referred to an out of network provider by your PCP. For example, you have a POS plan that pays
80% of an in-network visit, 60% for out-of-network visits, and 75% of out-of-network visits that
your primary care provider referred you to. You get the benefits of lower premiums like the
HMO, but the flexibility of choosing your providers like a PPO.
A1a. Recommended Strategies
Determining which plan to move to in the future, Seamus Company must examine the cost-
savings, tax implications and advantages and general fiscal management improvements that
each managed care organization (MCO) presents. Seamus Company must also balance such
cost savings benefits with the quality of life improvements, or lack thereof, that may come with
each plan.
In looking at the 3 different plan options with switching to an MCO, in terms of sheer cost-
savings the HMO is the better plan. HMOs have much lower deductibles that both the PPO and
POS plan, decreasing the portion of costs that Seamus Company is responsible for. Every plan
discussed however will bring a lower cost responsibility for Seamus Company in terms of
deductibles and fixed premiums. With large HMOs and PPO plans the insurance companies will
