Case 12.3 Should My Firm Accept This Contract? You are the manager of a 20-physician cardiology…

Case 12.3

Should My Firm Confirm This Contract?

You are the overseer of a 20-physician cardiology exercise. You are getting free to admonish your board environing a scheme for capitated specialty caution from a persomal HMO. Data from your fee-for-service exercise illusion billings per limb per month of $100 for visits, $80 for catheterizations, and $115 for lab services. The exercise owns the labs, and the avail are shared inchoate the partners. Your consider is that costs (privately from physician proceeds) correspondent 25 percent of account.

The scheme from the HMO is for a trounce of 275 per limb per month. Your present reaction is to repel it. Your pre-eminent financial officer makes two comments that surrender you pause: “Our over obtain percolate significantly if we confirm this scheme and change 25 percent of our duty to capitation. In analysis, we should prepare that our trounces for visits, catheterizations, and tests obtain percolate significantly uninterruptedly we change.” In this case the town has barely two other cardiology groups. You are not unmistakable whether they accept been asked to bid or not. Your juridical recommendation has warned you that direct discussions after a while your rivals strength liberty you disclosed to an antitrust aid.

Discussion Questions

• Why is your moderate counter-argument to repel the propose?

• Why strength over go down if you confirm the form?

• Why strength utilization trounces go down?

• What are the risks of confirming or refusing?

• What should you do present? Should you confirm the scheme? Should you compel a counteroffer?