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    Managing Costs and Efficiency in the Healthcare Organization

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    A large manufacturing firm in your area closes its doors, resulting in an increase in unemployment. You manage a multi-physician primary care practice. About half of your patients are covered by public programs such as Medicare and Medicaid. The other half is covered by their employersâ?? health insurance plan. What effect would you expect the closure to have on:

    your volume of business

    your revenue per visit

    your costs
    In discussing this, be sure to consider the balance of maintaining a profitable business for your physician-owners with the medical needs of the patients.
    It is often claimed that hospitals compete for physicians rather than patients. Assuming this is true, how does it occur and what are the implications in terms of service availability, costs, and market power of the providers and the health insurers? On the other hand, have you seen any evidence to contradict this, even partially?

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    Solution Preview

    When the large manufacturing firm closes, many people who are unemployed may become eligible for medicaid benefits, to access health care for themselves and their families. In addition, there may be some older workers who previously relied on private insurance, who will be eligible for Medicare. This change will affect your primary care practice, when the number of patients with private insurance shifts to a higher proportion of those on Medicaid and Medicare. Because you accept such public funding sources for payment, the practice may see a large increase in patients, who's ...

    Solution Summary

    The solution discusses measures that can be adopted, to treat an increasing number of patients, while maintaining profitability of the organization.