An HMO requests your hospital services for its obstetrics division. It offers to

Question

An HMO requests your hospital services for its obstetrics division. It offers to pay your hospital $2,000 for a vaginal delivery without complications (DRG 373). You look at the Standard Test Procedure (STP) for this Diagnosis-Related Group (DRG) and discover that your hospital's cost is $2,400. What will you do to obtain the contract?

Present your work as a 2-page report in a Word document formatted in APA style.

Name your document LastnameFirstInitial_W5_A2.doc.
For example, if your name is John Smith, your document will be named SmithJ_W5_A2.doc

By Sunday, October 13, 2013, submit your report to the W5: Assignment 2 Dropbox.

Assignment 2 Grading Criteria Maximum Points Explained ways to analyze the hospital's cost for the procedure and operational data for the procedure to identify possible cost reductions. 8 Calculated marginal profit for various costing profiles. 8 Identified and explained ways to make the contract profitable for the hospital. 12 Applied the correct APA style, usage, grammar, and punctuation. 4 Total 32

Explanation / Answer

You'd have to study the hospital's margins in that procedure and determine if you can afford to 'lose' $400 per procedure. In no circumstance may you accept a contract for under your cost per unit.

I negotiated contracts with HMOs for years for sub-acute care and learned fast that the HMOs would try to dazzle you with volume, but it's no help to the institution if you're even losing a little on each unit.

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