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Proven Contract Management


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Hospital Contract Assessment

Situation
The hospital had recent turnover in Contracting Staff. There was no source of Contracting terms and conditions.

Problem Assessment
The Hospital was losing out on additional revenue, due to the lack of managing the renewals of contracts. Several contracts had pending renewals that had missed the renewal date and had not been finalized. One contract had been completed but never returned to the Hospital and rates never loaded.

Actions
A complete contract assessment of all Health plan contracts was performed. This included key provisions such as rates, last renewal, effective date and other operational issues. Complete assessment was documented and provided to the Hospital. This included a write-up for each Health plan contract. The write-up included a summary of the position of the contract and actions needed. Actions included operational improvements and re-contracting if needed.

Results
Contracts were updated with better terms and rates. A tracking system was devised to track renewals and status of contracts until final loading by Health plan and filed by hospital.

IPA Physician Re-contracting

Situation
IPA Specialty Physicians were almost entirely capitated. The Specialty costs needed to be contained. 

Problem Assessment
The Specialty Physician capitation was not in line with IPA revenues and provided no incentive to control cost.

Actions
A competitive assessment of capitation rates and range of services by specialty was performed. The assessment was translated into new rates and a risk pool distribution percentage was also calculated. Specialty Physicians were contracted at new rates. Rates were also tied to revenue. This provided an incentive for the physicians to help the IPA gain more from the health plans. Also as the physicians now shared in risk pool distributions they were more aware of actions on the entire IPA financials.

Results
Re-contracting completed in three months. Expenses reduced and revenue was enhanced. Added benefit was the customer satisfaction rose. The physicians had an incentive to keep patients happy as well as maintain a good IPA reputation. This enabled contracting staff to get larger increases, putting more dollars in the physician's hands.


IPA Administrative Cost Reduction

Situation
IPA Operations were inefficient and not responsive to customers. Administrative costs were running 16% of revenue.

Problem Assessment
Operational Staff were aligned by function. They could not understand the details of the health plan contracts. They also did not communicate with other departments. This created a significantly long time to resolution of issues. Also duplicate work efforts were identified.

Actions
Placed staff from all areas; Claims, Customer Service, and Medical Management on teams. The teams were aligned by health plan. The teams were then trained on the details of the health plans they managed.

Results
Staff was reduced. Accuracy of work was improved. Time to resolution was improved and overall Administrative costs were reduced from 16% to 11% of revenue.


Contracting Article

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Completing managed care negotiations on time—and securing great terms—is often a struggle for hospitals and IPAs. Why? Because most management teams are already stretched thin and it can be nearly impossible to find the time to research market rates and engage in effective negotiations. In the end, negotiations are often completed late and result in below-market rates.