THE CRIMSON GROUP, INC.
CONSULTING AND LEADERSHIP TRAINING IN HEALTH CARE
Home Programs Faculty Research Curriculum Center Public Resources My Account
Member Sign In
Shopping Cart  
My Account
My E-Packets
Browse Bibliography:
By Keywords:
 

By Type:
New/Updated Items
Popular Items
Cases
Background Notes
Primers and Books

By Functional Area:
Finance/Financial Management
Financial Accounting
Financial Analysis and Management
General Management
Management Accounting
Management Control Systems
Marketing
Operations Management
Organizational Behavior

By Setting:
Developing Country
For Profit
Health Policy
Healthcare Management
Nonprofit
Nonprofit Organization Management
Public Sector Management

Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
 
Central Valley Primary Care Associates
Author(s):
Young, David W.
Functional Area(s):
   Management Accounting
Setting(s):
   Healthcare Management
Difficulty Level: Beginner
Pages: 5
Teaching Note: Available. 
Copyright Clearance Fee:  $9.00  Sign in to find out if you are eligible for an Academic Price of $5.00 
Add Item to a new E-Packet

Add To Cart

Order an Free Inspection Copy

Back to Bibliography
First Page and the Assignment Questions:
I’ve got a week to finish this bid. The information the hospital gave me on inpatient utilization was incomplete and so detailed that I had to have it summarized. Even so, I don’t know if I’ll be able to use it. How am I supposed to work with information like this to come up with a reasonable capitation rate for Continental?

The speaker was Maria Lopez, M.D., board member of Central Valley Primary Care Associates (CVPCA) and chair of CVPCA’s subcommittee on Finance, Compensation, and Risk. CVPCA was an independent physician association (IPA) corporation that comprised 130 primary care pediatricians who worked in 39 small group practices, located in 57 sites. It worked closely with the Valley Children’s Medical Center (VCMC) physician-hospital organization (PHO).

BACKGROUND

VCMC was a 200+ bed teaching and research institution that was considered to be one of the leading children’s hospitals in the country. However, although it had a national reputation, and was the only children’s hospital in the three-state area surrounding Central Valley, it was not the only institution providing pediatric services. Several general hospitals were located nearby, each of which had a small (10 to 30 bed) pediatrics department. Moreover, while VCMC had both a residency program and an active research agenda, none of the other hospitals was engaged in either teaching or research. Most of their patients had relatively uncomplicated diagnoses, requiring fairly standard treatment or procedures. Patients with complicated diagnoses or highly severe conditions generally were taken directly to VCMC or transported there shortly after admission to one of the other hospitals.

Central Valley Primary Care Associates

CVPCA had been formed in 1996. Its mission was to develop a comprehensive integrated primary health care delivery system to ensure quality and cost effective care. Together with VCMC, it aimed to provide for the total health care needs of children and adolescents in the Tri-State area. Dr. Lopez’s subcommittee was one of six. Its charge was to:

... develop minimally acceptable capitation fees and fee-for-service compensation packages that directly correspond to the contractually covered services, and to outline acceptable risk components that may be included in the physician compensation program, such as withholds, risk pool sharing, and maximum stop-loss coverage... .

Assignment

  1. What are the salient strategic issues for Dr. Lopez to consider in her decision making?
  2. How should Dr. Lopez approach the development of a budget for the expenses associated with CVPCA’s 5 to 11 year old patients?
    (Note: You do not need to prepare a budget, but rather to outline the approach that Dr. Lopez should follow. To do so, you should structure the information available to Dr. Lopez in such a way that it is useful to her, and so that you can identify those places where she will need to obtain additional information.)
  3. What additional data are needed to complete the budget? How should Dr. Lopez obtain them? Where will she need to make assumptions?
  4. How should Dr. Lopez translate her budget into a capitation rate that she can propose to Continental? What other issues should she consider in her proposal to Continental?
  5. What issues should Dr. Lopez consider in working with the PHO, the hospital, and the specialists needed to care for pediatric patients so that she can increase the probability of meeting her budget?