Managing financial risk with options on futures.
With the rise of managed care and capitation, more providers will be sharing in the financial risk of providing care. To help protect their organizations from the risk of unexpectedly high utilization under such a fixed-payment system, healthcare financial managers soon will be able to use options on futures contracts. These contracts provide wide profit potential but limited loss potential. Before investing in options on futures, however, healthcare financial managers should consider issues such as basis risk and trading costs.
Bond
M T
MT
James J. Nance College of Business, Cleveland State University, OH, USA.
Marshall
B S
BS
D002204:Capitation Fee; D003132:Commerce / Q000639:trends*; D003284:Contract Services / Q000191:economics*; D005377:Financial Management, Hospital / Q000379:methods*; D006279:Health Maintenance Organizations / Q000191:economics; D007348:Insurance, Health / Q000191:economics*; D007449:Investments / Q000191:economics / Q000639:trends*; D012308:Risk Management / Q000191:economics*; D013997:Time Factors; D014481:United States