Issues to consider in internalization of a service.
In a staff-model HMO, the demand for services may be greater in one area than in another. Services with little demand and/or high cost are usually contracted to an external provider or institution. Equipment purchases or renovation of a facility to accommodate a new service sometimes go hand in hand with internalizing a service, and capital budgeting is an integral part of the process. The decision on when it is feasible to internalize services has to be considered on two levels: service and finance. This article will look at what issues affect the organization on these two levels and will consider the cost-benefit and legal issues that need to be considered when making such a decision. A work sheet that may be used as is or modified is included.
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CIGNA Healthplans, Orange, CA.
D003284:Contract Services; D003362:Cost-Benefit Analysis; D003659:Decision Making, Organizational; D005568:Forms and Records Control; D006279:Health Maintenance Organizations / Q000458:organization & administration*; D010934:Planning Techniques; D011357:Product Line Management / Q000458:organization & administration*; D014481:United States