Tertiary care centers: a strategy for fiscal survival.
BACKGROUND
Managed care organizations use a variety of payment strategies to contract for high-end tertiary services with academic healthcare centers. We assessed the financial outcome of these strategies and attempted to identify those that maintain a balance between cost and reimbursement.


METHODS
Patients admitted with an Injury Severity Score > or =16, hospital charges > or =$100,000, and a managed care organization as the payer were evaluated.


RESULTS
A fixed reimbursement contract decreased reimbursement by 28% and negatively impacted the margin by 215%. The addition of a stop-loss provision to a fixed reimbursement contract is the best strategy to share the risk between payer and provider. If the fixed reimbursement strategy continued, the negative impact to the margin would have been $36,984 per patient.


CONCLUSIONS
Fixed reimbursement strategies shift all the risk to the academic healthcare center. If volume, severity of illness, or cost is not controlled, they negatively affect the financial outcomes. The addition of a stop loss at $100,000 of charges paid at 40% of the entire claim most equitably distributes risk between the academic healthcare center and the managed care organization. It also excludes the negative impact of increasing severity of illness and volume and should induce cost control.
Rodriguez
Jorge L
JL
Department of Surgery, University of Louisville, Louisville, KY 40201, USA.
Brill
James P
JP
Hoth
J Jason
JJ
Stassen
Nicole A
NA
Franklin
Glen A
GA
Barbier
Robert
R
Polk
Hiram C
HC
D000046:Academic Medical Centers / Q000191:economics*; D003284:Contract Services / Q000191:economics*; D006801:Humans; D008329:Managed Care Programs / Q000191:economics*; D012051:Reimbursement Mechanisms; D020414:Risk Sharing, Financial; D019037:Urban Health Services / Q000191:economics*