Assignment:
To seek shelter from the competitive storm, Marcus Welby Hospital (MWH) is considering forming a joint venture with an existing for-profit HMO. MWH would be given 30 percent ownership of the privately held HMO, and each of its five board of trustees members would be given 1 percent ownership, in exchange for MWH contributing $10 million in capital funds, which is 35 percent of the HMO's appraised net worth. Since the HMO already owns its own nursing home, MWH will raise the capital by selling its nursing home. MWH will receive 30 percent of whatever profit distributions the HMO board chooses to make from time to time and the trustees will receive their 1 percent shares. MWH also hopes to increase its patient base for hospital admissions and to secure a better bargaining position for reimbursements from the HMO, but the HMO is making no promises about where its subscribers will be sent for hospital care, nor how it will pay MWH for hospital services to its subscribers.
Assume that MWH has articles of incorporation similar to Queen of Angels' only covering nursing home as well as hospital services, and that it has received only general, unrestricted gifts from donors. Also, assume there is no other management or personal connection between MWH and the HMO.
• What issues would you want to alert the hospital board to concerning whether this is a permissible venture, and how the HMO can use its capital funds?
• Would these parties be advised to have the HMO pledge some portion of its revenues to pay for charity care services at MWH( below ispage 380 title; THE HISTORY OF MARCUS WELBY HOSPITAL AND HOW IT GREW)
• This hypothetical serves as the basis for several of the problems in the readings that follow. It illustrates the profound transformations that have occurred in the health care sector over the last half-century.
Marcus Welby Hospital (MWH) Is a private, nonprofit 400-bed facility employing more than 2,000 workers, with more than $100million in annual revenues. It is located on the outskirts of a metropolitan area of one million people that contains three other major tertiary care hospitals of 300 beds or more and four smaller, community hospitals of 100 to 150 beds. Currently, 38 percent of MWH's gross revenues are from Medicare, 12 percent are from Medicaid, 40 percent from private insurance or out-of-pockets payments. The remaining 10 percent is bad debt or charity care partially subsidized by a major protestant denomination with which it has long been affiliated.
March Welby Hospital was born in the 1950s as a small community hospital. It began as an effort by persons from the local church and medical communities joining forces with local business leaders to provide convenient hospital care in the growing suburbs. When the federal Hill Burton program created a reservoir of construction loan in the 1950s, the group of town booster choose to apply for a construction loan to build a 100- bed facility. Its affiliation with the religious domination has never been formalized through ownership. Nevertheless, the charitable role of the hospital is taken seriously by the board of directors, which always includes one or two members of the denomination.
In the latter 1960s, increased revenues through Medicare program enabled the hospital to obtain further construction loans, and the hospital expanded to add 100 more beds and more supplicated inpatient services. Another wave of change swept through the health care industry in the 1980s, in response to a fundamental alteration in the way Medicare pays hospitals. Some hospitals consolidated, whereas Marcus Welby sought to diversify operations and increase its patient base by providing a wider range of services and much larger.
• Assingment 2.
• Choosing
Complete the Problem on page 459 in the text. Submit your solution to your instructor. See page 380 for a general description of Marcus Welby Hospital .
Marcus Welby Hospital has decided to form an HMO in which it wants to give physicians a major stake, in order to foster allegiance and encourage cost-effective treatment. You are consulted as a legal and management expert to advise the hospital on the consequences of forming the HMO as a nonprofit versus a for-profit entity. What are the relevant considerations with respect to tax exemption, the ability to raise capital, the role of physicians, and operational constraints
• Assingment 3
• Economic Credentialing
Complete the Problem beginning on page 484 of your text titled "Problem: Economic Credentialing" in a two page paper.. Submit the completed assignment to your instructor. See page 380 for a general description of Marcus Welby Hospital .
You are the lawyer for Marcus Welby Community Hospital . The administrator approaches you about how to amend the bylaws so that the hospital can get rid of doctors who are costing the hospital too much money under Medicare and HMO insurance. The administrator is concerned about which removal actions can be defended in court and which bylaw amendments are politically feasible with physicians. Advise the administrator on each of these options:
• Amend the Hospital Bylaws to give the hospital board authority to remove doctors from the medical staff for any reason, regardless of the medical staff's own recommendations, as long as the medical staff is first consulted.
• Amend the Medical Staff Bylaws to declare that an additional criterion for medical staff membership is to practice an efficient style of medicine that avoids wasting medical resources or providing unnecessary care.
• Forget about amending any bylaws. Instead, go after physicians who are economic losers based on their general medical competence and their unwillingness to be cooperative.
• Keep but supplant the entire medical staff structure by limiting who can practice in each department through one-year renewable contracts with the 200 best doctors out of the present 300.
Note that the assignment asks you to comment on each of the options, not just one. You may comment on one option being better than another for some reason, but be sure to comment on all the options
• Assingment 4
• Negotiating Contract
Complete the assignment beginning page 507 titled "Exercise: Negotiating a Managed Care Contract" in a two to four page paper. Submit the assignment to your instructor. For a general description of Marcus Welby Hospital see page 380 of the text. The assignment below makes some adaptations to the text to clarify expectations for your paper.
One of Marcus Welby Hospital 's (MWH) competitors established a successful IPA-model HMO two years ago. Fearing loss of patients, MWH is forming the Marcus Welby Managed Care Network (the Network). The objective is to sign up a number of physicians, mainly in primary care but also in common specialties, and then to market this network to these two sources: (1) large employers who provide health insurance to their workers on a self-insured basis; and (2) large regional or national insurance companies (such as Blue Cross) who then offer the network to their customers.
The Network is approaching each physician group individually and asking them to sign up nonexclusively, leaving them free to sign up with other networks or HMOs. The contract excerpts on pages 507 and following contain some common sticking points in these negotiations. Read each pairing of contract options and determine what is at stake. Then, assume the position of lawyer/negotiator for either (a) the Network or (b) a physician group who wants to sign up but is concerned about the details.
• Write in your paper what you would say in a meeting with a representative from the other side and
• Describe how you would hammer out a deal, either adopting one version or the other, or making any changes you want.
• You must therefore be able to write clearly about what the concerns of the other side would be
• assingment 5 Fraud and Abuse
• Complete the Problem on page 599 of the text as a two to four page paper. For a general description of Marcus Welby Hospital see page 380 of the text.
You are outside counsel to the Marcus Welby Healthcare Corporation, which among its other operations owns a durable medical equipment (DME) subsidiary, which sells equipment for home use such as crutches, wheelchairs, and oxygen concentrators. You learn that the subsidiary has had certain business practices about which you have some question under the Medicare and Medicaid Anti-Fraud and Abuse provisions:
• Salesmen regularly offer home health agency employees a "premium" whenever their clients order DME from the subsidiary.
• The subsidiary offers "rebates" to patients who use its equipment.
• The subsidiary pays hospital and home health agency personnel for assisting its patients in learning how to use its products.
Some arterial blood gas test results may have been "massaged a bit" by the DME in order to facilitate Medicare payment for oxygen concentrators
• Assingment 6
• Reverse Referral Fees
Directions
Complete the Problem at the top of page 599 "Reverse Referral Fees" as a two page paper. For a general description of Marcus Welby Hospital of the text. You are outside counsel to the Marcus Welby Healthcare Corporation (MWHC), which is concerned that expenses in some of its ancillary departments are causing it to lose money under Medicare and HMO insurance. It would like to start charging its hospital-based physicians for some of the costs of running their departments. Its current relationship with these physicians is one in which they have exclusive contracts to work in these departments, but no money changes hands between them. The hospital handles all billing, staffing, and overhead, but it bills separately for facility charges versus professional fees, and the physicians keep all the professional fees the hospital collects on their behalf. This is the standard practice in the industry. MWHC has the following suggestions for changing this arrangement:
• Have the radiology group pay for services, supplies, personnel, utilities, maintenance, and billing services furnished by the hospital. In a non-hospital, office-based setting, this package would normally cost about $100,000 to $150,000 per year. The hospital will charge the radiology group only $25,000 at first, but increase the charges to $100,000 over four years. Payments are due only if the hospital's gross revenue derived from radiology services exceeds $1,000,000 in the previous year.
• The hospital's clinical laboratory, under the direction of the pathology group, would pay the hospital a 20 percent fee for "specimen collection and handling services" when a physician on the MWHC medical staff orders a test from the clinical lab.