Nature of Assignment: The relationship between three stakeholders (payers, providers, and patients) is often times in tension, yet for the system to work properly appropriate incentives must exist for all parties

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Nature of Assignment: The relationship between three stakeholders (payers, providers, and patients) is often times in tension, yet for the system to work properly appropriate incentives must exist for all parties. We have focused on the some of the risks that both providers and payers face when dealing with each other, particularly payment risk. Below is a fact pattern that I would like you to analyze using the knowledge you have gained thus far. After the fact pattern, there are two main questions that you will need to answer. Fact Pattern A large, multidisciplinary hospital system in a major city – called Anytown USA Hospital System (or “AUHS” for short) - is entering negotiations with a large, nationwide healthcare payer – The Country’s Best Payer’s (or “TCBP” for short) - who is newly offering a plan in AUHS's market. AUHS has never contracted with TCBP before, though it did see a somewhat regular volume of patients belonging to plans offered by TCBP through its emergency department, which is a major element of its services as a level 1 trauma center. The primary concern that AUHS has is creating a more consistent revenue base, which is critical to funding future expansion that the hospital has planned, including adding very specialized services that are not otherwise available anywhere in the geographic region. Additionally, AUHS’ contract with a major healthcare payer is up for renewal in another 12 months. That payer has indicated a desire to renew the contract, so the decision will fall to AUHS as to whether it wants to do so as well. TCBP, on the other hand, is a major player in the healthcare market but has never operated in AUHS’s region because, until recently, TCBP did not have a sufficient number of members enrolled in its networks. It has now expanded its patient base by enrolling dozens of major employers in the area in its networks. TCBP wants to make sure that its enrollees feel that they are being offered the best network possible in the area, though it also does not want to overpay for services that are otherwise available at a cheaper rate at smaller health care facilities. There are several health care facilities generally in the same area as TCBP that, collectively, offer the same services as AUHS, but not in a single location. TCBP does not have relationships with these providers either – yet – though as smaller providers they would likely be eager to be included in TCBP’s network going forward. TCBP is eager to ensure that its expansion into AUHS’s geographic area is favorable because it has invested significantly in building its base of enrollees in the area. Questions: Given the fact pattern, please answer the following two questions: -Do you believe that the payer and provider should enter into a contractual relationship? -First, analyze the question from the payer’s perspective. Should the payer enter into the contractual relationship? Why, or why not? -Secondly, analyze the question from the provider’s perspective. Should the provider enter into the contractual relationship? Why, or why not? -Choose one of the two parties and describe what your negotiation strategy would be to minimize payment risk for the party you have chosen. Format: Your answer should be three (3) pages long, single-spaced, and written in 12-point font.