Provider-MCO Negotiation


The working paper this poster is based off of can be found here: Bargaining Paper

Below is an interactive view which highlights the decision to accept patients from three types of providers (private, Medicare and Medicaid) as a function of λ0. You can adjust the price ratios and the share of patients of each type.

If the frame does not load below, access the worksheet directly here

Do physicians behave like this?

  • Mastering Patient Flow by E.W. Woodcock: Consider eliminating contracts with insurance companies that pay you less
  • Physician Practice Blog: Stop accepting that low-paying payer. It may seem counterproductive, but you can fill that spot with a higher-paying payer class, and still come out on top.
  • Practice Management Resource Group: “Each time a new managed care contract comes across your desk, part of the evaluation process is to determine how the added patients will impact your payor-mix. Will these patients increase or decrease your expected collections? Will they displace higher paying patients?”
  • The Mayo clinic recently mentioned difficulties with Medicaid / Medicare patients crowding out more profitable private patients.

Physician’s foundation survey: Do you now have the time and resources to see additional patients in your practice while still maintaining quality of care? Yes = 31%

Values for the parameters:
In a statement provided to Modern Healthcare, the Mayo Clinic said that Medicare and Medicaid beneficiaries accounted for half of their services.
Medicaid and private insurance carriers account for 15% and 33% of total health care expenditures, and 19% and 63% of the insured population
Among patient revenue sources at the 203 hospitals examined in 2013, a median of

  • 44.3 percent came from Medicare
  • 12.9 percent came from Medicaid
  • 32.1 percent came from commercial payers
  • 7.6 percent came from self-pay

The average hospital occupancy rate is 64 percent (Medicare Payment Advisory Commission, March 2014)
Private payers average between $1.15 and $2.35 per $1.00 Medicare spending, depending on procedure group and place of service.