Supply of Primary Care Workforce
Note: The Instructor will post the document for this Assignment by Day 1 of Week 4.
To deliver health care services, an ACO needs to create a competent workforce that can provide health care to the patients that are in the ACO. Some integrated ACO entities already have employed physicians and mid-level providers that receive salaries from the organization, whereas other non-integrated ACO entities need to invest in external relationships with independent physicians and other providers. Since ACOs do not have managerial control over non-employed providers, additional controls and incentives may be necessary to ensure that efficiency is maximized. ACOs also need to consider the number and mix of specialists (e.g., family practice vs internal medicine) and mid-level providers (e.g., physician assistants and nurse practitioners) in delivering primary care services that can promote value. Maximizing value requires appropriate workforce decisions on supply and incentives to encourage providers to minimize costs. For this Assignment, examine the Week 4 Assignment document and consider the efficiency in the supply of health services.
Scenario: Your hospital has an opportunity to participate with an Accountable Care Organization (ACO) contract with 50,000 ACO patients. The ACO patient population expects about 5,000 avoidable hospitalizations per year with a potential savings of $50 million, which will be shared 50% revenue to the insurer and 50% revenue to the hospital. The ACO patient population will require an average of 6 office visits per year, and 300,000 total office visits will need to be supplied by your primary care workforce
To prepare for this Assignment:
Review the scenario and Week 4 Assignment document provided to you by the Instructor. Based on the financial data, conduct a financial projection (revenues, expenses, and profit) that analyzes the efficiency of the supply of health services.
In a 2- to 3-page Word document that includes tables and/or calculations, make recommendations on the following: 1) number of physicians and nurse practitioners needed; 2) reimbursement method: salary or fee-for-service; 3) recommendations for financial incentives to address the challenges of supplier-induced demand and how to ensure efficiency. Interpret the net profit from the ACO contract based on your recommendations. Explain the rationale behind your recommendations, including the impact made by your financial calculations.
Financial Data ACO revenue: Number of ACO patients 50,000 Potential savings: Number of avoidable hospitalizations per patient 0.1 Total avoidable hospitalizations per year 5,000 Cost per avoidable hospitalization $10,000 Total cost of avoidable hospitalizations $50,000,000 Demand for healthcare/utilization: Number of office visits per patient 6
Total office visits per year 300,000
Supply of workforce/expense:
Employed providers (salary) – Physician salary per year $200,000 Nurse practitioner salary per year $100,000
Contracted providers (fee-for-service) – Physician fee per visit $100 Nurse practitioner fee per visit $50
Productivity: Physician visits per year 3,000 Nurse practitioner visits per year 2,000
Financial incentives: Salary bonus to ensure efficiency 10% Bonus fee per visit to ensure efficiency $1