Formation of medical and hospital groups.

The first impression of most physicians and hospitals when dealing with managed care companies (MCOs) is that the size or "bigness" of the MCO is a major factor in the success of the MCO in negotiating contracts. This is only true to a degree. Physicians and hospitals have developed a tendency to make an unqualified bolt to also be "big", to put themselves on a more equal negotiating footing with MCOs. They should consider first the circumstances associated with organizational growth that lead to an effective outcome versus those that lead to failure. Effective outcomes happen because local market share can be controlled; management data systems that work are in place; and senior management has depth as well as maturity.

Cost management strategies for carotid endarterectomy.

BACKGROUND: We developed a model for capitation and global pricing for carotid endarterectomy. METHODS: A care algorithm for diagnosis, perioperative management, and postoperative care using cost data was developed. Perioperative care charges were extrapolated from a 1-year experience and applied to models to determine pricing for a 1-year global fee and a 5-year capitated contract. RESULTS: Global pricing was estimated at $12,071 per patient while a capitated price for 5-year care was $17,175. Based on the age mix of the population, a per member, per month cost could be calculated assuming a frequency of 414 procedures per 100,000 patients over age 65 and 31 procedures per 100,000 patients under 65. Sources of costs were extensive preoperative diagnostic testing, particularly angiography, brain imaging, and cardiac evaluation. CONCLUSIONS: Global pricing and capitation are both feasible for carotid endarterectomy. Each approach has unique risks and benefits.