REGULATORY ENVIRONMENT IN HEALTH CARE

question 1.For Profit Joint Venture.

or this assignment, complete the Problem presented on page 432-433 (also below) in the text. See page 380 for a general description of Marcus Welby Hospital .

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?
  • question2.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
  • question 3.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. Support your advice with material from the text. 

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