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Cases in Healthcare Finance

Case 11 Solution

CASE 11 SOLUTION (8/3/05)

Copyright © 2006 by FACHE

BANGOR FAMILY PHYSICIANS
Pay for Performance

Case Information
Type
This case is nondirected, in that it does not contain a specific list of questions that students must answer. Rather, the case contains general guidance or concerns expressed by various parties that students should consider when developing their solutions. If you, as the instructor, want to convert this case to a directed case, and hence provide your students with very specific guidance questions, you can copy and make available the applicable questions for this case contained in the Case Questions section of the online Instructor’s Manual.

Purpose
This case analyzes alternative pay for performance compensation plans for group practice physicians. Several different approaches are used to measure economic (financial) performance. In addition, compensation can be based on both financial and non-economic factors. Students must not only consider the impact of various approaches on compensation amounts, but also consider the issues of fairness and creation of incentives that benefit the practice as a whole.

Complexity
The case is moderately complex, especially for students who have little actual work experience and hence a limited understanding of “real world” compensation. There is a lot of number crunching, but the model does most of the work.

Model Description
The model (filename CASE11 for students and INCASE11 for instructors) takes much of the busywork out of the case, so it enables students to spend more time on interpretation and evaluation. Like most case models, the student and instructor versions differ only in regards to the input data. The instructor’s version contains the complete base case inputs, while these inputs are zeroed out in the student version of the model.

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