Quick Road Map

timer Asked: May 2nd, 2017

Question description

In paragraph form, the roadmap is basically addressing the questions in order of my answers and what the purpose of it is. The road map is coming in right after the intro. Half a page should be good to be honest. There is a bit of material you need to know.

Case: http://www.csun.edu/sites/default/files/green-guar...

Questions: "green-guard-questions" doc

Answers: "gg answers" doc

I believe I'm missing one question involving statistical analysis.

GREEN GUARD CARE – QUESTIONS Use the guidelines for writing a report on the course web site and use the following questions as a guide: Q. 1. Using only the information provided in Exhibit 1, explain why further analysis of physician visits may be needed. Compare the profitability of hospital and surgical services to physician services, using the allocation of revenue that was given. Show the breakdown of the $250 premium using a pie chart. Does the allocation of the $250 per employee per month payment across the types of health care services seem reasonable, given the past two months’ utilization? Q. 2. The weekly utilization data is provided in the Excel file on the BUS 302 website. Create scatter plots to show the relationships between the number of employees, number of visits per week, and total physician costs. Calculate visits per employee and the cost per visit for each week. Calculate the mean, standard deviation, and coefficient of variation for these measures for this six-month period. Explain how these statistics are useful in understanding the trend in total outpatient physician costs per Arc Electric employee. Q. 3. Regression analysis can be useful to tease out the importance of various factors in explaining costs. a. Evaluate the relationship between visits per week and week. Interpret your regression results by discussing significance of the regression equation and magnitude of the estimated coefficients. b. Evaluate the relationship between cost per visit and week. Interpret your regression results by discussing significance of the regression equation and magnitude of the estimated coefficients. c. Compare the results from the two regressions and explain how they can be used to help Mr. Pasture in making his decision. Q. 4. Mr. Langdon referred to a national study of copayment levels. The important results of this study are provided in Exhibit 3. a. Calculate the price elasticity of demand for physician visits at each copayment level using the arc method. What does the data tell you about the price elasticity of demand for physician visits? How does this information help Mr. Pasture in making his decision? b. Using the six months of data provided in the Excel file, simulate the profitability of the physician services department if copayments are increased to $20 per visit. Repeat your analysis using a copayment of $25 per visit. Q. 5. Using the six months of data provided in the Excel file, calculate the percentage reduction in physician payments that would be required to achieve the same level of profits as in Q.4.b. Q. 6. In addition to the options suggested by his staff, Mr. Pasture recently read an article about rationing health care services as a method of controlling costs. The general idea of rationing is that more expensive treatments are excluded so that basic health benefits can be provided to a wider population. Health plans can implement rationing by limiting the types of services they will cover. While they commonly exclude coverage for experimental treatments and cosmetic surgery, many are now considering adding physical therapy, mental health services, and therapies that treat fatal conditions to the list of excluded services. Would you recommend that Mr. Pasture consider this approach? Discuss the ethical considerations.
Introduction Green Guard Care is a company that provides health care plans for the 5,000 employees of Arc Electric. Managed care plans are covered with a premium to compensate health care professionals, additional costs, and used to profit. Physicians are also paid for their asking fee for each visit. In these physician visits they are asked to make a copayment of $15 a visit. Louis Pasture is the Director of Strategic Planning and Forecasting for Green Guard Care. He is concerned in the position the Green Guard Care is with Arc Electronics and needs assistance with Green Guard’s situation. Marie curry delivered the summary of Arc Electric’s utilization and found that there had been a sharp increase of physician visits which may be costly and excessive. Alex Langdon conducted a study that competitors are increasing their use of mechanisms which include copayments, waiting periods, pre authorization requirements, and exclusions on certain health care services. He also found that charging a higher copayment which will reduce the amount of physician services. Faith Monroe disagrees and wishes consult with physicians to lower their rate. This however may lead to bad quality. For the roadmap of this report, we plan to analyze physician visits and the profitability of them and the $250 premium. We will prepare a scatterplot to show the relationship between the number of employees, visits per week, and total physician costs using the six-months of data. We will then develop a regression analysis to explain costs and the factors around them. Next we will calculate the price elasticity of demand for physician visits at each copayment level using the arc method and simulate the profitability if the copayments are increased. Lastly we will explain the ethical implications of rationing certain services in the healthcare plan and leave Mr. Pasture with the information he needs to make a decision. Physician Visit Analysis Based on our analysis, we took further action in inspecting the possible causes of a decrease or increase in potential physician visits within Green Guard Care and Arc Electric employees. A competitive advantage factors in the amount of benefits a group has over its competitors to gain superior profitability and maintain low costs. While a comparative advantage is attaining the ability to efficiently perform certain economic actions over other activities. Arc Electric has formed an agreement to impose a premium of $250 per employee a month within the 5,000 employees that are currently hired. The total received premium a month equates to $1,250,000. Taking a look at the cost incurred by physician visits, it is displayed that the allocated amount per month is $375,000. When looking back at physician visit costs during the month of July the amount incurred is below the given budget with a total of $337,900. In comparison to the month of August, the costs incurred is above the allowed budget at a whopping $391,450. Referring to our pie chart we display that even if the expenses of physician costs surpass the amount of budget given, the expenses can still be maintained by the other expenses and services. Utilization Analysis The scatterplot models explain the relationship between employee visits and costs as well as physician costs per employee. The linear regression line is to determine whether the variables are dependent to each other. The correlation between the scatter plots are all positive. In other words, as more employees join Green Guard Care and increase in visits will occur weekly. As visits increase, the total costs of physician visits will increase as well. A confidence level of 95% determines that a rise in physician use will rise linearly. Using descriptive statistics such as mean, standard deviation, and coefficient of variation to create a model between the relationship of employee visits and physician costs can explain future outcomes. As stated, a rise in employee’s joining Green Guard care will ultimately create a rise in total physician visit costs. Statistical Analysis (-) Copayment Analysis and Elasticity Using the arc method price elasticity of demand, we can see how sensitive demand changes as the price changes. If the price elasticity of demand is less than 1, the demand is inelastic which means that the price of the product or service will not affect consumer demand and that people will pay for the product or service at any relative price. If the price elasticity of demand is equal to 1, then the percent changes in price and quantity demanded are equal. A price increase of 1% will make consumers cut back the amount they buy by 1% and vice versa. If the price elasticity of demand is greater than 1, than the product or service is elastic and therefore the demand is highly sensitive to price changes. The arc price elasticity of demand is calculated using the formula: The formula will be used with the following table which are the copayment level and the average physician visits per capita: After plugging in the data, the results are: The results tell us that the demand for physician visits is inelastic and therefore will be in demand no matter how high the price goes up. The demand is not sensitive enough to make it elastic. This is possibly because physician visits are considered a necessity and are needed to maintain a healthy lifestyle. No matter how much the price is changed, people will still see a physician from time to time during the year. In the data we determine the average profitability of increasing the copayments to $20 and $25 by using the six-month data provided given to us. To determine the additional profit, you would take the number of visits per week that employees were visiting physicians and doctors and multiply each visit per week by the $5 and the $10 increase. From there we get the total amount from each of increase. After taking all the total and averaging the amount for the 25 weeks, the average increase in profits would be around $8,900 with a $20 copay and $11,160 with a $25 copay. Rationing and Ethical Dilemma An ethical dilemma that Mr. Pasture is facing is whether or not he should ration certain health care treatments in order to provide the basic health benefits to the wider population. The services affected and removed from the plan could potentially include are physical therapy, mental health services, and therapies that treat fatal conditions. The four relevant stakeholders identified would be (1) employees receiving health care plans, (2) insurance companies, (3) Arc Electric (4) medical professionals (Therapists, physical therapists, cosmetic doctors, and surgeons). If Mr. Pasture chooses or does not choose to consider this approach, there will be certain consequences. If Mr. Pasture chooses to ration services, Employees receiving health care plans would lose access to medical resources they may need, Green Guard would financially be safe and avoid having to charge higher premiums for the health pans, Arc electric would have a lower premium cost, and Medical professionals would lose patients. Under the utilitarian approach, the stakeholders that would be benefiting are Green Guard and Arc Electric and the stakeholders who lose are the employees and the medical professionals. In terms of the greater good to the greater amount, this is unethical. Under the rights theory, this option restricts people to medical services they may need so it would also be deemed highly unethical under that regard. If Mr. Pasture chooses to not ration services, employees receiving health care plans would have access to possible medical resources they may need, Green Guard will have to impose a higher premium for Arc Electric which may deter them away from doing business and cause them to look for another health insurance provider, and medical professionals would retain patients for their services. Under the utilitarian theory this option provides benefit to the greater good being the 5000+ employees as well as medical professionals. It hurts Green Guard and Arc Electric because they essentially carry the liability of the employee's’ health. If both parties agree to keep all of the services available to all, it will be costly to them, however they will be doing a big justice for a large amount of people. Ultimately it is up to the insurance provider Green Guard and Arc Electric if they wish to come to an agreement on a higher premium and lose some money over the well-being of their employees. Conclusion It appears that the health care plan established with Arc Electronics needs further development and adjustments. As Arc Electronic’s staff is increasing, so does the amount of visits to a physician. Each visit is costly and poses as a large expense for Green Guard. To fix this we suggest to increase the copayment price as the demand is inelastic. An increase from $15 to $25 is a fair amount and will be profitable for each party. It may slightly discourage excessive visits and for employees to stay healthy during the year and will be at a considerable price to compensate the physicians properly. We also suggest to not ration multiple services that the employees of Arc Electronics may need and to possibly negotiate for a slightly higher premium. If Green Guard can establish the need for healthcare and its advancements to Arc Electronics well enough, it may allow them to agree on a higher premium if it’s for the greater good of their employees.

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