The Fable of "The Multi-Specialty Physician Practice and the Insurance Carrier."
In this fable, physician practice sells to a vertically integrated insurance carrier.
This physician practice used a vendor--called Vendor A--to perform a particular service for certain patients. Vendor A charged $300 per patient per day.
Everyone was happy. The patients were happy. The physicians were happy. Vendor A was happy.
BUT... the vertically integrated insurance carrier also owned a vendor--called Vendor I--that performed the same service as Vendor A, except Vendor I charged $800 per patient per day.
After buying the physician practice, the insurance carrier replaced Vendor A with Vendor I to increase their overall revenue... all while increasing healthcare cost.
BUT, There is MORE...
The insurance carrier had negotiated an Earnout with the physician practice whereby the practice was to receive future payments from the carrier based on future profits of the practice.
However by installing Vendor I, the insurance carrier diminished the profitability of the practice and therefore, decreased the earnout payments that they needed to pay.
The insurance company won DOUBLE.
THE END
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3 фев 2024
