Econ427 Cases

“American Well: The Doctor will E-see You Now” by Ofek and Laufer

American Well provides a platform for improvement of the quality of the patient-physicians interaction. Using the internet and telephony, patients with non-emergency healthcare needs connect with their physicians and receive advice and diagnosis without the traditional face-to-face interaction (Ofek and Laufer 1). This platform is effective because it has the potential of reducing cost of health care delivery, contributing to an efficient and effective system of health care delivery and creating opportunities for more revenue for the providers. Although the innovative platform has the capability of serving insurers, employers, providers, and patients, the company has so far marketed to the health insurance providers in the USA. Now, the company considers promoting its second-generation product, which allows real-time connectivity of the primary care physicians (PCPs) and specialists (Ofek and Laufer 4). My view is that technology transforms the traditional relationship between the patients and the health care service providers. The health care value chain provides immense opportunities for the innovative information technology companies to harness. It is my view that pursuing opportunities in the health care delivery networks, including hospitals, pharmacies, and chains of clinics will provide American Well to assert their position as a fully integrated and diversified online care company. This case is quite insightful in highlighting the role and opportunity of technology in fostering the process of care and enhancing the quality of healthcare delivery.

“Steward Health Care System” by Higgins and Fisher

Steward Health Care Systems (Steward) had established itself as an effective company in the reduction of health care costs and improvement of quality of care. Thus, the Centers for Medicare and Medicaid Services (CMS) Innovation Center had selected Steward to pioneer as Accountable Care Organization (ACO) to link the Medicare payments with patient outcomes by ensuring the healthcare providers collaborate in patient treatment (Higgins and Fisher 1). The expected outcomes include reduction in treatment costs and improvement in quality of care. Steward’s main goal was to create value for the health care providers and patients through transformation of health care delivery systems (Higgins and Fisher 7). Steward had to decide whether the ACO model had attained the intended goal of reducing costs and enhancing care for Medicare patients (Higgins and Fisher 8). My view is that the ACO model was the best intervention for the healthcare providers and the patient outcome. Sharing information and records for patients was an effective way of ensuring the patient access to proper, adequate, and appropriate care. The model fostered reduction of medical errors and duplication of treatment, which subsequently lowered treatment costs and improved patient outcomes. This case study raises important insights into the collaborative approach to treatment of patients and its potential to create value by fostering cost, quality, access, and sustainability of patient care.

“THG Management Services” by Herzlinger and Lurding

THG Management Services saw an opportunity to develop Health Maintenance Organizations (HMO’s) in the Southern United States region. The company could leverage this opportunity by contracting to manage the Nashville-based Academic Medical Centers (AMC) model for Medicare, Medicaid, and Commercial HMO’s (Herzlinger and Lurding 1). The strategic decision issue was on whether to manage and operate the HMOs for the interested organizations or to own and bear the insurance risks for the HMOs as they sought to expand. Managing risks presented the opportunity of establishing a low capital-intensive start-up and achieving positive revenue in first quarter (Herzlinger and Lurding 3). The costs of managing risks included contract termination, bureaucratic decision-making, and conflict of interest. Owning the risk provided opportunity for autonomy and focus on shareholder value (Herzlinger and Lurding 4). Owning risks provided the opportunity to diversify the risks and enabled THG to retain the margin accruing in markets with immature managed care (Herzlinger and Lurding 5). As for me, it would be appropriate for THG to pursue risk ownership and establish their HMO’s. While owning the HMO’s would imply assuming high risks, it would also provide an opportunity for greater returns in case the venture has turned out positive and its would enable THG to establish and build their brand on the market. This case provides several insights regarding the art of balancing the costs and benefits while trying to make strategic decisions regarding risk management and risk ownership.