Reference no: EM133244535

Question - Allen Smith is a recent graduate of one of the most reputable schools in the North East Region. He completed his Master's in Health Administration and his undergraduate studies in Economics. Allen has no work experience in health administration except for the internship he completed with a small physician office as part of his capstone training.

Upon graduation, Allen was offered a job as a practice administrator in Buffalo, New York with the United Physician Group (UPG). The long-term practice administrator, John Delaphena, has decided to retire by the end of the month after being with the practice for 20 years. He believes health care has become more challenging than ever before. He believes hiring a new graduate as a practice administrator would be a good option to assist the practice in overcoming these new challenges. Mr. Delaphena interviewed Allen and found him to possess a high level of analytical and problem-solving skills. He discussed the interview results with Dr. Wilson, the Chief Medical Officer, and they decided to give Allen a chance to demonstrate his managerial skills.

UPG is a small physician group practice which consists of five physicians. The group was founded by Dr. Larry Wilson 20 years ago along with John Delaphena who started out as an administrative assistant. Dr. Wilson dedicated 20 years of his professional life to his practice with the hope of getting a rewarding return on his investment once he decides to sell his practice. Dr. Wilson is being offered a non-compete offer from Heathway Medical System to buy his practice. All the staff will continue to work in the practice for another five years before management restructuring takes place. Dr. Wilson is worried the Affordable Care Act (ACA) will have a negative impact on small medical groups like his. Such an impact could eventually force them to close the practice and be hired by larger medical groups or an affiliated hospital, such as Heathway Medical System. Dr. Wilson has requested Allen to study the law and to explore different options UPG has in terms of preparing for the impact of the ACA.

UPG represents five different specialties - primary care, physical medicine, orthopedics, neurology, and orthopedic surgery. In addition to the physicians, the group has five other employees: a front desk person, an RN, an LPN, a billing coordinator, and a medical assistant.

Dr. Wilson talked to Dr. Smith, the practice neurologist, who is seven years younger than Dr. Wilson, about the possibility of buying Dr. Wilson's share of the practice. Dr. Wilson was going to transfer the leadership role to Dr. Smith once Dr. Wilson retired. Dr. Wilson proposed to stay as a non-executive chairman to help Dr. Smith through the transition phase. Initially, Dr. Smith showed interest in taking over the group, but once the ACA was passed, Dr. Smith also had concerns about the future of their practice. He has requested Dr. Wilson wait until they can find out more about the impact of the ACA on medical groups.

Dr. Adams, an orthopedic surgeon, has a strong relationship with Heathway Medical System and its chair of Orthopedic Surgery at its hospital. He made a recommendation during their last quarterly meeting to consider an offer from Heathway Medical System which enables them to sell the practice to Heathway Medical System and become employees of the hospital for five years. However, the buyout proposed by Heathway Medical System was 28% below the expectations of Dr. Wilson, so he rejected the offer. Dr. Adams things that it is the only option available to them since the practice is doomed to fail with the cuts in reimbursement and growing regulations of the Centers for Medicare and Medicaid Services (CMS). Over the past year, the practice was highly affected with a 15% cut in Medicare reimbursement; 70% of the practice patients are from Medicare.

Dr. Wilson was greatly concerned about the future of the practice and the future of his investment. That concern made him seek advice and recommendations from Allen regarding the best option to pursue in handling this dilemma. Allen has promised Dr. Wilson that he will do his best conducting market research, reviewing the ACA, and conducting financial analysis to identify the best options for the group. Allen, however is leaning toward selling the practice since those who are in a similar role like his and who are working for Heathway Medical System make $15,000 more in annual compensation than he currently makes with the practice.

Create a thread responding to the following:

1. What kind of financial information is essential to identify, gather, and study?

2. Do you think there is a conflict of interest in Allen's case? Please explain why.

3. Which of the options available to UPG seems to be the best? Please explain why.

Modified from: Buchbinder, S. B. & Shanks, N. H. (2017). Introduction to Health Care Management. Burlington, MA: Jones & Bartlett Learning.