A1. Three (3) fiscally sustainable strategies for Seamus Company from the perspective of a CFO, moving away from a fee-for-service model to an MCO model.
1) Adopt a Health Maintenance Model (HMO): As CFO one fiscally sound strategy to lead Seamus to a place where they save money on health insurance costs would be to adopt an HMO model, or a model in which our health insurance plans limit coverage to care from doctors who work for or contract with our HMO plans. This would much more affordable than the prior fee-for-service plan in that most services are provided for a fixed fee, rather than individually. HMO policies include a gatekeeper philosophy that makes doctors and providers the point men and decision makers when it comes to healthcare utilization.
2) Adopt a Preferred Provider Organization Model (PPO): As CFO another alternative route to fee-for-service plans exits in the adoption of a PPO system. The PPO model would save money compared to the fee-for-service system in that each medical care service rendured by medical professionals and facilities could be provided to subscribed clients at reduced/negotiated rates. Employees may prefer this to the HMO model due to the fact that more patients are able to keep their preferred doctor, but gain a discount if available. PPOs do not use a gatekeeper format as HMO policies do.
3) Adopt a Point-of-Service Model (POS): The Point-of-Service model may be the best of both worlds when it comes to choosing between an HMO or PPO insurance model. In the POS system the patient is presented a limited amount of choices, but a great discount in cost and out of pocket. Employees will be able to select providers from outside the POS network, but at a larger cost than if they select one inside the network provided.
HMO Plan: If we are to move towards a gatekeeper HMO plan I recommend Seamus factors in the fact that HMO plans have significant cost-saving measures built into them due to the fact that there is no longer a fee-per-service format, but rather one that rewards wellness and includes co-payments.
While there are little tax deductible considerations or any other tax advantages, HMO plans pay-it-forward by making premiums lower and plans more affordable. This, obviously, is our main goal. Add everything together and an HMO plan greatly impacts better fiscal management health as the process of planning, directing and controlling financial resources is much easier.
PPO Plan: Recommending a PPO plan has much to do with the fact that no gatekeeper physicians are involved. Patients (employees) are more free, thus can keep their previous providers if they are willing to pay a tad more at times. While there are not many tax-based reasons to choose a PPO plan, there are fiscal management reasons behind the move. Management will have a much easier time tracking finances and predicting future expenses than we would with the old pay-service model.
POS Plan: Point of service plans may be the b...