Case #1 – Part C – Negotiation Exercise
For this exercise, you will compete as teams in a negotiation game designed to simulate how the exchange plans referenced in Case 1B will actually be built. Your team will be assigned a role, either as one of the hospital systems or one of the payers. The object is to negotiate the lowest cost (if you’re the payer) or the highest reimbursement (if you’re the hospital). The information below is available to all players. I will send you team-specific information as I assign the team. This team-specific information should be considered proprietary and not shared with anyone outside your team.
| Public Notes – information available to all | |
| 1 | Exchanges will attract enough purchasers to ensure 87,650 visits |
| 2 | General Pediatric will get 19,539 of those visits; University 1,187 |
| 3 | Hospitals have same cost structure as Year 0 – consider 100% fixed |
| 4 | Commercial, Medicare, Medicaid volumes all are as given in previous Case 1B |
| 5 | Exchanges rates are negotiable on a $/svc basis |
| 6 | If a payer can’t come to terms with either hospital, they won’t sell in the exchange |
| 7 | Likewise, if a hospital can’t come to terms, they won’t participate in the exchange with that payer (i.e. assume no volume from them) |
| 8 | Hospital winner = most net revenue from exchange business |
| 9 | Payer winner = lowest overall cost of exchange business |
| 10
|
Payer Scoring – 10 points for deal completion; 10 points for lowest cost (or 10 points to each if a tie); 5 extra points if your competitor doesn’t complete a deal |
| 11 | Hospital Scoring – 10 points for deal completion; 10 points for highest revenue (or 10 points to each if a tie); 5 extra points if your competitor doesn’t complete a deal |
| 12 | Collusion between teams is forbidden – all points are forfeit and a 10 pt penalty assessed if you’re caught |
| 13 | Normal negotiations happen between payers and providers in any format acceptable to both |
| 14 | There are no limits to how many times you can offer/counter. Deal is done when you both agree it is |
| 15 | Each team will turn in to Blackboard a summary of the terms agreed to – very simple, 1) do we have a contract and 2) what are the payment rates per service? Say more if you want, but that’s the minimum. |
| 16 | Mr. Banks will act as referee in the case of any disputes. His decisions will be considered final |
