Question

1. Identify the major disadvantage of a sole proprietorship or a partnership. 2. How does a corporation differ from a partnership? 3. What conflicts exist when a Nico provides bonuses to physicians for providing fewer tests?

Answer 1

Ans)1) A partnership has several disadvantages over a sole proprietorship: Shared decision making can result in disagreements. Profits must be shared. Each partner is personally liable not only for his or her own actions but also for those of all partners—a principle called unlimited liability.

2) A legal partnership is a contractual relationship involving close cooperation between two or more parties having specified and joint rights and responsibilities. A collaboration involves cooperation in which parties are not necessarily bound contractually.

3) MCO-most pay their network physicians on a capitation basis (pays the physician's practice a fixed fee, generally an actuarial per-member-per month, PMPM, dollar amount)
-physicians may also be responsible for costs of referrals, laboratory tests, and hospital services
-so shift costs of care, and risks associated with these cost, directly onto physician practices. put physician's earnings at risk
-if care provided under such arrangements costs less than the fixed dollar plan payment, the practice makes a profit. if instead care costs more than the payment, the practice must make a lost.

- Managed care term: skimping:
providing less than the optimal quantity of services for any given condition in a given time period
Managed care differs from FFS care--Dumping, Creaming, and Skimping:
hospitals and other FFS providers are paid for each treatment in order to cover costs. HMOs are paid fixed rates per person irrespective of the amount of treatment used.

because an individual's HMO's costs will depend on the average health of its clientele, practices such as dumping (unhealthy patients) and creaming (healthy patients) may occur. if an HMO can identify and dump patients who are suckers, it can improve the average health of its clientele and hence lower its costs

This behavior contrasts with cost-based FFS care. every penny spent on even the most severe case theoretically is paid back to the hospital, the cost-based hospital will not dump anymore.