FNCE 531 – Advanced Managerial Finance for Healthcare
HW2 – Chapter 4
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SOUTHEASTERN SPECIALTY, INC. (SSI), is a for-profit corporation formed by physicians in the College of Medicine at Southeastern University. SSI, with more than 600 physicians, provides the medical staff for University Hospital. In addition, SSI staffs and administers a network of 25 ambulatory care clinics and centers at ten locations within 50 miles of the hospital. In 2009, SSI generated more than $500 million in revenues from about 40,000 inpatient stays and 750,000 outpatient visits. More than 70 percent of SSI’s revenues come from inpatient stays, but this percentage has been declining, and by 2014, more than half of SSI’s revenues are expected to stem from outpatient services. As improvements are made in technology and third-party payers continue to pressure providers to cut costs, more and more inpatient services will be converted to outpatient and home care. For example, in 1999, 80 percent of SSI’s ophthalmology surgeries took place in University Hospital, while in 20009, 80 percent were conducted in outpatient settings.
Although SSI has traditionally provided only specialty services, in 2004 it instituted a “personal physician services” program, in which patients can receive both primary and specialty care from College of Medicine physicians. This was the first step in SSI’s drive to develop an integrated delivery system, which offers a full range of patient services. Now that the system is in place, SSI is contracting with managed care plans to provide virtually all physician services required locally by plan members. Furthermore, SSI is examining the feasibility of contracting directly with employers and hence bypassing managed care plans, but no decision has yet been made. Indeed, state insurance industry