Fiscally Sustainable Strategies for Seamus Company

Health Maintenance Organization (HMO) 

The Seamus Company should consider shifting to a health maintenance organization (HMO) as one of the fiscally sustainable strategies for shifting from the current fee-for-service model. The HMO model is an effective strategy for preventing and treating illnesses (Lee & Lee, 2020). The preventive role of the HMOs will ensure that medical costs are lowered, thus enabling the firm to save on costs. Besides, the HMO model will allow Seamus to gain more control over its operations since it necessitates patients to consult their primary physician before being allowed to access services from other medical workers. 

Preferred Provider Organization (PPO) 

The preferred provider organization (PPO) would also be another option for Seamus Company in its quest to transit to a managed care organization model. One of the advantages of PPOs is that community members enjoy affordable care provided that they use the PPO network (Lee & Lee, 2020). Moreover, members do not need to be referred to access specialist services (Brown & Crapo, 2014). Therefore, they save on costs since referrals usually require one to book an extra appointment that translates to more expenses. Another merit of the PPO model is that members can choose their preferred service providers. PPOs also allow members who can afford specialist services to get such services even if the providers are not part of the PPO network. 

Point-of-Service 

The point-of-service model is another fiscally sustainable strategy that Seamus Company can adopt to replace the fee-for-service model. POS tends to combine characteristics of the PPO and HMO models. One of the advantages of the point of service model is that it saves on costs since it is keen on disease prevention, just like the HMO. However, it tends to be more expensive when members choose to seek providers who are not within their network, similar to the PPO model (Lee & Lee, 2020). Therefore, although the POS gives members the freedom to choose their providers, they will incur more costs related to tax expenses that come with services outside the network. On the other hand, those keen on cutting on expenses can choose to seek services only within their circle since there are no tax deductions in such cases. 

Fiscal Management Principles 

As Seamus works towards doing away with the fee-for-service model, it needs to integrate financial management principles into its plans. One of the factors that it has to consider is cost, which encompasses every action or service that requires financial expenditure. The organization needs to cut costs as much as possible to gain more profits and build its investment capital. Control is also an important financial management principle. Seamus should govern how its physical and monetary resources are used to ensure wise utilization and preservation for future investments. The firm needs to be sustainable in resource use to ensure that future generations can enhance its continuity using the available resources. Integration of financial management principles will enable Seamus to lower costs for its clients and improve its health services quality. 

Cost Reduction Mechanisms 

The proposed strategies for transition from a fee-for-service model to managed care organization align with Seamus’s goals of making its health insurance schemes more affordable. The present system whereby members pay for every service is detrimental to employees and the firm’s bank account. (Zuvekas & Cohen, 2016) Whenever providers require patients to get more tests or appointments, they get the opportunity to gain more money from the services they offer. Besides, members do not get preventive care and are more likely to fall sick in the future, meaning the company accounts for any related losses. However, the managed care organization strategies are more affordable since they focus on prevention apart from treatment. 

Benefits of Adopting HMO 

The HMO will ensure that Seamus cuts its expenses and provides better quality of services. HMO approximates the number of services that employers will use every year. The utilization risk is that every member may ultimately consume more services compared to what was expected initially. The employer accounts for the utilization risk in the current fee-for-service model since they have to pay for the extra costs. 

More service benefits for Seamus will translate to merits for both the firm and the employees. One major advantage is lowered healthcare expenses in the long run. Services geared towards disease prevention, such as checkups on various illnesses, minimize the chances of disease occurrence in the future. Considering that prevention costs are less than those associated with treatment, the proposed strategies are more affordable (Brown & Crapo, 2014). Moreover, when employees become sick less often, productivity increases since few or none of them may have to ask for sick leaves. Increased absenteeism leads to extra costs of hiring more workers, requiring training to orient the new workers who could either be permanent or temporary. On the other hand, when employees are less likely to be away from work, there is increased efficiency since they are more motivated to work because of their good health and their numbers enabling work to be completed on time. Also, it will improve the customer satisfaction levels, increasing the sales as they will now consume more services. 

Although increased service benefits may be highly advantageous to Seamus, it also has its drawbacks. For instance, there is a possibility that some employees may fail to utilize the services that the company has paid for since the employees cannot be compelled to use them (Zuvekas & Cohen, 2016). As a result, the firm will experience a great financial blow by incurring costs that do not yield their intended purpose. Besides, another demerit of increased service benefits is that employees may need some time away from work to use the services. No matter how little that time may be, it will affect productivity and efficiency in different organizational units. Additionally, workers could also receive services that exceed what was accounted for in the plan. In such a case, the company will pay for the extra service benefits enjoyed by the workers, translating into more expenses for the firm. 

Whenever an employee uses more service benefits, the company enjoys several advantages. One of the merits is that the firm will have healthier workers, leading to more productivity since there will be fewer workers taking sick leave. Thus, health is directly proportional to quality work output. Moreover, increased productivity will translate into high-quality output as workers get adequate time to innovate new ideas. As a result, the firm’s sales will increase due to high customer satisfaction and customer retention. Therefore, good health leads to more sales and organizational success (Brown & Crapo, 2014). Employees will also require less time away from work because of poor health, and they will have more opportunities to work and increase sales. Besides, increased usage of service benefits will lead to less employee turnover. As a result, Seamus will not have to train other workers to replace sick ones. 

External Healthcare Partnerships 

External healthcare partnerships have the potential of yielding several financial benefits to the Seamus Company. The first advantage is that employees will visit the hospital less often since they get holistic healthcare services. According to Patel et al. (2016), external healthcare partnerships promote holistic medical services that can meet patients’ needs. Besides, they also offer preventive care that may include free gym services and health lectures that will, in the long run, lower the chances of contracting diseases. Gym exercises, for instance, will ensure that employees have healthier bodies, thus lowering healthcare costs for Seamus Company. Thus, external healthcare partnerships will allow employees to enjoy healthy lives, ensuring that the company does not lose employees due to ill-health. 

Besides the benefits that external healthcare partnerships may yield, they may also have a few demerits. Investing in them will require pooling its financial resources. However, there is no assurance that workers will utilize them, which means that money may be wasted if the services are not used. Moreover, the firm will not get any returns for investing in external healthcare partnerships if left unutilized (Some et al., 2020). On the other hand, participating in the plans does not necessarily mean that workers will not visit the hospital since preventive care and treatment may necessitate visiting a physician or a healthcare specialist. Moreover, preventive measures such as gym exercises do not eliminate the chances of contracting diseases but only minimize them. For instance, genetic diseases are bound to occur regardless of the measures that the company may put in place to prevent illnesses. Therefore, external healthcare partnerships translate to more costs for Seamus in addition to other expenses. 

For sustainable growth, the company must reduce its operating costs as much as possible. The fee-for-service model has been consuming many financial resources that need to be reduced (Patel et al., 2016). The external healthcare partnerships ensure that employees go to the hospital less often and use most of their time working. Besides, preventive care ensures that workers fall ill less often, therefore, lowering treatment costs. Therefore, the external partnerships lower investment costs in the long run and enhance efficiency and productivity at the company. 

The Seamus will make the best decision if it chooses external health care partnerships for its employees. Such plans enhance workers’ health compared to even a single healthcare visit annually to a personal physician (Patel et al., 2016). Apart from boosting their physical health, it lowers stress, thus improving their mental health. When employees are physically and mentally sound, they will perform optimally, leading to increased productivity. Gym exercises not only prevent disease but enable one to relax and take a break from work. As a result, employees’ morale will increase. Given that health and wellness are vital determinants of employee output investing in it will be worth the effort given the numerous benefits and returns that the company will obtain. 

Conclusion 

Transitioning from a fee-for-service model to a managed care organization is vital for Seamus. It can either use a health maintenance organization, a preferred provider organization, or a point for service model. Regardless of the model that the company will decide to adopt, it is evident that it will realize several benefits by discarding the fee-for-service model. The employees’ overall health will improve since there will be fewer hospital visits than in the current situation. As a result, they will have better physical and mental health and greater morale to work. However, it is worth noting that the MCO model may not achieve its purpose if employees choose not to utilize it. In such a case, the investment may be a waste of money to the company. Despite the few drawbacks that are likely to result from external healthcare partnerships, they are usually worth the investment. Given the vital roles that employees play in ensuring organizational success, it is crucial to invest in them to achieve organizational growth. 

References 

Brown, B., & Crapo, J. (2014, July 28). The key to transitioning from fee-for-service to value-based reimbursement.  Health Catalyst . https://www.healthcatalyst.com/insights/hospital-transitioning-fee-for-service-value-based-reimbursements 

Lee, E. K., & Lee, J. (2020). Competition strategy for healthcare insurance plans. 2020 IEEE International Conference on Bioinformatics and Biomedicine (BIBM) , 1, 1972-1978. https://doi.org / 10.1109/BIBM49941.2020.9313177 

Patel, K., Presser, E., George, M., & McClellan, M. (2016). Shifting away from fee-for-service: Alternative approaches to payment in gastroenterology.  Clinical Gastroenterology and Hepatology ,  14 (4), 497-506. https://doi.org/10.1016/j.cgh.2015.06.025 

Somé, N. H., Devlin, R. A., Mehta, N., Zaric, G. S., & Sarma, S. (2020). Stirring the pot: Switching from blended fee‐for‐service to blended capitation models of physician remuneration.  Health Economics ,  29 (11), 1435-1455. https://doi.org/10.1002/hec.4145 

Zuvekas, S. H., & Cohen, J. W. (2016). Fee-for-service, while much maligned, remains the dominant payment method for physician visits.  Health Affairs ,  35 (3), 411-414. https://doi.org/10.1377/hlthaff.2015.1291