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You are a committee formed to make a recommendation, to the CEO and Board of Directors, regarding a potential move to BBI. You are in a larger city, so there are two Level 1 hospitals available to your employees, and a BBI - approved ASC is also located where it will be convenient to most of the company's employees. There is another, much smaller MCO, Amerihealth, operating in the area. While Amerihealth's current premiums are 8% higher than those quoted by BBI, it offers lower copays, deductibles, and out-of-pocket limits than BBI. Because yours is a large company, BBI has offered a price lock with the new contract, holding all premiums, deductibles, copays, and out-of-pocket limits constant for the first two years of the five-year contract. In contrast, Amerihealth is offering your company two-year contracts with the opportunity to renegotiate terms every year. Amerihealth does not have the name recognition that BBI enjoys, and being a lesser-known MCO, it is accepted by far fewer providers than BBI. Further, the lack of name recognition could hurt the recruitment of new employees.

You are a committee formed to make a recommendation, to the CEO and Board of Directors, regarding a potential move to BBI. You are in a larger city, so there are two Level 1 hospitals available to your employees, and a BBI - approved ASC is also located where it will be convenient to most of the company's employees. There is another, much smaller MCO, Amerihealth, operating in the area. While Amerihealth's current premiums are 8% higher than those quoted by BBI, it offers lower copays, deductibles, and out-of-pocket limits than BBI. Because yours is a large company, BBI has offered a price lock with the new contract, holding all premiums, deductibles, copays, and out-of-pocket limits constant for the first two years of the five-year contract. In contrast, Amerihealth is offering your company two-year contracts with the opportunity to renegotiate terms every year. Amerihealth does not have the name recognition that BBI enjoys, and being a lesser-known MCO, it is accepted by far fewer providers than BBI. Further, the lack of name recognition could hurt the recruitment of new employees.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are a committee formed to make a recommendation, to the CEO and Board of Directors, regarding a potential move to BBI. You are in a larger city, so there are two Level 1 hospitals available to your employees, and a BBI - approved ASC is also located where it will be convenient to most of the company's employees. There is another, much smaller MCO, Amerihealth, operating in the area. While Amerihealth's current premiums are 8% higher than those quoted by BBI, it offers lower copays, deductibles, and out-of-pocket limits than BBI. Because yours is a large company, BBI has offered a price lock with the new contract, holding all premiums, deductibles, copays, and out-of-pocket limits constant for the first two years of the five-year contract. In contrast, Amerihealth is offering your company two-year contracts with the opportunity to renegotiate terms every year. Amerihealth does not have the name recognition that BBI enjoys, and being a lesser-known MCO, it is accepted by far fewer providers than BBI. Further, the lack of name recognition could hurt the recruitment of new employees.
Transcribed Image Text:You are a committee formed to make a recommendation, to the CEO and Board of Directors, regarding a potential move to BBI. You are in a larger city, so there are two Level 1 hospitals available to your employees, and a BBI - approved ASC is also located where it will be convenient to most of the company's employees. There is another, much smaller MCO, Amerihealth, operating in the area. While Amerihealth's current premiums are 8% higher than those quoted by BBI, it offers lower copays, deductibles, and out-of-pocket limits than BBI. Because yours is a large company, BBI has offered a price lock with the new contract, holding all premiums, deductibles, copays, and out-of-pocket limits constant for the first two years of the five-year contract. In contrast, Amerihealth is offering your company two-year contracts with the opportunity to renegotiate terms every year. Amerihealth does not have the name recognition that BBI enjoys, and being a lesser-known MCO, it is accepted by far fewer providers than BBI. Further, the lack of name recognition could hurt the recruitment of new employees.
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