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Provide a simple one-page answer to the question. You willbe graded on the quality(correctness and effectiveness) of your answer. 

 


    Considera metropolitan hospital market that is dominated three systems (i.e. thesefirms satisfy more than 80 percent of demand in the market). System A hasfacilities located throughout the entire market and enjoys approximately a 30percent market share. System B has facilities in the city and northern suburbs,while the System C has facilities in the city and the western suburbs. Themarket has a number of large employers and employees live in the center cityas well as both the Northern and Western suburbs. On average, employees livingin the suburbs commute 30-45 minutes into the city, and it is hard to drivebetween the suburbs quickly. 

 

This market has two dominantinsurers and a few smaller insurance plans that earn little profits. Inaddition, System B recently began offering a provider sponsored insurance planwhere they are both the insurer and the healthcare provider. As part of thisinsurance plan, System B offers value based care where patients are required toreceive all healthcare within the system and practitioners focus on providinglower cost care. Despite successfully achieving a lower cost basis for thepatients in the provider sponsored plan compared to patients covered dominantinsurer, to date most of the enrollees for that plan come from MedicareAdvantage.  Despite extensive marketingefforts. System B has been largely unsuccessful selling this plan to employersin the market.

 

System B proposes to purchaseSystem C and integrate its facilities into its provider sponsored insuranceplan. After reviewing clinical practices at System C, the managmement of SystemB believes the assets of this system are well suited to the practice style oftheir value-based insurance plan.

 

Question:  Do you believe SystemBs acquisition of System C will ultimately increase its profits?  Who will be the primary beneficiaries of thismerger?  How exactly will those partiesbenefit? Would you approve this merger? 

 

Provide a simple one-page answer to the question. You willbe graded on the quality(correctness and effectiveness) of your answer. 

 


    Considera metropolitan hospital market that is dominated three systems (i.e. thesefirms satisfy more than 80 percent of demand in the market). System A hasfacilities located throughout the entire market and enjoys approximately a 30percent market share. System B has facilities in the city and northern suburbs,while the System C has facilities in the city and the western suburbs. Themarket has a number of large employers and employees live in the center cityas well as both the Northern and Western suburbs. On average, employees livingin the suburbs commute 30-45 minutes into the city, and it is hard to drivebetween the suburbs quickly. 

 

This market has two dominantinsurers and a few smaller insurance plans that earn little profits. Inaddition, System B recently began offering a provider sponsored insurance planwhere they are both the insurer and the healthcare provider. As part of thisinsurance plan, System B offers value based care where patients are required toreceive all healthcare within the system and practitioners focus on providinglower cost care. Despite successfully achieving a lower cost basis for thepatients in the provider sponsored plan compared to patients covered dominantinsurer, to date most of the enrollees for that plan come from MedicareAdvantage.  Despite extensive marketingefforts. System B has been largely unsuccessful selling this plan to employersin the market.

 

System B proposes to purchaseSystem C and integrate its facilities into its provider sponsored insuranceplan. After reviewing clinical practices at System C, the managmement of SystemB believes the assets of this system are well suited to the practice style oftheir value-based insurance plan.

 

Question:  Do you believe SystemBs acquisition of System C will ultimately increase its profits?  Who will be the primary beneficiaries of thismerger?  How exactly will those partiesbenefit? Would you approve this merger? 

 

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