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Wheeling Cardiology Associates Case Solution

Is the proposed merger a good idea?  Why or Why not? 

The merger will reduce each group’s overhead burden. The merger would further lower the overhead expenses per physician by sharing resources such as billing, medical information system and other duplicative items would be shared under the merger arrangement. The merger would result in cost savings, which would make the new group more appealing to purchasers of cardiology services. The primary purpose is to prevent market/monopoly power. i.e. reducing the opportunity for the competition.

If the merger takes place in a highly competitive industry, then any cost savings due to efficiencies presumably will be passed on to the consumers. Furthermore, if the merger provides one organization with significant market power, disturbing the competitive environment, then it is likely that savings will not be passed on.

According to the Sherman Act, section 1 and section 2 prohibit mergers that constitute unreasonable restraints of trade and the mergers that create monopoly power. Furthermore, the potential benefits that could be reaped from the merger and acquisitions might outweigh potential risks due to zero to more concentrated market.

One of the biggest motivators was the cost reduction, any anticipated changes in payment, reimbursement or purchasing provided the incentive to cut costs. In addition to this, the merger was designed to improve both the quality of the care and strategic positioning overall. Furthermore, this enables the group to negotiate managed care contracts on an even playing field with comparable groups, as well as to pass along cost savings to the consumers.

 

Who are the stakeholders and what is each party looking for?  What are the benefits/costs to that party?

Antitrust Reform:

The Antitrust Reform is the stakeholder in this case. The group proposing to merge not only needed to demonstrate that significant efficiency would be achieved, but also that the prices would not increase as a result of increased market power. The group also needed to demonstrate that any cost savings could be achieved only through merger and that the savings would be long lasting.

Regulatory authorities:-

Another stakeholder is the regulatory authorities of the West Virginia, they could grant the antitrust exemption if a benefit-cost analysis indicates a net benefit. The goal was to reduce costs and eliminate duplicative services.

Attorney general:-

He is one of the most important stakeholders. He stated that the proposal should be the best interest of the public. He feels that the merger is strategically necessary for preparation for the future. Thus, a new, larger group of cardiologist will conceivably be able to provide higher quality cardiology services at lower costs. This will be made possible by pooling expertise, sharing resources, and taking advantage of economies of scale.

What should Ms. Ames say to convince the Attorney General of the benefits of the merger?

Attorney General should demonstrate that the merger should be in the best interest of the Wheeling community with healthcare costs receiving national attention, and changes in health care purchasing and delivery resulting in an increase in the anticipation of national reform.

Ms. Ames wants to convince the Attorney General that she should fulfill his wishes or give valid reasons. Ames should state that the new proposal will act to prevent monopoly power because the power allows for raising the prices above competitive levels as well as to put efforts to reduce the cost. Furthermore, the merger was designed to improve both quality of care and strategic positioning overall and to achieve economies of scale that would provide a strategic edge in negotiation managed care contracts. She can also explain that under the new arrangement two other systems abounded their development of separate transplant programs. The state legislature was considering a bill that would grant antitrust immunity for the project. Furthermore, Wade Overgaard, the manager of sales and marketing for Kaiser’s Northwest region stated that this project proved that it is beneficial for everyone to collaborate the results in lower costs and higher quality for everyone............................

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Look at each stakeholder you identified in Question #2.  Apply the A-D-K-A-R model to each and determine where the first barrier point is to continue with the model.

Antitrust Reform:

Awareness: -

This part represents indicates that the group is aware of the reason for the change. After analyzing the case study, it seems that the group is aware of the new proposal and the goal/outcome of from the proposed change and early communicated to change.....................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

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