Case Studies

Clinically-Driven Bidding

Client: Social Services Agency, 1996

Avoiding the "Winner's Curse": Knowing Cost of Recommended Care Shapes Contract Bids

Capitation visited the Medicaid system well before its influence was felt in the medical/surgical arena. In pre-paid behavioral health programs, small social service agencies bid for all-or-nothing, fixed-price contracts.

These clinician-intensive projects modeled the expected constellation of services clients in various diagnostic categories would likely require. Integrating cost accounting information allowed bidders to forecast break-even service levels and budget for operations following a winning proposal.