Multiple Health-Related Institutions
An Audit Report on Selected Management Controls for Various Health-Related Institutions
March 2000
Report Number 00-018
Overall Conclusion
The University of Texas Health Science Center at Houston (Health Science Center at Houston) and The University of Texas Southwestern Medical Center at Dallas (Southwestern Medical Center) do not know if managed care contract collections ($73 million in fiscal year 1998) cover all related managed care costs. They do not identify and link the total costs of managed care services to individual managed care contracts. Without this information, management could enter or renew managed care contracts where the total costs to provide services actually exceed revenues.
At times, an institution might reasonably choose to enter a contract where losses could occur in an effort to provide unique medical training related to illnesses not found in the general population or to achieve its mission in another area. However, more complete knowledge of the costs of the contract and its financial impact to the institution and the State is an important factor in the decision. Managed care contracts accounted for 8 percent of the total revenues at these two institutions for fiscal year 1998 and could increase as the institutions become more dependent on managed care contracts.
The University of Texas M. D. Anderson Cancer Center (M. D. Anderson Cancer Center) and The University of Texas Medical Branch at Galveston (Medical Branch at Galveston) both identify and link the costs of managed care by contract. Because of their hospital operations, both institutions have implemented more comprehensive methods of accounting for the costs applicable to each contract. Thus, they use more complete information in managed care contract decisions.
Key Facts and Findings
The University of Texas Health Science Center at Houston and The University of Texas Southwestern Medical Center at Dallas do not know if managed care contract collections cover all related managed care costs. They do not identify and link the total costs of managed care services to individual managed care contracts.
The institutions need reasonably accurate cost information to make informed managed care contracting decisions and to analyze the cost efficiency of services for managed care contracts. To have reasonably accurate information, it is essential to identify and link all related managed care costs and collections to each individual managed care contract.
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