You have been presented an outstanding opportunity to serve as a graduate student intern for the chief executive officer (CEO) of a large HCO. The HCO is an HMO model and originated approximately a century ago as a small rural hospital. Due to the rural setting, the HMO model flourished and, over the years, expanded throughout the region. Today, the HMO has a presence in over eighteen counties and has a number of competing interests from for-profit and not-for-profit HCOs in the region.


The board of directors recently approved the acquisition of two regional hospitals. First, the HCO decided to acquire a small rural critical-care-access hospital in a relatively remote county. The interest in acquiring the hospital is to service the existing population and expand the reach of the HMO. Second, the HCO decided to acquire a private full-service hospital in a moderate-size city (population forty-two thousand). The HCO’s move is strategic in nature, preventing the sale of the hospital to its for-profit competitor, and will gain the region its sole emergency department level 2 (two) trauma center with helicopter transport while giving the HCO the ability to service its growing HMO membership in the area.

Based on the above information:

  • Evaluate the various HMO models (staff, group, and network) and identify the model that would probably be best suited for the region. Justify your answer.
  • Research and comment on the importance and applicability of the various levels of emergency department trauma care. Investigate the exemptions afforded to a critical care rural hospital with respect to Medicare reimbursement and accreditation.
  • Elaborate on the difference between an HMO and an accountable care organization (ACO).
  • Explain the concept of capitation, its importance to the HMO and participating providers, and how the concept of capitation varies with the ACO model.
  • Explain patient-centered care and its importance in healthcare delivery.



Submit your answers in a 2- to 3-page Microsoft Word document.