Índice de valor social añadido: una propuesta para analizar la eficiencia hospitalaria / Social value added index: a proposal for analyzing hospital efficiency

OBJETIVO: El objetivo de este trabajo es demostrar que es posible monetizar el valor social que genera un hospital y que con su análisis podemos establecer una perspectiva diferente para analizar la eficiencia del gasto público. MÉTODO: Utilizando el método del caso se ha seleccionado un hospital público en España. Es idóneo por dos razones: primero, porque su actividad es pequeña y esto facilita el diálogo con los stakeholders; y segundo, como es un hospital de carácter residencial, permite realizar una experiencia de aproximación de la contabilidad social en hospitales sencilla, modificable y que es posible testar. RESULTADOS: Se establece la traducción monetaria de la actividad de un hospital, incluyendo la parte social de las transacciones económicas (mercado), las variables que no han supuesto transacción económica, pero han sido percibidas y valoradas por los stakeholders (no mercado), y la satisfacción de los stakeholders (emocional). Este valor socioemocional asciende a aproximadamente 60 millones de euros anuales para el periodo de 2013 a 2017. CONCLUSIONES: El valor social generado para los stakeholders, y su monetización, permiten gestionar de forma más eficiente las decisiones hacia el propósito social de los hospitales públicos. En concreto, el índice de valor social añadido puede ser una herramienta para la eficiencia social del hospital, ya que se establece cuánto valor social genera a partir de la financiación pública que le han asignado. Así, la disminución de este valor en los últimos años denota un problema que, sin este análisis con perspectiva social y desde los stakeholders, no podría haberse detectado

OBJECTIVE: The objective of this paper is to demonstrate that it is possible to monetize the social value generated by a hospital and use it to establish a different perspective to analyze the efficiency of public spending. METHOD: A public hospital in Spain was selected using the case method. It is suitable for two reasons; first, the hospital activity is small and therefore dialogue with stakeholders is easy; and second, as it is a hospital of a residential nature, it allows an easy, modifiable and testable approximation of social accounting in hospitals. RESULTS: It establishes the monetary translation of the activity of a hospital, including the social part of the economic transactions (market), the variables that have not been created based on economic transaction, but have been perceived and valued by the stakeholders (not market), and the satisfaction of the stakeholders (emotional). This socio-emotional value amounts to approximately 60 million Euros per year from 2013 to 2017. CONCLUSIONS: The social value generated for the stakeholders, and its monetization, allows more efficient management of decisions towards the social purpose of public hospitals. In particular, the social value added index can be a tool for the social-efficiency of hospitals, as it establishes how much social value it generates from the public funding allocated to it. Thus, the decline in this value in recent years denotes a problem that, without this analysis with a social perspective and from the stakeholders, could not have been detected

Low risk, high reward? Repeated competitive biddings with multiple winners in health care.

We study physiotherapy providers' prices in repeated competitive biddings where multiple providers are accepted in geographical districts. Historically, only very few districts have rejected any providers. We show that this practice increased prices and analyze the effects the risk of rejection has on prices. Our data are derived from three subsequent competitive biddings. The results show that rejecting at least one provider decreased prices by more than 5% in the next procurement round. The results also indicate that providers have learned to calculate their optimal bids, which has also increased prices. Further, we perform counterfactual policy analysis of a capacity-rule of acceptance. The analysis shows that implementing a systematic acceptance rule results in a trade-off between direct cost savings and service continuity at patients' usual providers.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program (CBP) and Fee Schedule Amounts, and Technical Amendments To Correct Existing Regulations Related to the CBP for Certain DMEPOS. Final rule.

This final rule updates and makes revisions to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year (CY) 2019. This rule also updates the payment rate for renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury (AKI). In addition, it updates and rebases the ESRD market basket for CY 2019. This rule also updates requirements for the ESRD Quality Incentive Program (QIP), and makes technical amendments to correct existing regulations related to the Competitive Bidding Program (CBP) for certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS). Finally, this rule finalizes changes to bidding and pricing methodologies under the DMEPOS competitive bidding program; adjustments to DMEPOS fee schedule amounts using information from competitive bidding for items furnished from January 1, 2019 through December 31, 2020; new payment classes for oxygen and oxygen equipment and a new methodology for ensuring that new payment classes for oxygen and oxygen equipment are budget neutral; payment rules for multi- function ventilators or ventilators that perform functions of other durable medical equipment (DME); and revises the payment methodology for mail order items furnished in the Northern Mariana Islands. This rule also includes a summary of the feedback received for the request for information related to establishing fee schedule amounts for new DMEPOS items and services.

Long-term impact of competitive biddings and an antimicrobial stewardship program in a general hospital in Chile / Impacto de un programa de control de antimicrobianos (PCA) y licitaciones públicas sobre el consumo de estos medicamentos

ABSTRACT Background: The long-term effect of an antimicrobial stewardship program (ASP) and its integrated impact with competitive biddings have been seldom reported. Aim: To evaluate the long-term effect of an ASP on antimicrobial consumption, expenditure, antimicrobial resistance and hospital mortality. To estimate the contribution of competitive biddings on cost-savings. Material and Methods: A comparison of periods prior (2005-2008) and posterior to ASP initiation (2009 and 2015) was done. An estimation of cost savings attributable to ASP and to competitive biddings was also performed. Results: Basal median antimicrobial consumption decreased from 221.3 to 170 daily defined doses/100 beds after the start of the ASP. At the last year, global antimicrobial consumption declined by 28%. Median antimicrobial expenditure per bed (initially US$ 13) declined to US$ 10 at the first year (-28%) and to US$ 6 the last year (-57%). As the reduction in consumption was lower than the reduction in expenditure during the last year, we assumed that only 48.4% of savings were attributable to the ASP. According to antimicrobial charges per bed from prior and after ASP implementation, we estimated global savings of US$ 393072 and US$ 190000 directly attributable to the ASP, difference explained by parallel competitive biddings. Drug resistance among nosocomial bacterial isolates did not show significant changes. Global and infectious disease-associated mortality per 1000 discharges significantly decreased during the study period (p < 0.05). Conclusions: The ASP had a favorable impact on antimicrobial consumption, savings and mortality rates but did not have effect on antimicrobial resistance in selected bacterial strains.

Antecedentes: Existe poca información sobre el impacto a largo plazo de un programa de control de antimicrobianos (PCA) y su efecto combinado con licitaciones públicas de fármacos. Objetivo: Evaluar el impacto de un PCA sobre el consumo, gasto, mortalidad y estimar la contribución de las licitaciones. Material y Métodos: Comparación antes (2005-2008) - después (2009-2015) del PCA y estimación porcentual del ahorro atribuible al PCA y licitaciones. Resultados: El consumo bajó de 221,3 a 170 dosis diarias definidas por 100 días camas (medianas) al primer año. En el último año el consumo declinó un 27,6%. La mediana del gasto por cama ocupada se redujo de 13 a 10 US$ el primer año y a 6 US$ el último año (-57%). Debido a que el gasto bajó más que el consumo, estimamos que solo el 48,4% del ahorro fue debido al PCA (cuociente de ambas reducciones: −27,6%/-57%). De acuerdo con el gasto en antimicrobianos por cama entre ambos períodos, se calculó un ahorro global de 393.000 US$ y de 190.000 US$ directamente atribuible al PCA, siendo la diferencia explicada por licitaciones. Los porcentajes de resistencia en cepas de infecciones nosocomiales no mostraron incrementos o reducciones significativas en el tiempo y la mortalidad por egresos asociada a enfermedades infecciosas (Códigos CIE 10) se redujo significativamente (p < 0,05). Conclusiones: El PCA se asoció a largo plazo a un impacto favorable sobre el consumo de antimicrobianos, gasto por antimicrobianos y egresos por enfermedades infecciosas sin un impacto en la resistencia antimicrobiana. Las licitaciones tuvieron un efecto aditivo en el ahorro.

Long-term impact of competitive biddings and an antimicrobial stewardship program in a general hospital in Chile.

BACKGROUND: The long-term effect of an antimicrobial stewardship program (ASP) and its integrated impact with competitive biddings have been seldom reported. AIM: To evaluate the long-term effect of an ASP on antimicrobial consumption, expenditure, antimicrobial resistance and hospital mortality. To estimate the contribution of competitive biddings on cost-savings. MATERIAL AND METHODS: A comparison of periods prior (2005-2008) and posterior to ASP initiation (2009 and 2015) was done. An estimation of cost savings attributable to ASP and to competitive biddings was also performed. RESULTS: Basal median antimicrobial consumption decreased from 221.3 to 170 daily defined doses/100 beds after the start of the ASP. At the last year, global antimicrobial consumption declined by 28%. Median antimicrobial expenditure per bed (initially US$ 13) declined to US$ 10 at the first year (-28%) and to US$ 6 the last year (-57%). As the reduction in consumption was lower than the reduction in expenditure during the last year, we assumed that only 48.4% of savings were attributable to the ASP. According to antimicrobial charges per bed from prior and after ASP implementation, we estimated global savings of US$ 393072 and US$ 190000 directly attributable to the ASP, difference explained by parallel competitive biddings. Drug resistance among nosocomial bacterial isolates did not show significant changes. Global and infectious disease-associated mortality per 1000 discharges significantly decreased during the study period (p < 0.05). CONCLUSIONS: The ASP had a favorable impact on antimicrobial consumption, savings and mortality rates but did not have effect on antimicrobial resistance in selected bacterial strains.

Surgeon leadership in the coding, billing, and contractual negotiations for fenestrated endovascular aortic aneurysm repair increases medical center contribution margin and physician reimbursement.

BACKGROUND: Fenestrated endovascular aneurysm repair (FEVAR) allows endovascular treatment of thoracoabdominal and juxtarenal aneurysms previously outside the indications of use for standard devices. However, because of considerable device costs and increased procedure time, FEVAR is thought to result in financial losses for medical centers and physicians. We hypothesized that surgeon leadership in the coding, billing, and contractual negotiations for FEVAR procedures will increase medical center contribution margin (CM) and physician reimbursement. METHODS: At the UMass Memorial Center for Complex Aortic Disease, a vascular surgeon with experience in medical finances is supported to manage the billing and coding of FEVAR procedures for medical center and physician reimbursement. A comprehensive financial analysis was performed for all FEVAR procedures (2011-2015), independent of insurance status, patient presentation, or type of device used. Medical center CM (actual reimbursement minus direct costs) was determined for each index FEVAR procedure and for all related subsequent procedures, inpatient or outpatient, 3 months before and 1 year subsequent to the index FEVAR procedure. Medical center CM for outpatient clinic visits, radiology examinations, vascular laboratory studies, and cardiology and pulmonary evaluations related to FEVAR were also determined. Surgeon reimbursement for index FEVAR procedure, related adjunct procedures, and assistant surgeon reimbursement were also calculated. All financial analyses were performed and adjudicated by the UMass Department of Finance. RESULTS: The index hospitalization for 63 FEVAR procedures incurred $2,776,726 of direct costs and generated $3,027,887 in reimbursement, resulting in a positive CM of $251,160. Subsequent related hospital procedures (n = 26) generated a CM of $144,473. Outpatient clinic visits, radiologic examinations, and vascular laboratory studies generated an additional CM of $96,888. Direct cost analysis revealed that grafts accounted for the largest proportion of costs (55%), followed by supplies (12%), bed (12%), and operating room (10%). Total medical center CM for all FEVAR services was $492,521. Average surgeon reimbursements per FEVAR from 2011 to 2015 increased from $1601 to $2480 while the surgeon payment denial rate declined from 50% to 0%. Surgeon-led negotiations with the Centers for Medicare & Medicaid Services during 2015 resulted in a 27% increase in physician reimbursement for the remainder of 2015 ($2480 vs $3068/case) and a 91% increase in reimbursement from 2011 ($1601 vs $3068). Assistant surgeon reimbursement also increased ($266 vs $764). Concomitant FEVAR-related procedures generated an additional $27,347 in surgeon reimbursement. CONCLUSIONS: Physician leadership in the coding, billing, and contractual negotiations for FEVAR results in a positive medical center CM and increased physician reimbursement.

Nutrition Quality of US School Snack Foods: A First Look at 2011-2014 Bid Records in 8 School Districts.

BACKGROUND: As part of the Healthy, Hunger-Free Kids Act, snacks, and desserts sold in K-12 schools as of the 2014-2015 school year are required to meet the "Smart Snacks" nutritional guidelines. Although studies exist in tracking progress in local and national efforts, the proportion of snack food procured by school districts compliant with the Smart Snacks standard prior to its full implementation is unknown. METHODS: We repurposed a previously untapped database, Interflex, of public bid records to examine the nutritional quality of snacks and desserts procured by school districts. We selected 8 school districts with at least 90% complete data each year during 2011-2012, 2012-2013, and 2013-2014 school years and at locations across different regions of the United States. We quantified the amount of calories and sugar of each product contained in the won bids based on available online sources and determined whether the produce complied with Smart Snack guidelines. RESULTS: In all 8 districts (snack expenditure analyzed ranging from $152,000 to $4.4 million), at least 50% of snack bids were compliant with the US Department of Agriculture Smart Snacks standard during the 2013-2014 school year. Across sampled districts, we observed a general trend in lower caloric density (kcal per product) and sugar density (grams of sugar per product) over a 3-year period. CONCLUSIONS: Many districts across the country have made headway in complying with the Smart Snack guidelines, though gaps remain.

Medicare Competitive Bidding Program.

A recent study by the National Minority Quality Forum (NMQF) reported the failures and adverse health outcomes of the Medicare competitive bidding program as implemented by the Centers for Medicare & Medicaid Services (CMS) in 2011. CMS has repeatedly reported that the program caused no disruption of beneficiary access to needed medical products (including diabetes testing supplies) and that no adverse outcomes occurred. Although signals of disruption were seen early in the program implementation, economic modeling by McGeary and Katzman in 2004 demonstrated that the program design was significantly flawed. This article discusses the unintended consequences of competitive bidding program and provides a rationale for suspending the program until CMS can implement effective monitoring protocols to protect the safety of Medicare beneficiaries.

Medicare Program; End-Stage Renal Disease Prospective Payment System, Coverage and Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program Bid Surety Bonds, State Licensure and Appeals Process for Breach of Contract Actions, Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program and Fee Schedule Adjustments, Access to Care Issues for Durable Medical Equipment; and the Comprehensive End-Stage Renal Disease Care Model. Final rule.

This rule updates and makes revisions to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for calendar year 2017. It also finalizes policies for coverage and payment for renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury. This rule also sets forth requirements for the ESRD Quality Incentive Program, including the inclusion of new quality measures beginning with payment year (PY) 2020 and provides updates to programmatic policies for the PY 2018 and PY 2019 ESRD QIP. This rule also implements statutory requirements for bid surety bonds and state licensure for the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP). This rule also expands suppliers' appeal rights in the event of a breach of contract action taken by CMS, by revising the appeals regulation to extend the appeals process to all types of actions taken by CMS for a supplier's breach of contract, rather than limit an appeal for the termination of a competitive bidding contract. The rule also finalizes changes to the methodologies for adjusting fee schedule amounts for DMEPOS using information from CBPs and for submitting bids and establishing single payment amounts under the CBPs for certain groupings of similar items with different features to address price inversions. Final changes also are made to the method for establishing bid limits for items under the DMEPOS CBPs. In addition, this rule summarizes comments on the impacts of coordinating Medicare and Medicaid Durable Medical Equipment for dually eligible beneficiaries. Finally, this rule also summarizes comments received in response to a request for information related to the Comprehensive ESRD Care Model and future payment models affecting renal care.

[Public health infrastructure investment difficulties in Chile: concessions and public tenders]. / Dificultades de la inversión en infraestructura pública de salud en Chile: concesiones y licitación pública.

This paper seeks to highlight the problems of gaps in health infrastructure in Chile, and to analyze the mechanisms by which it is provided. In Chile this is done in two ways: the first is through competitive bidding or sector-wide modality. The second way is through hospital concessions. Both mechanisms have had difficulties in recent years, which are reported. Finally, we propose ways to improve the provision of health infrastructure in Chile.

El presente trabajo busca evidenciar los problemas de brechas en infraestructura sanitaria en Chile, así como analizar los mecanismos mediante los cuales ésta se provee. Ello se realiza mediante dos modalidades, la primera es la licitación competitiva o modalidad sectorial. La segunda forma es la concesión hospitalaria. En los últimos años ambos mecanismos presentan dificultades, las cuales se relatan en este documento. Finalmente, se plantean propuestas con el fin de mejorar la provisión de infraestructura sanitaria en Chile.

Price offers of pharmaceutical procurement in China: evidence from Guangdong province.

Using a sample from the pharmaceutical procurement in Guangdong, China, over the period from 2007-2009 and a data set of comprehensive potential bidders, this article analyzes the determinants of bidding behaviors in the presence of sample selection. Bidding patterns between highly competitive and less competitive groups are also examined. Price differentials are further decomposed to explain factors that account for the gap. We find that a high level of competitiveness and more winning experiences induce manufacturers to behave aggressively and make lower bids. Moreover, bidders in a less competitive group are less sensitive to the number of potential bidders and the experience of past wins. The decomposition results indicate that the characteristics of bidders are not the main driver for the large price differentials between those groups.

Reverse Auction: A Potential Strategy for Reduction of Pharmacological Therapy Cost / Pregão: Estratégia para Redução do Custo da Terapia Farmacológica em Insuficiência Cardíaca e Transplante Cardíaco

Background:Polypharmacy is a significant economic burden.Objective:We tested whether using reverse auction (RA) as compared with commercial pharmacy (CP) to purchase medicine results in lower pharmaceutical costs for heart failure (HF) and heart transplantation (HT) outpatients.Methods:We compared the costs via RA versus CP in 808 HF and 147 HT patients followed from 2009 through 2011, and evaluated the influence of clinical and demographic variables on cost.Results:The monthly cost per patient for HF drugs acquired via RA was $10.15 (IQ 3.51-40.22) versus $161.76 (IQ 86.05‑340.15) via CP; for HT, those costs were $393.08 (IQ 124.74-774.76) and $1,207.70 (IQ 604.48-2,499.97), respectively.Conclusion:RA may reduce the cost of prescription drugs for HF and HT, potentially making HF treatment more accessible. Clinical characteristics can influence the cost and benefits of RA. RA may be a new health policy strategy to reduce costs of prescribed medications for HF and HT patients, reducing the economic burden of treatment.

Fundamento:A polifarmácia tem um significativo peso econômico.Objetivo:Testar se o uso de pregão em comparação ao de farmácias comerciais (FC) para a compra de medicamentos reduz o custo do tratamento de pacientes ambulatoriais de insuficiência cardíaca (IC) e transplante cardíaco (TC).Métodos:Comparação dos custos do tratamento através de pregão versus FC em pacientes de IC (808) e TC (147) acompanhados de 2009 a 2011, avaliando-se a influência de variáveis clínicas e demográficas no custo.Resultados:Os custos mensais por paciente para medicamentos de IC adquiridos através de pregão e através de FC foram $10,15 (IQ 3,51-40,22) e $161,76 (IQ 86,05-340,15), respectivamente. Para TC, aqueles custos foram $393,08 (IQ 124,74-774,76) e $1.207,70 (IQ 604,48-2.499,97), respectivamente.Conclusão:O pregão pode reduzir o custo dos medicamentos prescritos para IC e TC, podendo tornar o tratamento de IC mais acessível. As características clínicas podem influenciar o custo e os benefícios do pregão, que pode ser uma nova estratégia de política de saúde para baixar os custos dos medicamentos prescritos para IC e TC, diminuindo o peso econômico do tratamento. (Arq Bras Cardiol. 2015; [online].ahead print, PP.0-0).

Reverse auction: a potential strategy for reduction of pharmacological therapy cost.

BACKGROUND: Polypharmacy is a significant economic burden. OBJECTIVE: We tested whether using reverse auction (RA) as compared with commercial pharmacy (CP) to purchase medicine results in lower pharmaceutical costs for heart failure (HF) and heart transplantation (HT) outpatients. METHODS: We compared the costs via RA versus CP in 808 HF and 147 HT patients followed from 2009 through 2011, and evaluated the influence of clinical and demographic variables on cost. RESULTS: The monthly cost per patient for HF drugs acquired via RA was $10.15 (IQ 3.51-40.22) versus $161.76 (IQ 86.05­340.15) via CP; for HT, those costs were $393.08 (IQ 124.74-774.76) and $1,207.70 (IQ 604.48-2,499.97), respectively. CONCLUSION: RA may reduce the cost of prescription drugs for HF and HT, potentially making HF treatment more accessible. Clinical characteristics can influence the cost and benefits of RA. RA may be a new health policy strategy to reduce costs of prescribed medications for HF and HT patients, reducing the economic burden of treatment.

Medicare program; End-Stage Renal Disease prospective payment system, quality incentive program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies. Final rule.

This final rule will update and make revisions to the End-Stage Renal Disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2015. This rule also finalizes requirements for the ESRD quality incentive program (QIP), including for payment years (PYs) 2017 and 2018. This rule will also make a technical correction to remove outdated terms and definitions. In addition, this final rule sets forth the methodology for adjusting Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule payment amounts using information from the Medicare DMEPOS Competitive Bidding Program (CBP); makes alternative payment rules for certain DME under the Medicare DMEPOS CBP; clarifies the statutory Medicare hearing aid coverage exclusion and specifies devices not subject to the hearing aid exclusion; will not update the definition of minimal self-adjustment; clarifies the Change of Ownership (CHOW) and provides for an exception to the current requirements; revises the appeal provisions for termination of a CBP contract, including the beneficiary notification requirement under the Medicare DMEPOS CBP, and makes a technical change to the regulation related to the conditions for awarding contracts for furnishing infusion drugs under the Medicare DMEPOS CBP.

Competitive bidding for Medicare Part B clinical laboratory services.

The traditional Medicare fee-for-service program may be able to purchase clinical laboratory test services at a lower cost through competitive bidding. Demonstrations of competitive bidding for clinical laboratory tests have been twice mandated or authorized by Congress but never implemented. This article provides a summary and review of the final design of the laboratory competitive bidding demonstration mandated by the Medicare Modernization Act of 2003. The design was analogous to a sealed bid (first price), clearing price auction. Design elements presented include covered laboratory tests and beneficiaries, laboratory bidding and payment status under the demonstration, composite bids, determining bidding winners and the demonstration fee schedule, and quality under the demonstration. Expanded use of competitive bidding in Medicare, including specifically for clinical laboratory tests, has been recommended in some proposals for Medicare reform. The presented design may be a useful point of departure if Medicare clinical laboratory competitive bidding is revived in the future.

Competitive bidding in Medicare Advantage: effect of benchmark changes on plan bids.

Bidding has been proposed to replace or complement the administered prices that Medicare pays to hospitals and health plans. In 2006, the Medicare Advantage program implemented a competitive bidding system to determine plan payments. In perfectly competitive models, plans bid their costs and thus bids are insensitive to the benchmark. Under many other models of competition, bids respond to changes in the benchmark. We conceptualize the bidding system and use an instrumental variable approach to study the effect of benchmark changes on bids. We use 2006-2010 plan payment data from the Centers for Medicare and Medicaid Services, published county benchmarks, actual realized fee-for-service costs, and Medicare Advantage enrollment. We find that a $1 increase in the benchmark leads to about a $0.53 increase in bids, suggesting that plans in the Medicare Advantage market have meaningful market power.

Competitive bidding for health insurance contracts: lessons from the online HMO auctions.

Healthcare is an important social and economic component of modern society, and the effective use of information technology in this industry is critical to its success. As health insurance premiums continue to rise, competitive bidding may be useful in generating stronger price competition and lower premium costs for employers and possibly, government agencies. In this paper, we assess an endeavor by several Fortune 500 companies to reduce healthcare procurement costs for their employees by having HMOs compete in open electronic auctions. Although the auctions were successful in generating significant cost savings for the companies in the first year, i.e., 1999, they failed to replicate the success and were eventually discontinued after two more years. Over the past decade since the failed auction experiment, effective utilization of information technologies have led to significant advances in the design of complex electronic markets. Using this knowledge, and data from the auctions, we point out several shortcomings of the auction design that, we believe, led to the discontinuation of the market after three years. Based on our analysis, we propose several actionable recommendations that policy makers can use to design a sustainable electronic market for procuring health insurance.