Using actuarial models to assess managed care risk.

Actuarial models can be used to illustrate the financial risks inherent in healthcare provider operations. They are especially useful in analyzing the implications of managed care agreements, which revolve around risk and the financing of risk. Simple actuarial models may focus on inpatient utilization and reimbursement under capitation. More sophisticated models detail risks associated with individual diagnosis-related groups, as well as with many types of outpatient and physician services. Actuarial models can provide an objective basis for planning for the future and can be used to build consensus on strategies that will ensure success under managed care agreements.