Alternative contracts offer flexibility in meeting the terms of a deal in non-traditional ways. They are used in various sectors, including healthcare, construction, utilities, and social services. Alternative quality contracts in healthcare pay fixed annual fees to providers and incentivize quality over quantity. In the construction industry, alternative contracts can save time without sacrificing quality. Electric companies offer time-of-use rates, and child welfare agencies use alternative contracts to provide services and resources to young people under government guardianship.
An alternative contract offers one or more options for meeting the terms of the deal in non-traditional ways. It allows the service provider, or person requiring services, the flexibility to get the job done. Alternative contracts are used by utility companies, on construction projects and in the healthcare sector. An alternative employment contract could be implemented in social service agencies, depending on the region.
Alternative quality contracts between health insurance companies and health care providers aim to keep insurance costs low. These agreements pay doctors and medical centers a fixed annual fee for providing services to patients over a defined period of time. Healthcare workers are eligible for bonuses if they meet quality and efficiency goals each year.
This alternative contract differs from the previous method of paying insurance claims. In the past, healthcare providers billed fees for services provided to individual patients. Insurance companies found that some doctors performed nonessential care to make more money, while doctors who kept costs down were penalized. The alternative contract offers an incentive to focus on quality instead of quantity, according to insurance companies using alternative contracts.
Annual bonuses could encourage doctors to perform outpatient services, when appropriate, instead of inpatients. This tactic saves the insurance company from paying unnecessary claims. The formula used to determine year-end premiums compares the costs charged by doctors in the same medical industry and rewards doctors who keep costs low. The goal of this form of alternative contract is to keep health insurance affordable.
In the construction industry, an alternative contract may be awarded when time is critical, especially on public works projects. Typically, government agencies use the low bid price to determine the most appropriate contract choice when taxpayer money is at stake. An alternative contract could get a job done faster without sacrificing quality. This type of contract could be used in an emergency situation when the public is at risk.
Some electric companies offer alternative contracts for their residential, commercial and industrial customers. Instead of a fixed cost per kilowatt-hour, a company could allow customers to choose a time-of-use rate to meet peak hours of consumption. Under this contract, a customer could choose off-peak times to carry out activities that require electricity in order to reduce electricity bills.
In some areas, child welfare agencies employ alternative contracts to place young people under government guardianship. A young person may be eligible for services and financial resources while living in a residence deemed safe and under the supervision of a relative, friend or social worker. This alternative contract typically includes a proposal from the young person outlining his plans for an independent life.
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