Perpetual Mercy Hospital Case Analysis

In April of 2000, the Downtown Health Clinic (DHC), which is run and overseen by Perpetual Mercy Hospital (PHC), found out some troubling news and was very concerned about it. Perpetual Mercy Hospital was concerned about the possibility of a establishing a similar clinic five blocks north of their facility. The main concerned are that the new and upcoming clinic may take away DHC’s current patients and that such a similar clinic so close could put a damper the DHC’s profitability and financial progress.

This situation and possible alternatives were analyzed to develop a recommendation of how DHC can keep their patients and continue to achieve its service and profitability objectives. Alternative Identification Currently the DHC is approaching a full year of being opened, but now it faces a tough decision for their future. If this new clinic ends up being opened down the street, it could risk the future of the DHC, especially if patients aren’t loyal to their current clinic.

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Some issues that are of some important to DHC are that patients are waiting too long during the lunch break time, women would also like to be available for gynecology services, and that the local business people extend their operating hours. If the clinic extended its service hours opening at 7:00 a. m. to 7:00 p. m. the clinic would see an increase in visits per month which would give patients high reimbursements for each visits. In return the clinic would see more in their annual reimbursement revenue.

There have been many options in consideration regarding how to meet the patients needs more efficiently to prevent them from leaving DHC and moving to the new facility as well as attaining their profitability. The four main alternatives that can be analyzed are: 1. Continue operations without any changes 2. Extend operating hours 3. Provide gynecology services 4. Extend operating hours and provide gynecology services Evaluative Criteria The first alternative is to avoid any operational changes.

As stated, the DHC is currently open 260 days a year, Monday through Friday, from 8:00 a.m. to 5:00 p. m. It seems that the clinic’s financial objectives are currently being achieved. Since the clinic is obtaining their objectives and is growing, it might hurt the current operation to make any sudden changes.

Extending the office hours and adding the gynecology services would increase the costs that DHC will experience. The hospital could use fewer expenses by getting involved in an advertising campaign for the clinic to help acquire its 11, 663 office workers in the service area, opposed to changing the current operations.

A second alternative for DHC is to extend their current operating hours to comply with the patients as requested. As stated, if the DHC could serve the downtown area more efficiently, 30 percent of patients suggested that hours be extended 7:00 a. m. to 7:00 p. m. Monday through Friday. Sherri Worth, the assistant administrator thought that if DHC could schedule new employee physical examinations so that their hours didn’t coincide with their usual working hours and local business people were able to schedule appointments before 8:00 a.m. or after 5:00 p. m.

Worth then thought it would be necessary to hire a second licensed physician working the hours of 7:00 a. m. to 3:00 p. m. and another physician working from 11:00 a. m. to 7:00 p. m. which would develop an overlapping schedule to help reduce the waiting times and allowing more patients to be seen. This option has great potential for generating patient retention and referrals due to DHC paying attention to patient’s requests increasing their loyalty and people willing to attend DHC opposed to the new clinic.

Although this alternative would increase patient’s visits, profitability is not a guarantee. This option would also require an increase of 33 percent in personnel costs and cost of the other physician. The third alternative is for the DHC to add gynecology services at the clinic. When the patients were asked on how DHC could improve their services to the downtown area, about half of the female patients requested that gynecological services be added. Worth believed that gynecological services would benefit the clinic since 70 percent of current visits are made by women.

As stated, women should see a gynecologist regularly at least once or twice a year which Worth estimated an additional 2,000 visits each year by providing this service. This gynecology service would require a charge of $104 per visit, including lab work, and would run patients $70 per hour to employ the gynecologist. This service would show patients that their opinions and needs are valued, which would increase customer satisfaction, willingness to return, and patients to refer other people. This would benefit the clinic in order to compete with other clinic in providing the same services and adding value for its patients.

By the clinic adding gynecology services 2000 additional visits per year @ $104 = $208,000. 00 Two additional 8-hour days per week @ $70 per hour = $58,240. 00 Increase revenue = $149,760. 00 The fourth alternative is for DHC to extend its operating hours from 7:00 a. m. to 7:00 p. m. as well as adding gynecology services. As stated before, extending the office hours would include the hire of an additional physician, which in turn decreases waiting time and number of patients able to be evaluated. The fact of employment physicals performed each month would increase greatly as well.

By implementing the extension of operating hours and adding gynecology services, DHC’s revenue would vastly increase and they would see higher net profit. Recommendations With all alternatives taken into account, with the exception of alternative two, the clinic has enough patient visits to break even with costs; I feel that alternative four is the Perpetual Mercy Hospital’s best option. Due to the fact that alternative four has the highest increased profit potential, I recommend that DHC extend operating hours and add gynecology services.

By selecting this option, I feel that DHC will successfully retain current patients, obtain new patients, and protect themselves from any new facilities being established in the downtown area. I also feel that if DHC would implement an advertising campaign in some form of media to generate customer awareness of what their improving on and what they offer. If DHC continues valuing patients requests, opinions, and efficiently catering to their patients needs they will satisfy customers, which in turn results in keeping current patients and gaining new ones.

Maintaining their loyalty to their patients is a very big aspect to obtaining the clinic’s profitability and financial objectives. Creating this type of vibe will definitely benefit DHC and PMH because patients will want to return to their clinic where they are heard and their opinions are valued. If DHC and PMH continue to express their loyalty to their patients, a positive word of mouth will generate around the downtown area will create more visits per day, week, month, and year. This will allow DHC to become self supporting in profit, growth, and meeting patient’s needs.

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