You Decide: Middleton Hospital

You have been the CEO of Middlefield Hospital for 2 1/2 years and finally resolved the workforce challenges that plagued the hospital when you first arrived. In a recent meeting, the chief financial officer (CFO) indicated that the financial performance of the hospital has been deteriorating over the last 6 months. The hospital is not meeting its budget and he is concerned about the future.

The new facility across town has continued to cut into Middlefield’s market share by admitting more patients. The number of admissions to Middlefield Hospital is declining each month, and more uninsured patients are seeking services at your facility.

You convene the Middlefield Hospital management team and discover a few interesting facts, which are identified below. 1. The payer mix of Middlefield Hospital is comprised of more and more Medicare, Medicaid, uninsured patients and fewer patients have commercial insurance. This is reducing overall reimbursement and net income for the hospital. 2. The nearby hospital that competes with Middlefield has opened a wellness center that offers a comprehensive array of preventative and wellness services to the community. This facility is attracting young families to seek services at this location.

3. Most of Middlefield’s managed care contracts are more than 2 years old. There are little reliable utilization and reimbursement data available. No one at Middlefield Hospital is assigned to manage these contracts or maintain ongoing relationships with managed care companies. 4. The Joint Commission survey is scheduled for next year, and there are significant problems with the hospital’s quality improvement program. 5. The health plan offered to employees is getting more expensive each year. In fact, the costs are increasing at a rate of 20% each year.

This is adding significantly to the hospital’s operational costs. 6. The inpatient mental health services and neo-natal intensive care unit continue to lose money for the hospital. The board of directors has asked that you provide a 750-word report (double spaced in APA or other Devry-approved format) detailing your strategies and recommendations to improve the financial performance of the hospital. The strategies and recommendations should be as specific as possible and include identifying resources that are necessary to implement the strategies.

Also, describe the outcomes expected from implementing your recommendations. Your primary text and journal/website research must be used as a reference to support your analysis. Use at least three references. You have been the CEO of Middlefield Hospital for 2 1/2 years and finally resolved the workforce challenges that plagued the hospital when you first arrived. In a recent meeting, the chief financial officer (CFO) indicated that the financial performance of the hospital has been deteriorating over the last 6 months. The hospital is not meeting its budget and he is concerned about the future.

The new facility across town has continued to cut into Middlefield’s market share by admitting more patients. The number of admissions to Middlefield Hospital is declining each month, and more uninsured patients are seeking services at your facility. You convene the Middlefield Hospital management team and discover a few interesting facts, which are identified below. 7. The payer mix of Middlefield Hospital is comprised of more and more Medicare, Medicaid, uninsured patients and fewer patients have commercial insurance.

This is reducing overall reimbursement and net income for the hospital. 8. The nearby hospital that competes with Middlefield has opened a wellness center that offers a comprehensive array of preventative and wellness services to the community. This facility is attracting young families to seek services at this location. 9. Most of Middlefield’s managed care contracts are more than 2 years old. There are little reliable utilization and reimbursement data available.

No one at Middlefield Hospital is assigned to manage these contracts or maintain ongoing relationships with managed care companies. 10. The Joint Commission survey is scheduled for next year, and there are significant problems with the hospital’s quality improvement program. 11. The health plan offered to employees is getting more expensive each year. In fact, the costs are increasing at a rate of 20% each year. This is adding significantly to the hospital’s operational costs. 12. The inpatient mental health services and neo-natal intensive care unit continue to lose money for the hospital.

The board of directors has asked that you provide a 750-word report (double spaced in APA or other Devry-approved format) detailing your strategies and recommendations to improve the financial performance of the hospital. The strategies and recommendations should be as specific as possible and include identifying resources that are necessary to implement the strategies. Also, describe the outcomes expected from implementing your recommendations. Your primary text and journal/website research must be used as a reference to support your analysis. Use at least three references.

The Players: Dr. McCrae – Psychiatrist I am a psychiatrist and admit my patients to the mental health inpatient unit at Middlefield. It is the only psychiatric inpatient unit available in the community, and the care provided is excellent. I understand the program loses money, but the hospital has a community obligation to offer services to patients who need mental health care. Aretha Holly – Pharmacy Technician I love the health plan offered by Middlefield Hospital. The plan really meets the needs of my family. The copays and deductibles are so low and I get my prescriptions for free.

Also, I can go to any provider I choose. I hope they don’t make any changes to the plan, because I am worried that I may not be able to afford it Barbara Seville – Director of Quality Improvement Middlefield’s quality improvement activities are not effective anymore. We do lots of data collection and reporting, but there is little improvement in the quality of care. Most staff members believe that we already provide quality patient care and don’t see the why we are putting resources into this function. I think we are relying too much on our past reputation. The Players: Dr. McCrae – Psychiatrist

I am a psychiatrist and admit my patients to the mental health inpatient unit at Middlefield. It is the only psychiatric inpatient unit available in the community, and the care provided is excellent. I understand the program loses money, but the hospital has a community obligation to offer services to patients who need mental health care. Aretha Holly – Pharmacy Technician I love the health plan offered by Middlefield Hospital. The plan really meets the needs of my family. The copays and deductibles are so low and I get my prescriptions for free. Also, I can go to any provider I choose.

I hope they don’t make any changes to the plan, because I am worried that I may not be able to afford it Barbara Seville – Director of Quality Improvement Middlefield’s quality improvement activities are not effective anymore. We do lots of data collection and reporting, but there is little improvement in the quality of care. Most staff members believe that we already provide quality patient care and don’t see the why we are putting resources into this function. I think we are relying too much on our past reputation. Running a hospital isn’t unlike any enterprise; you must be willing to think outside the box and make tough choices.

The challenge here will be dealing with a vast amount of regulations (Cannon and Tanner) and US Government interference to accomplish what will need to be done. One thing for sure is if some major changes are not accomplished soon, this hospital will be in serious trouble. Lets look at these issues one at a time. The Payer Mix Medicare and Medicaide reimbursesments have become a HUGE problem for healthcare in this country and if Obama Care is not relealed in favor of something that will not bankrupt the country it will get far worse before it gets better.

The problem at hand today though is we are accepting far too many patients that can’t not pay what we need to survive in business. The first thing I need form the CFO is a break even anaysis as to how many of each type of payer we can accept so that adjustments can be made. One thing for sure is we need to stop accepting any “new” Medicare patients imeadiatly as has been done in other markets like Denver; Atlanta; Austin, Texas; Spokane, Wash. ; and other urban areas (Appleby). If we cannot keep our doors open accepting the number of Medicare patients we are, then we have no choice.

Middleton is not the only hospital in the area, other hospitals need to pick up some of the slack we are going to send back out into the market place. Middleton can’t afford to be the one stop shop for medicare, Medicaid and uninsured individuals. If we close our doors, where would they go then? I guess they need to start going now because we are inisiateing some limitation plolicies imeadately. Wellness Center Does the tree from the forest need to hit us on the head to see the forest? We need to imeadiatly need to section off part of the first floor of this hospital into one or more “Home Health Centers”.

By using the allied health care professionals we have on staff to provide better, faster and quality services at a competive price to others in the market will bring the neighborhood patient back to us. Additionally, we need to look at the actual costs of these services and adjust the fees and offer a significantly lower “cash price” to encourage the use of Health Savings Accounts (HSA’s) or Medical Savings Accounts (MSA’s). By not having to wait for reimbursement we will therefore dramaticly improve our cash flow and improve the effeciency of the billing department, thus saving money there as well. Managed Care Contracts.

It would apear we have another tree falling in the forest and because it didn’t hit us directly we didn’t see it. Once again, we need to imeadiatly assign someone in the accounting/ legal department to deal with our dated managed care contracts. Even with the tight regulations that we face in this industry, there is no excuse not to be on top of these contracts making sure we are receiving the proper amount of reimbursements that are reasonable and customary for the area. The right person or team should also develop and maitain the necessary reltionships to insure we are not put in this situation again.

Quality Improvement Barbara Seville, Director of Quality Improvement needs to quit focusing on the past reputation of Middlefield and find some new approaches to quality improvement. One question I have for her is what are we doing with data collection and reporting now? Barbara’s main focus need to be getting the staff to stop looking through rose collored glasses and see what they believe about quality care being provided isn’t sufficient. If the hospital’s quality improvement program, isn’t what it need to be then, why are we waiting untill next year to adress this issue?

This hospital need to take a “Ford Motor Company” attitude; “The Quality goes in, Before the Name Goes on”. The attitude must have been successful, because when the other American (owned) car companies were in line for a Government bailout, Ford was too busy taking care of business to stand in line. That needs to be our strategy as well. The technology and equipmet issue was addressed and handled at the last secession, we have implemented success coaches for personel, we need to figure out what else needs to be done a do it now and not wait until next year.

We are in trouble here and can’t sit around and wait. Health Plan Health care plan?? Why is this an issue? Why do we have a plan that would send our staff elsewhere for healthcare? We are a hospital. We need to restructure this plan into a High Deductable Health plan using a Health Savings Accounts (HSA) (Roy). We should be able to roll back our premium expense by 3-5 years. Whereas, we are a hospital, we can offer our employee and their families healthcare internally at a deep discount and in addition contribute $2or every $1 dollar as a matching contribution for the employee HSA.

If they don’t want treatment here, they would be free to go elsewhere and use their HSA to help pay for their choice. Prescription drugs; I have allways wondered why can’t hospitals can’t form a coop and buy drugs in huge quanities like the big box retailers do? We could then implement our own $4/$10 prescription drug plan for both our employees and the public.

If this is not an option, then with their HSA, the employee would be free to purchase their drugs at the “Big Box retailer of their choice. This health plan should go a long way to the retention and attraction problem having been dealt with prior to this.

Aretha Holly and her collegues should find this plan will save them money in the long run and there should be a significate savings to the hospital as well; which in effect mean She will have a pharmacy technician job for the long run. Inpatient Mental Health Services and Neo-Natal Intensive Care Unit Middleton Hospital can’t be everything to everyone, sometimes choices need to be made when it comes to the services and hospital units that Middleton dedicates space and staff for. Both the inpatient mental health services ward and neo-natal intensive care unit are losing money.

If we can’t find a way to stop the bleading of red ink; then they might have to be closed. Dr. McCrae – Psychiatrist, seems to think that Middleton has a community obligation to offer mental health services to patients who need care. If that is truly, what he believes then maybe he need to get the community to raise some additional funds to bring this unit to Break-Even.There must be reason, Middleton is the only psychiatric inpatient unit available in the community, and since the care we provide is excellent; raising money withion the community shouldn’t be a monumental task for Dr. McCrae.

As was streeed in the opening paragraph, running a hospital isn’t hugely different from any business; but it must be run like a business and not a charity. Tough choices have to be made if survaival is what is wanted. Middleton can and will survive under these strategies. Works Cited Appleby, Julie. “Rejections rise for Medicare patients. ” USA Today 18 February 2001. Online Newspaper.

Cannon, Michael F and Michael D Tanner. Healthy Competition : What’s Holding Back Health Care and How to Free It (2nd Edition). Washington, DC: CATO Institute, 2007. Book. Roy, Avik. “Yes, Virginia, There Can Be a Free Market for Health Care. ” (2012). Blog.

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