Middlefield is facing problems that are similar to those faced by many around the United States. Medicare and Medicaid reimbursements are not only shrinking, but also taking longer to arrive from the government, and reduced access to insurance means that more patients are showing up without coverage. That takes away money on two fronts: we’re having to refuse elective and non-emergency procedures, and the emergency patients that we do serve without insurance, by and large, never pay. If you add that to the increased costs of providing benefits to our own employees, it’s not hard to tell that our hospital is bleeding potential profits in several areas – and we haven’t even started talking about departments yet. There are several changes I would suggest implementing immediately, and several others that I would phase in over a 60- to 90-day period.
First, I would open negotiations with different health insurance providers. Costs are going up everywhere, but there’s no reason not to look at alternatives that provide similar levels of service. I would set as a goal a reduction in cost to last year’s level of expense and seek to negotiate a cap on annual premium increases.
I would also bring in an auditor to look at the managed care contracts. After 30 to 60 days, I would expect a report on utilization and reimbursement data. If I had the flexibility, I would hire someone for this position who could also serve as a liaison with our contract vendors. Leaving these relationships unmanaged is a recipe for waste, if not disaster; we can’t expect our managed care vendors to keep an eye on their own operations without any input from our end (Tung and Yang p. 218). As a target, I would set an increased utilization goal of 25% and an increase in reimbursements at a percentage appropriate to the auditor’s findings.
Next, I would analyze the departments which are underperforming. Are the mental health and neo-natal intensive care units losing money because we’re waiting for government reimbursement? Do we have a caregiver-to-patient ratio that is inappropriately high to maintain profitability (Jack and Powers p. 153)? If so, we may be looking at sending some of our caregivers to part-time status or even considering some layoffs. Do we have enough inpatient mental health patients to justify the ongoing presence of a department?
If not, what departments could we add, instead? Many hospitals are adding departments to diversity their offerings and increase profitability (Clement p. 991). Cosmetic procedures such as lap-band and other weight reduction procedures have increased in popularity, and those who want to have them done generally have the means to pay for them. Our competition has opened a wellness center; operating one of those in conjunction with a weight-loss reduction surgery unit could give us an advantage.
Over a 60- to 90-day period, I would start a review of the quality improvement program. If the problems with this plan are significant enough, we would be at risk of losing government funding, in the form of reimbursements or grants, while we remedy the situation. It would be more proactive to go through the program and perform in-house improvements before the Joint Commission survey begins. With many hospitals in our financial situation, it’s highly likely that many of them are facing the same infrastructure and care dilemmas that are before us, and proactivity on our end should help our review by the Joint Commission go more favorably for us.
Another longer-term strategy I would employ would include an analysis of our marketing presence. What is our competition doing to position themselves? I would institute a thorough review of our presence through the various media: television, radio, billboards, print media, direct mail, and follow-up through e-mail and direct mail from patient visits. The competition is pulling in young families left and right: what do their materials look like? We have an NICU that isn’t bringing in money. If we want to keep it, a campaign featuring a young couple with a baby needs to begin immediately.
There is no such thing as maintaining a status quo in health care – or in any industry, to be honest. Competition is always approaching, and external factors such as government funding and premium costs should not be elements that keep Middlefield from achieving its goals for excellence in patient care and customer service. These initial steps will give us perspective on the ongoing operations of the hospital and will indicate concrete changes we can implement to reverse negative trends well in advance of our review.
Works Cited
Clement J. (1987). Does hospital diversification improve financial outcomes? Medical Care
25/10, 988-1001.
Jack, E. & Powers, T. (2009). A review and synthesis of demand management, capacity
management and performance in health care services. International Journal of
Management Reviews, 11, 149-174.
Tung, Y. & Yang M. (2009). How to effectively implement an indicator system to improve
performance from a management perspective: the case of Taiwan Healthcare Indicator
Series (THIS) System. Journal of Medical Systems 33/3, 215-221.
