HCA 448 Case 1

#1Jason Grant is the current CEO of Summit Regional Hospital in Denver, Colorado. Summit Regionals financial health has been quite poor over the first year that he has been CEO and was suffering due to rising costs, static revenue, and declining quality of care. When he was hired he was told the mandate was to improve the quality of care and get the financials in order. Grant has less than a week to finalize his $70-million-dollar budget so it can be approved by the hospital’s board. As he looked over the budget, one issue was the building the future of the off-site clinics. The man who was there before Grant had set up community based clinics five years earlier to help to deliver care to the city’s poor. Even though these clinics were very valuable in delivering care to these neighborhood residents, the clinics took away funds from the Hospital’s in house services in which many of these were already underfunded.

As Grant thought back to early March he remembered one of the clinics he went and visited with a sign out front that was covered in graffiti, the building showing signs of serious aging and, a small waiting room. He met with Brett Dawson who was the clinic doctor and the administrator.  The look of the facility was in rough condition with the paint peeling everywhere, and in one examining rooms he found a bucket that was stuck in the floor catching a drip.

When Grant asked Dawson  how she puts up with the facility being in this bad condition and she said, ”What are my options?”  Last year’s clinic financials showed they cost 1.1 million to operate at a loss of $256,000. Grant believed that the clinics wear draining revenue. Summit Regional is needing funding for a new neonatal ward, operating theatre, MRI unit, upgraded business office computer system, and the emergency department needed another full time physician. Without these additions the the ability to attract top paying patients and doctors are very slim. Due to the location on the east side of Denver, Summit Regional had a high percentage of Medicaid patients in which the payments rarely covered the cost.

There was a rival hospital called St. Johns which was a for profit had better facilities and technology. Their financial condition was better than Summit Regionals as well because it was located on the west side of Denver in a better neighborhood and owned a 50% share in an MRI unit. Grant requested a possible merger with St. Johns but the Ceo of St. Johns responded back, “Competition is the only way to survive.” Grant knew he could either borrow or cut costs, but he hospitals ability to borrow money was low because of their debt so he figured the best alternative was to cut cost.

Grant wanted to cut some of the 1400 employees to take care of the current 350 beds. However, cutting personnel would affect the quality of care. Rising costs of these clinics and Denver’s budget deficit was causing the clinics revenue to decrease more. Closing the clinics would be a personal blow to the mayor who fought hard to get the clinics in Denver. If Grant was to close the clinics he felt as if he would lose an ally in the mayor's office.

The four in house clinics which were surgery, pediatrics, gynecology, and internal medicine cost Summit Regional $200,000 a year in physician fees alone. Because of Medicaid not covering the full cost of these services, the facility was losing about $100,000 a year from the in-house clinics and the clinics were already down 10% this year.

Data on the performance of the clinics was gathered and the prenatal care visits had been declining for 16 months and those visits account for 60% of the clinics’ business. The other types of visits to the facilities were all holding steady. It was believed that the prenatal decline was due to the cut funding for prenatal outreach and advocacy to low income communities. Without the outreach the pregnant women were less likely to visit the clinics. There were also no different between birth weights for clinic patient and birth weights for non clinic patients.

Some positive notes though were that the inpatient referrals from the clinics has risen in the last few years due to HIV-related illnesses, violence- related injuries, and detection of ailments of cataracts and cancer. Summit Regional had the job of serving the uninsured but generating revenue all at the same time. Some things needed to be cut and some things needed to be kept.

#2 Many of the challenges that Summit Regional is facing also are prevalent in the metropolitan hospitals serving the poor nationwide. Inadequate reimbursements from Medicare and Medicaid continue to be one of the main problems hospitals face financially and despite requirements from the Affordable Care Act, many patients that are still uninsured. These patients are more likely to postpone treatment because they do not have primary care physicians, which results in longer hospital stays and higher chances of readmission upon discharge (Rojas-Burke, 2014). Staffing shortages, the aging population, treatment for chronic conditions that often come as a result of socioeconomic conditions, and ever-changing advances in technology prove to be more difficult problems for inner city hospitals than their suburban competitors (Deal, Kamnikar, J., & Kamnikar, E., 2014, p. 14). The American College of Physicians has named violence, teen pregnancy, drug abuse, and HIV as being four major health problems in these urban areas, as well as those chronic conditions including diabetes and asthma. According to Donald Wasylenki, Chief of Psychiatry at St. Michael’s Hospital in Toronto, healthcare providers are less likely to be attracted to working in urban, poor areas due to one or a combination of these struggles (2001, p. 214-215).

#3 Section 501C3 is a part of the US Internal Revenue Code. It allows for nonprofit organizations to be exempt from federal taxes. 501C3 hospitals are "charitable." This means that their purpose is to provide treatment for poor and uninsured people who usually would not be able to afford this treatment. They are also known as non-profit hospitals. New requirements for charitable hospitals were formed under PPACA. The hospital must conduct a community health needs assessment every three years, the hospital must have a financial assistance policy, the hospital must enforce limitations on charges and the hospital must have a billing and collections policy.

#4 David Kindig, an Institute for Healthcare Improvement colleague described population health as being the outcomes for a particular group, rather the population be communities, regions, ethnic groups, socioeconomic classes, etc.

#5 SWOT ANALYSIS

Strengths:

1. One strength is that they have a desired group that consumes Summit Regional’s services on a routine basis. Even though these patients come from poor neighborhoods and mostly have Medicaid they do have patients that come and receive care from the hospital. This is better than not having any certain focus group of patients that come and that they actually have patients that still come in to receive care.

2. The second strength is that Summit Regional already has 4 in-house clinics. According to the case study the clinics include: surgery, PEDs, gynecology, and internal medicine. These clinics enable Summit Regional to deliver services based that can generate high revenue if issues are fixed.

3. The amount of inpatient referrals has risen in the last few years. Speculations in the case study say that it is due to HIV- related illnesses, violence related injuries, and detection of ailments such as cataracts and cancer.

4. The population of Denver including suburban and rural residents is 700,000 people. This is a strength because it gives Summit Regional plenty of people to administer care to outside of their current population.

Weaknesses:

1. Summit Regional and their clinics are suffering declining quality of care. According to the monthly public relations office survey Summit Regional’s quality of care had been on the decline for the last few months. This can cause patients to not want to come to get care because of the fear of not getting their needs taken care of.

2. The second weakness is the clinics biggest payer source is Medicaid which does not do well at covering cost incurred at the time of care resulting in the clinics going into more debt. This weakness can be happening because of non correct coding, timeliness of care is not correct, or patients are being readmitted within the 30-day window.

3. According to the case study there is a need for the neonatal ward to expand, the chief of surgery is wanting another operating theatre, radiology is demanding a new MRI unit, the business office is wanting a new computer system, and the ED needs another full time physician. These gaps can result in causing the clinics to not generate revenue resulting in an increasing debt. Because of the debt currently they are not able to advance on these needs.

4. Care is given according to the case study to people in poor neighborhoods who either have Medicaid, Medicare, or no insurance at all. They have no plan of finding new ways to draw in higher paying paying patients. Also the government in Denver is very keen on keeping Summit Regional’s clinics devoted to patients with little to no money and still expect to generate revenue.

Opportunities:

1. One opportunity is the ability for Summit Regional to reach out to the population of 700,000 people in Denver to deliver services to them. If the clinics can open up their consumer source and get more people in there to receive care this can result in a higher revenue and a debt decrease.

2. Another opportunity Summit Regional has is to increase the quality of care given in the facilities. According to the study by the public relations office quality of care has been lacking at the clinics. If the causes of the lack of care are identified and solved, then there will be better quality care taking place resulting in higher revenue and less people coming back within the 30-day period after care. Hearing about better quality care in the community will make more people want to come and receive their care at the clinics.

3. The third opportunity is the ability to attract technology and the staff needed in order to draw in more consumers. Better quality care and better technology can help to bring in new consumers due to new methods in surgery and the delivery of care.

4. One last opportunity is the ability for the organization to eliminate the unnecessary departments that do not generate revenue and the departments that do generate revenue needs to be more fine tuned. Improving processes in the desired departments will help to deliver timely, efficient care that creates revenue.

Threats:

1. The first threat is that the competitive hospital according to the case study have better facilities and technology. These facilities and technology help to bring more consumers in which generates more revenue. If Summit Regional’s financials continue to have the same trend they will be so far in debt that they have no way of keeping up with the competition.

2. The second threat is the rate of prenatal visits have decreased for 16 months which accounts for about 60% of the clinics business. If this problem is not fixed quickly, the clinics and go further into debt and eventually resulting in not being able to deliver care to the ones who need it.

3. The third threat is that the $100,000 that is donated to the clinics on a yearly basis possibly can be cut in the near future. Also funding has been cut for prenatal outreach and advocacy programs has been cut. This cut in funding cuts down on being able to pay for cost associated with the clinics. Also the cut in the programs stops education on pregnancy which can result in unhealthy mothers, babies, etc. When they come in to receive care and only have Medicaid it will not cover all of the cost incurred.

4. Summit Regionals non competitive position by his chief of surgery who stated, “If summit Regional wants to attract more higher paying patients and good department chiefs it at least has to keep up with St. John's.” The goal of anyone who is staff at Summit Regional should be to be better than St. John's not just compare to them. This lack in staff morale can create a workplace that doesn’t deliver quality and effective care is because they are just trying to compare to St. Johns instead of delivering great quality care that is better than St. John's.

References

Deal, K. H., Kamnikar, J. A., & Kamnikar, E. G. (2014, Winter). Challenges and opportunities facing public hospitals. Journal of Government Financial Mangement, 63(4), 12-16. Retrieved from http://www.busines.aum.edu/docs/default-source/business-beans/challenges-andopportunities-facing-public-hospitals.pdf?sfvrsn=2

Rojas-Burke, J. (2014, July 9). What happens when hospitals abandon inner cities. Association of Health Care Journalists. Retrieved from https://healthjournalism.org/blog/2014/07/what-happens-when-hospitals-abandon-inner-cities/

Wasylenki, D. (2001, January 23). Inner city health. CMAJ: Canadian Medical Association Journal, 164(2): 214-215. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC80685/