Assessing Organizational Viability

Scenario

You are the CFO of a rural hospital. During a recent review of the organization’s financial status, the hospital was deemed “at risk” for closure. Several factors contribute to the at-risk designation, including the state’s decision to opt-out of the Medicaid expansion program, the aging population which requires more expensive care, and the changes in reimbursement from Medicare. These challenges have resulted in rural facility closures across the country. As part of the strategic management team, you are charged with reviewing various facility units and making recommendations that may avoid closure. You determine that based on the profitability reports, the OB/GYN unit of the facility is underperforming in several key financial areas.

Instructions

In a written proposal to the hospital CEO, Administrator, and CMO, discuss the following:

• Identify potential challenges related to the OB/GYN unit’s performance.
• Explain potential trends in the community impacting health consumer utilization patterns.
• Explain the potential benefits of reorganization within the unit and how reorganization could improve its financial status.
• Recommend a course of action and the implications that those actions will have for patients, providers, and investors (i.e., how might closure affect the community or how might new service offerings, such as midwife services, improve profitability).