Case Analysis: Medical Center of Southern Indiana Essay

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Introduction

The Medical Center of Southern Indiana ( MCSI ) has had a disruptive term of office as a infirmary since its origin in 1973. Unprofitable from the really get downing. MCSI has gone through multiple ownership alterations. making a mistrusting ambiance between Clark County. IN occupants. the local medical community. and MCSI. The metropolis of Charlestown purchased the infirmary at the terminal of 1991 in the hopes of turning the installation into a profitable medical centre offering cardinal services to the community. An aggressive enlargement scheme was developed by direction contractor American MedTrust in 1992 and this led to an operating net income in 1998 of $ 480. 545.

This marked a turning point for MCSI. as it was the first twelvemonth in a really long clip that the infirmary had turned a net income. As they look to the hereafter. MCSI needs to find if it should go on with the aggressive scheme of spread outing services or decelerate its enlargement gait and concentrate on supplying first-class service within its current capacity and looking for ways to cut down cost and enhance grosss.

Key Demographics and Facts

Certain elements of the MCSI instance are indispensable in finding the appropriate scheme to prosecute in the hereafter. The external community general infirmary environment has non been booming during this clip period. Of the approximately 5. 000 community infirmaries in the United States in 1997. 22 % had bed capacity of 50-99. From the twelvemonth 1980 to 1997. the figure of infirmaries with 50-99 beds decreased by 24 % . As a 96 bed installation. the national tendency does non portend good for MCSI.

When the infirmary was purchased by the metropolis of Charlestown. American MedTrust came in with its aggressive “revitalization initiatives” to assist MCSI go profitable. Under American MedTrust’s leading. MCSI spent more than $ 3 million from 1992 to 1998 to carry through these aggressive schemes. Two cardinal elements of those enterprises involved spread outing the services offered and reconstructing relationships with insurance companies and the local medical community. As a full-service infirmary. MCSI already
offered a assortment of medical services. Because of a systematically low nose count ( tenancy rate around 45 % ) . developing ways to pull new patients was critical. A new inmate geropsychiatric unit. skilled nursing installation. and a place wellness bureau were added to the mix when infirmary executives determined that there was a demand in the community for these services and that the competition was non offering these services.

By 1998. all three new service lines were conveying in at least $ 1 million in gross gross. Other cardinal investings included the creative activity of an outpatient promenade. buying new engineering. and the creative activity of orbiter forte and primary attention clinics. Finding and spread outing beginnings of gross was besides a cardinal characteristic in the aggressive strategic program. MCSI knew that to heighten gross. the infirmary had to contract with managed attention companies. Because of rancid relationships between MCSI and the insurance companies. MCSI enlisted the aid of the province legislative assembly and the province insurance commissioner to go through the Any Willing Provider measure that required insurance companies to work with suppliers like MCSI and supply written accounts for any declines of contracts. In 1994. MCSI had two managed attention contracts ; there were 25 managed attention contracts in 1998. With 65 % of its patient base on Medicare. it was indispensable for MCSI to increase these managed attention contracts if the organisation hoped to spread out their gross watercourse.

Because of the enhanced services offered. the figure of full clip tantamount employees besides increased from 183 in 1994 to 270 in 1998. MCSI has benefited from a low 11 % employee turnover and a thin organisational construction. Even with these systems in topographic point nevertheless. the salary and pay disbursal has about tripled from $ 3. 3 million in 1992 to $ 9. 88 million in 1998. Of the 270 FTE employees. there are 75 active members of the medical staff. Gross gross generated by doctor was a spot lopsided in 1998 with 11 out of 75 doctors bring forthing about 75 % of the gross gross. As MCSI plans for the hereafter. grosss generated by doctor. by section. and the related wage disbursals need to be carefully examined to find the optimum mix of services provided to the Clark County community.

The location and demographics of Clark County continue to supply challenges for MCSI and the creative activity of future strategic programs. Clark County is a rural country with the bulk of its population life in the southern half of the county. near the Indiana and Kentucky boundary line. While Clark County does bask a low 2. 7 % unemployment rate. the mean county household income was a average $ 36. 726 in 1997. Merely 11 % of Clark County occupants had earned a bachelor’s grade as of 1998. therefore the chance of the mean household income increasing by any great grade was little. 65 % of the MCSI patient base in 1998 was a Medicare patient. MCSI is located in the north cardinal subdivision of Clark County.

Its closest rival is Clark Memorial Hospital in the southern half of the county. Clark Memorial has approximately 3 times the figure of beds as MCSI and the bulk of the county’s population lives closer to Clark Memorial. Louisville. KY is about 15 stat mis from MCSI. Any future enlargement programs must include a close analysis of the population growing tendencies in the country and an analysis of the service mix offered by both rivals. Clark Memorial and the Louisville-area wellness systems. Both of these rivals are better positioned to capitalise on any growing tendencies in the country and have the fiscal resources to sharply spread out to run into these tendencies.

Even though MCSI has posted an operating net income for the first clip in many old ages. the bulk of MCSI’s assets are tied up in receivables. The current ratio and yearss hard currency on manus are good below industry criterions. With increasing salary disbursals and assorted involvement disbursals increasing. puting in capital outgos or puting big amounts of money in new service lines might do MCSI’s runing net incomes be negative.

Recommendations

The Medical Center of Southern Indiana should go on to turn and better the service lines that are presently offered such as place wellness. skilled nursing. and geropsychiatric services. These services have been marginally profitable in the yesteryear for the installation. The place wellness bureau has seen a enormous growing increasing from $ 422. 000 to $ 1. 75 million in four old ages. Skilled nursing installation grosss have grown in four old ages from $ 1. 07 to $ 4. 7 million. In order to maintain these bing service lines booming. MSCI should be after moderate redevelopments that keep the installation up to day of the month with current service lines. Renovations should be similar to the $ 300. 000 reconstructing that was done to the outpatient service promenade and should include the purchase of medical supply equipment that will assist MCSI remain up to day of the month with its rivals. Large capital outgos should be avoided at this clip.

Additionally. MCSI should spread out its selling run to aim the local populations and maintain patients from the environing five counties from migrating into the Louisville country to have attention. This has been a job for the installation in the yesteryear. and has led to losingss in grosss. Another point of accent that should be addressed is the inclusion of the Ivy Tech College population and the Indiana University Southeast population. This population of pupils has yet to be targeted by the installation. and are a big beginning of possible gross. The selling scheme should besides concentrate on the enlisting and keeping of doctors. Recruitment has been an issue in the past and recruiting and retaining quality doctors is a cardinal constituent to the success of a installation. Currently. a minority of doctors bring in a bulk of the grosss.

Having quality doctors that provide services that the community wants and demands will besides assist enhance grosss. Because so much of the patient population is on Medicare. these gross sweetening schemes need to be complemented by cost economy schemes. MCSI has a bit more control over their disbursals than it does over their gross beginnings. After old ages of holding a guardian manner of strategic program. this aggressive prospector scheme has allowed MCSI to hold the resources to better run into the demands of the community and happen a manner to be profitable. However. at this point. it would be best to take a measure back and displacement to analyzer manner before go oning in an aggressive mode.

Datas

The Medical Center of Southern Indiana created a determination matrix to place determination standards in prosecuting a solution traveling frontward. MCSI choose to analyse physician partnership. its top service lines. enlargement of market run. and enlargement of the Ivy Tech population in order to make up one’s mind whether or non it should go on its aggressive enlargement run. Major standards countries taken into history included market place. competition. possible profitableness. and alignment with MCSI’s mission.

As shown in Figure 1. it was recommended for MCSI to go on edifice physician partnership and heightening its top three service lines ( place wellness bureau. skilled nursing installation. and geropsychiatric services ) . There was the recommendation to perchance prosecute enlargement of its selling run and Ivy Tech population. MCSI should decelerate down its aggressive enlargement scheme of adding new services and consolidate additions from those presently in topographic point. In making so. MCSI would switch from a prospector to an analyser.

MCSI achieved its largest operating net income of $ 480. 545 in 1998. Looking to go on aggressive enlargement could potentially take down its operating net income traveling frontward. Overexpansion of services may take to a dilution in the quality of attention. The infirmary is already structured as tilt to assist control costs. With such a low operating net income. MCSI does non hold the resources to go on their enlargement. As an analyser. MCSI will look to heighten its bing resources and delay to see what the competition does. Improvements can be made to MCSI’s top three services lines. Allocating resources for future redevelopments and purchases of equipment will assist maintain these countries successful and let them to go on generating net income. These three service lines respond to the demands of the Medicare patient base.

For physician partnership. MCSI must maintain its doctors who represent a bulk of gross gross. There is a big disparity for both gross gross brought in and patients seen amongst doctors. Keeping MCSI’s top doctors while besides looking to enroll other good doctors can take to an increased efficiency of patient attention and a decrease of cost. Involving the doctors in issues cardinal to care and daily operations is needed for a high physician keeping rate for MCSI. It is of import to hold doctors included in the procedures because they are the 1s caring for the patients. If MCSI has the available resources. it should prosecute spread outing its selling run and expression into enlargement of the Ivy Tech population.

The solution for MCSI to concentrate on its current service lines alternatively of continued aggressive enlargement will necessitate coordination amongst a wide-range of subdivisions within the medical centre. Kevin J. Miller. the President and Chief Executive Officer of MCSI is responsible for asseverating leading of the planning and execution of this solution. He must be involved in the procedure to avoid detachment within MCSI. It is critical for him to be a leader. but non take over the full procedure. The following measure would be specifying and pass oning the duties and functions of the organisational leaders in the assorted sections of the medical centre through the Board of Directors and Board of Trustees. It is their function to supply inadvertence and so allow the organisation take control.

Physician partnership through Independent Practice Association ( IPA ) . place wellness bureau. skilled nursing installation. and geropsychiatric services would affect those under the Physician Affiliates. Chief Nursing Officer. and Assistant Administrator of Specialty Services. severally. Expansion of selling run and Ivy Tech population would affect those under the Director of Human Resources and Director of Business Development. Those under the Chief Quality Officer are so responsible for sing the installations are up-to-date through redevelopments for these service lines. Those under the Chief Financial Officer would be responsible for maintaining path of the records and looking at the profitableness from services already in topographic point. All of these countries of MCSI must work with each other through active communicating.

It is necessary to hold strategic program agendas in order for the solution to be successful. Get downing with supervising daily activities. MCSI should finish a full strategic planning procedure every three old ages with one-year updates on each of the countries in the determination matrix. MCSI must hold the resources to supply for this solution. The solution identified by the determination matrix is responsible for MCSI’s ability to gain and increase one-year net income. Collecting informations in these countries in add-on to supervising the internal and external environment can let for MCSI to measure effectivity of consolidating additions from services already in topographic point in the hereafter. Current Status of the Medical Center of Southern Indiana

The Medical Center of Southern Indiana became a subordinate of Saint Catherine Healthcare LLC on May 1. 2006. Questions from the terminal of the Case:

1. Should MCSI decelerate down its aggressive enlargement scheme of adding new services and consolidate the additions from those presently in topographic point. or go on the aggressive enlargement scheme of adding and puting in even more services? We feel that MCSI should non go on its aggressive enlargement scheme. Rather. they should concentrate on go oning the care of their current service lines that have been so profitable for them the past four old ages ( place wellness. skilled nursing installations. and geropsychiatric services ) Continuing to spread out these bing services is what has allowed MCSI to turn and crush out rivals in some countries. Alternatively of concentrating on spread outing the service lines any farther. money should be invested to maintain bing installations “top of the line” .

2. Should MCSI reevaluate present services and retrench those that are non yet interrupting even? MCSI should decidedly carefully see all present services. particularly those that are non yet interrupting even. Certain service lines will ne’er interrupt even. but are required as portion of the community infirmary services. However. cut downing or retrenching these services could perchance be the best scheme traveling frontward.

3. Should MCSI alter its financial orientation and concentrate on cost decrease versus gross sweetening? With 65 % of the patient base on Medicare. gross sweetening might non be guaranteed. A combination of cost minimisation and gross sweetening schemes through increasing the figure of managed attention contracts would be the best orientation for MCSI.

4. Should MCSI prosecute a joint venture with doctors in limited partnerships? Yes. MCSI should prosecute a joint venture with doctors in limited partnerships. In 1998. 4 of MCSI’s 75 doctors brought in 44 % of the gross gross and 11 doctors brought in about 75 % of the gross gross. which was $ 39. 679. 356. It is critical to place the top earning doctors and maintain them at MCSI. Part of MCSI’s mission is to “increase physician enlisting. keeping. and coaction. ” MCSI must go on to affect the doctors in issues cardinal to quality and their daily operations.

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