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).
Full Answer Section
Potential Challenges Related to the OB/GYN Unit's Performance
There are a number of potential challenges related to the OB/GYN unit's performance, including:
- State's decision to opt-out of the Medicaid expansion program: This decision has resulted in a significant number of uninsured or underinsured women in the community. As a result, these women may be less likely to seek prenatal care and other OB/GYN services.
- Aging population: The aging population is requiring more expensive care, which is putting a strain on the hospital's budget. Additionally, the aging population is less likely to need OB/GYN services.
- Changes in reimbursement from Medicare: Medicare reimbursement rates for OB/GYN services have been decreasing in recent years. This has made it more difficult for the hospital to generate revenue from the OB/GYN unit.
- Competition from other hospitals and healthcare providers: There is increasing competition from other hospitals and healthcare providers for OB/GYN patients. This competition is making it more difficult for the hospital to attract and retain patients.
Potential Trends in the Community Impacting Health Consumer Utilization Patterns
There are a number of potential trends in the community that are impacting health consumer utilization patterns, including:
- Increase in the number of uninsured and underinsured people: The number of uninsured and underinsured people in the community is increasing. This is due to a number of factors, including the state's decision to opt-out of the Medicaid expansion program and the rising cost of health insurance.
- Increase in the aging population: The aging population is increasing. This is due to a number of factors, including the baby boomer generation reaching retirement age and advances in medical technology that are extending life expectancy.
- Increase in the number of people with chronic health conditions: The number of people with chronic health conditions is increasing. This is due to a number of factors, including the aging population and changes in lifestyle.
- Increase in the demand for high-quality, convenient care: Consumers are increasingly demanding high-quality, convenient care. This is due to a number of factors, including the aging population, the increase in the number of people with chronic health conditions, and the rise of consumerism in healthcare.
Potential Benefits of Reorganization Within the Unit
There are a number of potential benefits of reorganization within the OB/GYN unit, including:
- Improved efficiency and productivity: Reorganization can help to improve efficiency and productivity by streamlining workflows and reducing duplication of effort.
- Reduced costs: Reorganization can help to reduce costs by eliminating unnecessary positions and expenses.
- Improved quality of care: Reorganization can help to improve the quality of care by coordinating care delivery and ensuring that patients are receiving the best possible care.
- Increased patient satisfaction: Reorganization can help to increase patient satisfaction by improving access to care and making it easier for patients to navigate the healthcare system.
Recommended Course of Action
I recommend a number of actions to improve the performance of the OB/GYN unit, including:
- Reorganize the unit to improve efficiency and productivity. This could involve streamlining workflows, reducing duplication of effort, and cross-training staff.
- Reduce costs by eliminating unnecessary positions and expenses. This could involve consolidating administrative functions and outsourcing non-essential services.
- Improve the quality of care by coordinating care delivery and ensuring that patients are receiving the best possible care. This could involve developing clinical protocols and pathways, and implementing quality improvement initiatives.
- Increase patient satisfaction by improving access to care and making it easier for patients to navigate the healthcare system. This could involve expanding office hours, offering telemedicine services, and creating a patient portal.
- Offer new services, such as midwife services, to attract and retain patients. Midwife services are often more affordable and convenient than traditional OB/GYN services, and they can be a good option for some women.
Implications for Patients, Providers, and Investors
Patients: The proposed changes could have a number of positive implications for patients, including:
- Improved access to care: The proposed changes could improve access to care by expanding office hours, offering telemedicine services, and creating a patient portal.
Sample Answer
Proposal to the CEO, Administrator, and CMO
Subject: Rural Hospital OB/GYN Unit Performance
Date: October 3, 2023
Introduction
As part of the strategic management team, I was tasked with reviewing various facility units and making recommendations that may avoid closure. Based on the profitability reports, I have determined that the OB/GYN unit is underperforming in several key financial areas.
This proposal will 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 recommend a course of action.