Hospital System

For this Dropbox assignment, please read pages 692-716 (Case 14) of the course textbook Strategic Management in Health Care Organizations. In these pages, the Jefferson Hospital System (JHS) is described.

JHS consists of a full-service, acute-care hospital (Cooper Green Hospital), specialty outpatient clinics (Jefferson Outpatient Care), and six satellite, primary care clinics (the Community Care Plan).

With these components, JHS provides a full spectrum of medical care and a choice of two affordable payment options for what is considered to be an underserved population.

Create a 2- to 3-page report in Microsoft Word document that answers the following questions.

• Why do you think the components of this system are underutilized? (Please note that this is not just a problem of poor marketing and communication.)
• What would you do to increase the utilization of these services and attract a greater mix of paying patients? State at least four steps or actions you would take for this.
Support your responses with examples.
Cite any sources in APA format.

Assignment Grading Criteria
Maximum Points
Analyzed the components of the medical system at JHS that were underutilized.

Explained why the components of the medical system were underutilized.

Summarized the steps to increase the utilization of services and attract a greater mix of paying patients at JHS.
Notes from Class

As Dr. Michael entered his office, Martha James was still on his mind. It had been nearly four years since he launched the Community Care Plan, but in many ways it was still struggling. In his heart, he still believed it was a good model to provide access to preventive and routine medical services to the population traditionally served by Cooper Green Hospital: the poor and uninsured of Jefferson County. It placed small outpatient clinics within local neighborhoods.

They were staffed by physician assistants or nurse practitioners, who were supervised by a physician. For a quarterly fee, members could receive routine medical care at the CCP clinics. When needed, they also received care from specialists, and even inpatient hospital care at Cooper Green.
To Dr. Michael it made perfect sense; the CCP offered better access to services, less waiting time, less travel time, and a better atmosphere.

But the numbers did not agree. Although some of the CCP clinics established a reasonably sized patient base, others were struggling to attract members. If Martha James had been a CCP member, she could have been seen and received treatment before the infection had migrated to her lungs and she would not have had such a long waiting time. “For her, and thousands more like her,” Dr. Michael thought, “it’s important to keep the CCP running–if at all possible.” But few people knew about the CCP and even fewer had joined.

The five-year funding that enabled the hospital to launch the CCP was about to run out. Dr. Michael knew he was facing a critical decision: should he push forward with expansion plans for the CCP, maintain the clinics that existed, or fold the program altogether?

Cooper Green Hospital

In 1998, Cooper Green Hospital (CGH) was the current incarnation of Mercy Hospital. Built in 1972 with Alabama State and Hill-Burton funding, Mercy Hospital served the vision of the Alabama legislature to provide care for the indigent population of Jefferson County. Despite numerous organizational, structure, and name changes, the mission of the facility remained essentially the same: to provide quality medical care to the residents of Jefferson County, regardless of their ability to pay.

Mercy Hospital opened with 319 inpatient beds–a number based on an epidemiological study using the number of indigent cases reported in county hospitals during the mid-1960s. The study projected that the hospital would operate near 80 percent capacity. Occupancy never reached the initial projections. The highest average census for the hospital was 186.3 in fiscal year 1974. The numbers of inpatient admissions, discharges, and length of stay for 1998 are shown in Exhibit 14/1.

The role CGH played in the community faced constant scrutiny from a county commission with increasing budget pressures. Media and public challenges about the quality of care provided by CGH limited its ability to attract patients with private insurance. For the first two decades of the hospital’s operations, cost overruns were common, as the county’s indigent population grew and medical costs soared.

Facing increasing costs, Dr. Michael and the administrative staff initiated a stringent budget-cutting program that included personnel lay-offs, taking beds out of service, postponing most capital improvements, and eliminating some services. The hospital’s financial statements for the fiscal years 1993–1998 are included in Exhibits 14/2 and 14/3.

Early in his tenure as CEO, Dr. Michael initiated a strategic planning program for the hospital. Mission, vision, and value statements were developed (see Exhibit 14/4), strategic goals were outlined, and plans for meeting them were created. Each year, the strategic goals for the upcoming fiscal year were developed by the “management group” (consisting of the CEO, COO, CFO, Medical Chief of Staff, and Nursing Administrator) and distributed to all departmental supervisors.

As a result of ongoing strategic planning, Dr. Michael took the initial steps to transform Cooper Green Hospital into the Jefferson Health System (JHS) in 1998. JHS consisted of CGH (the inpatient facility) and Jefferson Outpatient Care (comprised of the outpatient clinics located in the hospital and six satellite clinics of CCP). JHS provided services to patients through two plans: HealthFirst, a traditional fee-for-service plan, and the Community Care Plan (CCP), a pre-paid membership plan.

Part of the motive for the transformation and expansion of CGH was to enhance its ability to generate external revenue, including attracting patients with private insurance. If CGH could attract paying patients on the basis of quality and satisfaction, it could mold itself from a provider of last resort into a true competitor in the market.
HealthFirst

Charges for services under the HealthFirst plan were determined by a sliding-fee scale that was based on federal poverty guidelines. Depending on the number of people in the family and the family’s income, patients were assigned to one of eight financial support categories. At the lowest level, patients paid as little as $2 for an office visit. At the highest level, patients paid full price for services (approximately $50 for an office visit). The HealthFirst financial support categories are shown in Exhibit 14/5. Initially, HealthFirst patients could only be seen at the outpatient clinic located at the hospital. However, in 1998 these regulations were relaxed, allowing HealthFirst patients to be seen at any of the satellite (CCP) clinics.

Community Care Plan

An important part of Dr. Michael’s vision for JHS was the CCP. His initial approach to developing the plan was best described as a “Field of Dreams” strategy: if you build it, they will come. “I envisioned offices filled with patients who were appreciative of the opportunity to receive quality medical care for a fair and affordable price–with less time waiting,” Dr. Michael remembered.

CCP was developed around the ideas that catastrophic care was more expensive, patients waited until their conditions worsened, and they were treated in the more costly CGH Emergency Department. Dr. Michael asked himself, “Why not avoid these unanticipated high health care costs by allowing patients to pay a low monthly premium for unlimited services?” This would require that CGH, as well as the patients, change the way they thought about health care. Further, for the system to survive, Dr. Michael and his executive staff would have to understand and respond to the rapidly changing health care environment.