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Jan 9, 2024
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Whitaker Memorial Hospital – Feasibility Study
HCM-FPX5310: Decision-Making in HC System
Instructor: Don Nowill
Introduction
Established in 1908 as the name Whittaker Memorial Hospital, the institution underwent a transformation in 1985, becoming Newport News Memorial Hospital with a capacity of 126 beds. Originally established to address the healthcare needs of African Americans in the early 1900s, the hospital has grappled with persistent financial challenges. The financial downturn began in 1984 when expenses surpassed revenues by $749,000. By the close of the first year, the hospital reported a loss of $184,000, prompting the departure of the administrator.
Facing mounting financial difficulties, the hospital filed for bankruptcy in 1993 and embarked on a path of restructuring to address its fiscal issues. In 1995, as part of the reconstruction efforts, Dr. Bryant assumed the role of Executive Director. Despite gaining a fresh
start by alleviating the burden of nearly 900 creditors, the hospital continues to confront financial
hurdles (Makamson, 2006). The hospital must create a strategic plan that will lead the facility to a significant reorganization.
Section I: Organization Background
Hospital Mission and Vision
The hospital has consistently upheld its mission to serve the community efficiently and effectively, placing special emphasis on delivering exceptional care to African Americans. This commitment arose from the prevalent issue of nearby hospital facilities turning away many African American individuals, making Newport News General Hospital the preferred choice. While the hospital catered to all nearby residents, it sought to distance itself from the perception of a public hospital, which unfairly implied inferior care. Determined to shed this stigma, the hospital aspired to evolve into a respected healthcare institution.
Current Revenue Stream
In 1991, the hospital experienced a net profit of -$2,173,593 with net revenues amounting
to $8,666,300, resulting in a -25.08% profit percentage. By 1994, the hospital achieved an efficiency score of 3.39, where a lower score indicates a higher efficiency rating. Notably, the hospital's efficiency score surpassed that of other nearby hospitals during this period. There were
concerns that the hospital might have overlooked some charges for services rendered, potentially contributing to its financial losses. In response, the administration opted to operate the facility with 80 beds, although, on average, there were 64 inpatients (Makamson, 2006).
Hospital Staffing
At the end of the first year, the hospital board appointed the city's mayor as the hospital administrator, aiming to implement a more effective management system. In pursuit of a more efficient management system, a $500,000 mainframe computer was acquired. Faced with ongoing financial challenges, the administration chose to trim expenses by downsizing the workforce, reducing the staff from 200 employees to 100 employees. Notably, the hospital stood as one of the primary employers in the area (Makamson, 2006). This reduction in the number of
nurses within a hospital carries inherent risks, considering that each state mandates a specific nurse-to-patient ratio. Layoffs may lead to standing issues at the facility, potentially jeopardizing
the hospital's credentials. Ensuring an appropriate staffing level is crucial for the successful reconstruction of the facility.
Tax Status
In 1993, the hospital applied for Chapter 11 bankruptcy and received approval. The bankruptcy filing revealed a debt of $22.4 million against assets totaling $14.6 million. Chapter 11 provides the hospital with the opportunity to undergo reorganization and strategize for the future (Makamson, 2006).
Section II: Objectives of the Proposed Program
Hospitals play a significant role in contributing to the economic vitality of a city or town, and maintaining the hospital's favorable standing is considered beneficial for the local community. The proposed program aims to enhance healthcare systems, enabling personnel to effectively monitor services and received payments. Historically, Newport News General Hospital faced substantial financial losses due to the hospital not capturing all charges for services rendered. Implementing Epic Systems will empower staff to input each patient into the electronic database, facilitating the seamless addition of ancillary charges as they occur. This includes lab work, medication administration, services rendered, etc. This method ensures the comprehensive capture of all necessary charges in an efficient manner, contributing significantly to increased revenue. Moreover, the program meticulously documents all charges, promptly identifying and rectifying any instances of incorrect patient billing (Epic Systems Corporation, 2023).
This system will not only maintain revenue streams for the hospital but allow patients to accurately track what they are being charged for. The Epic system will allow for direct payment for invoices. Everyone will benefit from the program because charges will be captured, and it will reduce the margin of error.
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References
Epic Systems Corporation. (2023). Our Software. Epic.com. https://www.epic.com/software/
Makamson, E. L. (2006). WHITTAKER MEMORIAL HOSPITAL.
Journal of the International Academy for Case Studies, 12
(5), 83-92. http://library.capella.edu/login?qurl=https%3A
%2F%2Fwww.proquest.com%2Fscholarly-journals%2Fwhittaker-memorial-hospital
%2Fdocview%2F216292854%2Fse-2%3Faccountid%3D27965