Tag Archives: health care management

Financial Statements:

What to Use, When to Use It

Accounting in health care is very important in order to understand the economic health of the organization. Without understanding the financial status of the organization, directionality of growth and prosperity is certainly in question; however, with financial statements as a guide, one can make informed and logical decisions to develop a strategic plan to direct organizational growth in a fiscally responsible nature.

Ittelson (2009) and Penner (2004) outline the various financial statements and how they are used. I will review three financial statements (the balance sheet, the income statement, and the cash flow statement) and the means to use the values on these statements to provide meaning, through the use of ratio analysis, of the fiscal health of the organization.

Financial Statements

Balance Sheet

The balance sheet is one of two main organizational financial statements. Ittelson (2009) outlines the balance sheet as showing assets = liabilities + worth, in that the value of an organization’s assets (or, what an organization has) is the sum of the organization’s liabilities (or, what is owed) and worth (or, the value of the organization to the owners).

Assets are usually listed on the balance sheet in order of liquidity and include everything valuable within an organization, including cash, accounts receivable, any inventory (included at depreciated value, if applicable), expenses that were prepaid, and any other intangibles that offer intrinsic value to the organization (Ittelson, 2009; Penner, 2004).

Liabilities, according to Ittelson (2009), are listed on the balance sheet as groupings of term (short- and long-term) and include current liabilities (accounts payable, expenses, portions of contracted debt currently payable, and taxes), long-term debt (or, contracted debt payable outside of the bounds of the current statement), and shareholder equity (or, the sum of capital stock value and the amount of retained earnings). The shareholder equity is also the worth of the organization.

By definition, the balance sheet must be balanced in the end with the value of the assets being the total liabilities and equities offset by the shareholder equity. The balance sheet, with this comparison, provides the fixed financial picture of the organization at any particular date.

Income Statement

The income statement, which describes an organization’s profitability, is the other main financial statement of an organization (Ittelson, 2009). The income statement details the value of inputs and expenses required to develop a specific income for a defined period of time; however, according to Ittelson (2009), it does not provide timing on payments or an assessment of how much cash the organization has on hand.

The income statement accounts for the gross margin (net sales vs. cost of goods sold), operating expenses (e.g. sales and marketing, research and development, and general and administrative expenses), interest income, and income taxes to derive net income (Ittelson, 2009; Penner, 2004).

As the organization’s net income increases, reflections of increased assets or decreased liabilities will be seen on the balance sheet. Likewise, this link will also show the reverse to be true as decreased assets or increased liabilities (Ittelson, 2009).

Cash Flow Statement

The cash flow statement, as noted by Ittelson (2009) and Penner (2004), simply describes the movement, or flow, of cash within the organization. Starting with the amount of cash on hand at the beginning of the reporting period, the cash flow statement tracks how cash is paid and received, such as cash receipts and disbursements, purchases of fixed assets, money borrowed, stock sales, and taxes paid, ending with the amount of cash on hand at the end of the reporting period. However, this statement does not account for receiving inventory or delivering finished products to customers as these would account for non-cash transactions. Only when the organization pays for the inventory or the customer pays for the product would it affect the cash flow statement.

According to Ittelson (2009), the cash flow statement describes the velocity of cash, exclusively, within an organization, and accounts for a portion of the organization’s assets as well as some new liabilities (such as a new mortgage or loan) and old liabilities (debt being paid).

Ratio Analysis

Although the financial statements described above describe the general financial health of an organization, the relationships of particular items within those reports can provide more specific indicators of financial condition (Ittelson, 2009; Penner, 2004). The use of these relationships is called ratio analysis.

Ratio analysis can help to determine factors, such as profitability, liquidity, asset management, and leverage. Ratio analysis can also help to compare various organizations among various industries by using a statement conversion to “common size” (Ittelson, 2009, p. 194), which represents items as percentages of the largest item on each statement.

Profitability, according to Ittelson (2009), is the ability of an organization to generate a return of profit on equity, sales, and assets. The gross margin, as a percentage, is also a profitability ratio analysis.

Liquidity, as opposed to the measure of returning a profit, is a measure of an organization’s ability to maintain a financial cushion and show financial strength.

Asset management ratios are measures of the efficient or inefficient use of assets and the time generally taken from using inputs to receiving payment. According to Ittelson (2009), “asset management ratios provide a tool to investigate how effective in generating profits the [organization’s] investment in accounts receivables, inventory [sic] and fixed assets is” (p. 198).

Leverage, much like liquidity, is a safety measure that describes the organization’s ability to absorb loss and meet obligations. The leverage safety cushion is also referred by Ittleson (2009) as the “equity cushion” (p. 202). Too much leverage is risky, but too little leverage decreases the ability to maximize profit and growth. Leverage is the use of other people’s money to augment the owner’s investment in order to maximize profits.

Discussion

By using strict accounting guidelines and keeping accurate records, financial statements can be prepared that will provide insight into the financial health of an organization. These statements can help to compare the financial status of the organization at different times or to compare the organization with other organizations. Also, accurate financial statements will help to draw investors, secure lending opportunities, and comply with legal requirements.

References

Ittelson, T. R. (2009). Financial statements: A step-by-step guide to understanding and creating financial reports (Revised and expanded ed.). Pompton Plains, NJ: Career Press.

Penner, S. J. (2004). Introduction to health care economics & financial management: fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Investment in Capital Improvements

To Buy or Not to Buy, That Is the Question

Outlays for capital improvements can be daunting, whether for a business or within a personal budget. It makes sense to invest in capital improvements when a realistic return on the initial investment can be expected. Computers, motor vehicles, and homes are all good examples of large personal investments that can generate significant returns or provide security that increases stability. In health care, outlays for expensive imaging devices, real property, and specialization programs can generate the same returns or stability to seek returns, especially when resulting from strategic business planning. Penner (2004) describes these outlays, or expenses, “as inputs or costs incurred in the process of producing goods and services” (p. 65). These inputs are designed to enhance existing revenues streams or provide for additional revenue streams.

Although health care budgeting is much more complicated than personal budgeting, the concepts are very similar. Penner (2004) demonstrates various types of budgets that account for many more revenue and expense items than is typically seen in personal budgeting. For instance, a hospital would account for every charge for every patient seen in each department seen. The hospital would also have to account for a number of expenses, such as personnel costs and the cost for each piece of patient care equipment (Penner, 2004). However, budgets can be consolidated and simplified the further they move from direct care (e.g. budget overviews used by the board of directors would not be so specific to account for each patient’s stay; instead, the budget overview would reflect revenues and expenses departmentally with references to the budgets of each specific department).

Recently, I made two large purchases that had to be budgeted: a) a Chevy Suburban (financed) and b) a Harley-Davidson motorcycle (cash). With both purchases, I needed to be sure that I needed the vehicle and I would benefit from the purchase. For the Suburban, because it was financed, required me to budget $500.00 / month; however, the vehicle allows me to get back and forth to work to earn my living, is reliable in all types of weather (important because I am required to report to duty even in severe weather), and maintains a high resale value. This purchase also required me to budget increased fuel costs due to poor fuel economy. The motorcycle purchase, admittedly largely recreational, also required significant forethought and budgeting; however, the excellent fuel economy certainly allows me to offset the Suburban’s fuel consumption during moderate weather. The motorcycle was also priced at a significant discount and requires little maintenance.

Again, the basics of budgeting are the same for business and personal finances; however, business budgets can get fairly complicated fairly quickly. For personal budgeting, the level of complexity is mainly determined by the needs of the individual. Tracking income and monthly bills requires little detail, though planning for a major future purchase or savings goal requires more significant accounting and detail.

References

Penner, S. J. (2004). Introduction to health care economics & financial management: Fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Mind Your Own Business: Health Care Economics

Regardless of funding levels or overhead, health care must be provided ethically. The goal of the health care industry is to improve health, and unlike other industries, this market is driven not by choice but by need. Other markets perform, according to Friedman and Friedman (1980) and Smith (1910), only when mutual benefit can be achieved, that is, without external force, coercion, or unnatural limitation. Penner (2004) presents the economy of health care representative of many of the ideals that were accepted at the turn of this century. However, the current state of health care economics is the result of the unnatural force of these ideals in attempting to mold the market against natural market pressures, as described in detail and warned against by Friedman and Friedman and Smith.

Health care demand is based on need. Within that need, demand is reflective of pricing. For example, patients do not elect coronary bypass surgery, but if needed, the demand could be reflected by pricing constraints realized in negotiations of hospitals and insurance carriers. In this case, the patient may be transferred to a center that has negotiated reduced rates with the carrier for coronary bypass procedures. Ergo, health care demand is reflective of patient need and is variable only in the context of insurance pricing. It is within this negotiation that the aspects of quality, access, and cost are accounted. Government policy, however, has a negative and downward effect on these negotiations. If health care institutions are perceived to be able to provide the same services at discounted prices for government payors, then the institution should be able to provide these same services to private payors for the same or similar cost. This cost adjustment conversely affects quality and access.

Penner (2004) makes a logically flawed argument in respect to regulation arguing that increases in skilled nursing facility (SNF) safety regulations created a demand for more nursing assistants; however, this is an increased input to be provided by the SNF, not an output to be demanded by the patient. The cost will be borne by the private insurance payor, ultimately, and not the regulatory agency or the patient, which increases premiums decreasing access to private health insurance. Regulations negatively impact the relationship between supply/demand, quality, access, and cost. This is not to say that safety should not be a concern, as it is one of the few areas that I agree should be regulated, though, minimally.

Penner (2004) goes on to state “one role of government is to intervene in cases of market failure” (p. 21), using the pharmaceutical industry as an example. Unfortunately, with the focus on the new and significant health care and health insurance legislation and regulation, many academic discussions surrounding health care economics are now outdated and trivial. Without entertaining a constitutional debate, recently, governmental involvement has shown to have a negative effect on the health care industry actually causing market failures instead of alleviating them. Recent over-regulation by government on the pharmaceutical industry has resulted in a significant and dangerous shortage of life-saving emergency medications (Malcolm, 2012). This economic constraint will lead to higher demands of other, inferior, medications and increase the price, effectually increasing cost and decreasing both access and quality. This effect is also seen in the emergency medical services when states fix the price that can charged to users leaving the municipal taxpayer to face tax increases or decreases in access to emergency services and the quality of the services delivered (American Ambulance Association, 2008). Over-regulating an industry without regard to survivability is inefficient and unethical, limiting access and quality while increasing costs.

Insurance companies have sought to minimize their exposure to the rising costs of health care (Penner, 2004). By developing common sense incentives, insurers can advocate for their customers financially while expressing desire for optimal outcomes. By maximizing consumer and provider choice, these incentives can be used as natural pressures within the market to improve upon cost, quality, and access (Penner, 2004). This realization, according to Penner (2004), resulted in the emergence of the health maintenance organization (HMO) — the first widely accepted form of managed care. Unfortunately, HMOs faced scrutiny in the 1990’s and later augmented business models to reflect newer preferred provider organizations (PPO) and point-of-service (POS) plans. PPO and POS plans were created to promote the more inexpensive use of general providers and those providers that have negotiated fees. Unfortunately, Penner writes, the pressures of these PPO and POS plans on the consumer limit choice within the market; however, the consumer still has a choice of insurance carrier, which minimizes the pressure faced within each plan. This freedom is not expressed in governmental plans, such as Medicare and Medicaid.

As health care costs rise, the writings of Friedman and Friedman (1980) and Smith (1910) would suppose that we lessen regulation within the industry, allow new and novel approaches to insurance paradigms, and create an environment with as little unnatural market pressures as possible in order to allow natural market pressures to ensure equitable cost, access, and quality through competition

References

American Ambulance Association. (2008). EMS structured for quality: Best practices in designing, managing and contracting for emergency ambulance service. Retrieved from fitchassoc.com/download/Guidebook-April08-V2.pdf

Friedman, M. & Friedman, R. D. (1980). Free to choose: a personal statement. Retrieved from http://books.google.com/

Malcolm, A. (2012, January 4). Vast web of federal regulation causing drug shortages. Investor’s Business Daily. Retrieved from http://news.investors.com/article/596775/201201041859/big-government-behind-drug-shortages.htm

Penner, S. J. (2004). Introduction to health care economics & financial management: Fundamental concepts with practical applications. Philadelphia, PA: Lippincott Williams & Wilkins.

Smith, A. (1910/1957). The wealth of nations (Vol. 1). Retrieved from http://books.google.com/

Human Resource Challenges

Human resource management is a comprehensive support paradigm for both the employer (and his or her agents) and the employee. Most of the discussion regarding human resources revolves around problem employees and how human resources management can be used to deal with them. This week, however, we get to appreciate how human resources management can be effective at mediating employee concerns. Presented with two scenarios involving employee concerns, we will choose one and explore the fundamentals of human resources management as it relates to the challenges presented.

Throughout the past two weeks, Paul, a physical therapist, has been receiving in his work e-mail inbox some disturbing messages from an unknown sender. Many of the messages are sexual in nature and some even refer to Paul’s coworkers. Paul has reluctantly confided in the head of the organization’s HR department to help him with the issue. He is very embarrassed about the situation and is concerned that an investigation might jeopardize his relationships with coworkers and even his position with the organization.

As internet technology and systems management is a forte or mine, it is difficult for me not to take the easy path by selecting scenario 1. For this scenario, Paul would only have to enlist his manager in engaging the IT department to track the emails, which is a very simple process (most people do not understand how much information is generated in server logs and attached to email messages). The sender of the offensive emails would be found out and dealt with, and/or future messages of this type would be blocked by the email server, and Paul would no longer be distracted by these offensive emails.

However, as I stated previously, I prefer a challenge and will review the problems and some potential solutions regarding scenario 2.

For the past year, the nurses’ union at Good Health Hospital has been meeting to discuss grievances against Good Health’s management. In particular, the nurses are concerned with the way managers treat them; many feel overworked, undercompensated, and underappreciated. They have recently submitted a proposal to Good Health’s executives asking for better management practices, an increase in nurse staffing, and better compensation and benefits for nurses. The executives have enlisted the help of Good Health’s HR department in addressing the concerns in the proposal; they are concerned about budget constraints as well as the possibility of a nurses’ union strike.

Scenario 2 involves organized employees threatening a work stoppage if, at least, some of their concerns are not mitigated. Work stoppages, or strikes, are detrimental to any organization. The nurses’ union at Good Health Hospital have presented grievances that are typical in health care (Fallon & McConnell, 2007). It is a wonder why these concerns were not identified early. As Fallon and McConnell (2007) point out, “the best time to address a problem is before it becomes a problem” (p. 281). In this case, effective management would have identified these concerns early and developed a plan, perhaps integrating potential solutions through the organizations strategic plan, and prevented the growing acrimonious and bitter discontent amongst the rank and file employees. Though Fallon and McConnell discuss various types of organizational leadership, I prefer to lead with libertarian values in mind; ergo, both respect and responsibility must be virtues of both employee and employer, and both must work hard for the other. Fallon and McConnell discuss how trust and mutual respect lends to an effective, efficient, and rewarding work environment. Unfortunately, in scenario 2, it seems that we are beyond mitigation and prevention and, legally and contractually, they must be addressed.

Good Health Hospital administrators should take heed to the complaints noted in the nurses’ grievances. Although many managers and adminstrators dislike unions, ignoring them is not the answer. In this case, the concerns are probably real. Fallon and McConnell (2007) tell how information pertinent to employer-employee relations does not typically transcend the ranks, and this set of grievances may be the first indication to upper management that there is an issue. Still, the hospital adminstration, depending on the organizational schema (for-profit, not-for-profit, public, private, et al.), has a responsibility to its stakeholders and must ensure both operational feasibility and cost containment. Answering to these grievances could jeopardize one or both of these. A work stoppage would be detrimental to the operation and prove costly while meeting the demands in full would unrealistically obliterate the profit margin (note: the demands are not listed within the scenario; however, we can infer that they are significant).

If I were in the position of dealing with these grievances, I would, first, separate the demands by genre: safety and ethics, emotion, and economics. First and foremost, any ethical or safety concerns should be dealt with immediately, anyway. By identifying and dealing with these issues first, the perception of a receptive and action-oriented administration is gained. The solutions for these issues can also be highly visible and can be made to work for the organization by way of press releases outlining improvements in safety if not mere visible changes in the work environment and culture. Second, addressing emotional issues, such as poor treatment by managers and the perception of a lack of appreciation, can be solved by the employees, themselves. For instance, a “grade your manager” program might be cost neutral and provide some insight for future coaching. This would also give a sense of the prevailing attitude of the employees in the way comment cards give businesses a sense of the clientele. Another way of addressing emotion is to direct each manager to inquire of their staff periodically about any minor concerns they might have. This would give a sense of open communications, something that appears to be lacking. Finally, it is time to address the economical concerns.

Many times, the pay and benefits that are offered to unionized workers are stipulated in the collective bargaining agreement. These, fortunately (or, unfortunately) cannot be changed until the contract is renegotiated. Ethically and respectfully, the compensation package should hover near market levels. Fortunately for Good Health Hospital, we have already addressed a few concerns, so we have latitude in addressing the economic issues. As Fallon and McConnell (2007) state, working conditions are just as important as financial incentives, and employees may sacrifice pay and benefits for a decent working environment.

Regardless of the hospital’s ability to meet the nurses’ demands, I would insist on meeting with them, out of respect, to hear their concerns; however, the meeting would be official and the labor relations attorneys would be present to ensure compliance to the National Labor Relations Board regulations.

References

Fallon, L. F. & McConnell, C. R. (2007). Human resources management in health care: principles and practice. Sudbury, MA: Jones and Bartlett.

The Hiring Process & Social Media

Social media has blossomed in the past few years beyond what many could have imagined. Today, it seems that many people engage others on the internet and social media without regard to their own personal privacy. Additionally, according to Jones and Behling (2010), privacy settings within social media applications tend to be complex, which inhibits their effective use by privacy-minded users. The result is an open and rich source of personal data, the problem of which is context.

I view social media as personal advertising where, unless specifically stated in the terms of service, the information posted by others is considered to have entered the public domain; others may view social media in the light of property rights where, although many people might not lock their front door, the invitation to invade the space is not assumed (Rosen, 2009). Regardless of personal views, information seekers need to be mindful of three things: 1) the terms of service for using the application resources, 2) the privacy policy in effect for using the application resources, and 3) the context of entries and the audience each entry is meant to reach (Jones & Behling, 2010; Rosen, 2009). Considering that the personal data made available on social media applications is not typical of allowable employment interview scenarios, employers need to be mindful that searching out this information may lead to unethical and illegal hiring practices (Fallon & McConnell, 2007; Jones & Behling, 2010; Rosen, 2009). Still, employers use social media to further vet applicants (Jones & Behling, 2010). Another consideration along similar lines is the use of generic web-based searches that could uncover similar information (Rosen, 2009).

In the case study provided by Coutu (2007), Virginia performed an internet search on Mimi and know suffers the problem that one cannot unknow knowledge. Additionally, Virginia know feels ethically compelled to share this information with Fred, the CEO. While this information would not be pertinent in the hiring process of a line employee, staff employees require more scrutiny, especially those that are being vetted for significant leadership positions. Rosen (2009) states, “employers do have broader discretion if such behavior would damage a company, hurt business interests, or be inconsistent with business needs” (para. 15). With this in mind, I tend to consider the paradigm of privacy practices when confronted with public officials and celebrities. A public head of a company or division might not have the same expectations of privacy afforded to a typical job applicant, but this would be a question for lawyers, as Mimi alludes to in the case study.

Basing the decision to investigate Mimi via Google on the general welfare of the organization, I would recommend allowing Mimi to defend her position in order to minimize bias and assumption. Two questions could be asked of Mimi that may allow her to mitigate concerns stemming from the search: 1) Regardless of any past pretenses, do you feel that you can represent this company appropriately if faced with issues regarding international politics? 2) Do you have any concerns about operating effectively within a political environment, such as China? Asking these questions, however, assume that the legal ramifications have been assessed and that they have been deemed appropriate for these particular circumstances. Ultimately, however, the decision lies with Fred to formulate a team that he feels can further the goals of the organization. He may consider the search results inconsequential and hire Mimi regardless of these findings, which would also be appropriate.

References

Coutu, D. (2007). We Googled you. Harvard Business Review, 85(6), 37-41.

Fallon, L. F. & McConnell, C. R. (2007). Human resource management in health care: principles and practice. Sudbury, MA: Jones & Bartlett.

Jones, C. & Behling, S. (2010). Uncharted waters: Using social networks in hiring decisions. Issues in Information Systems, 11(1), 589-595.

Rosen, L. (2009, September 15). Caution! – Using search engines, MySpace or Facebook for hiring decisions may be hazardous to your business. Retrieved from http://www.esrcheck.com/articles/Caution-Using-Search-Engines-MySpace-or-Facebook-for-Hiring-Decisions-May-Be-Hazardous-to-Your-Business.php

Human Resource Management, Part 2

“Didn’t Cut It? Hire Another”

Human resource management (HRM), especially when considering employment contracts, is heavily reliant on the understanding of the laws and regulations governing the jurisdiction of practice, whether these laws and regulations are local, state, or federally mandated. Fallon and McConnell (2007) demonstrate that “many laws and other legal requirements exert considerable influence on the employment process …. [and,] managers must [also] be aware of many aspects and nuances of HR law….” (p. 127). Kathy Gray’s difficulty, as described in the Fallon and McConnell chapter seven case study, arises from a culture within the organization that does not appear to respect the utility of HRM as both necessary and effective for the business. In the scenario, Kathy Gray is tasked with hiring a clerk for an open position; however, as soon as she makes her determination of the candidates, Sam Weston undermines the authority bestowed upon her and hires the lesser qualified of the two applicants. This would be difficult for anyone in a similar situation.

There are a number of problems that could stem from this scenario. First, by hiring the less qualified candidate, the business will utilize resources in training the chosen candidate only to seek out a replacement before recouping the expenses related to hiring and training the individual. O’Brien (2010) describes “the process of recruiting, selecting, hiring, and retaining employees [to be] difficult and costly” (p. 113). It would seem obvious that the chosen candidate should be the most qualified to save both cost and effort. Second, by Sam Weston undermining Kathy Gray’s authority, he has made her less effective as a leader. Kathy Gray was hired as a business manager and must earn the respect of those within the organization that she leads. By undermining her hiring authority, Sam Weston creates the perception that she is not prepared in her role as a manager. Fallon and McConnell (2007) posit that Sam Weston should have merely prepared himself to be a resource for Kathy Gray had she met difficulty in carrying out her newfound responsibilities. I have to agree as this would have allowed Kathy Gray to develop confidence in her new role, and a clear message would be sent throughout the organization regarding Kathy Gray’s authority in matters pertaining to her office. Although Sam Weston did choose an inept candidate, I do not see any reason why Kathy Gray cannot terminate the employment of her subordinate herself, as is the organizational norm. That being stated, there are better methods of dealing with employment matters than ad hoc hiring and firing of personnel by managers (Fallon & McConnell, 2007; O’Brien, 2010).

Fallon and McConnell (2007) and O’Brien (2010) both agree that HRM is a systematic approach to employment matters with ethical and legal considerations and implications. Meadows Nursing Home, the organization discussed in Fallon and McConnell’s case study, would do well to employ a human resources specialist (if not a human resources department) to handle the vetting of applicants, from within the organization as well as without. By developing a working partnership with the human resource team, managers can be assured that chosen applicants have met the minimum requirements for job performance, that job descriptions are accurate and detailed, and that, in the event an employee must be separated from employment, it will be handled in a professional, legal, and proper manner.

Finally, consideration should always be given to applicants within the organization before looking outward to fill vacancies. Employing from within demonstrates to the current staff a culture and willingness to cultivate talent and allow professional growth as a reward for loyalty. Also, current staff are already familiar with the business processes that an outsider may find atypical, and this would lead to short assimilation time; however, the organization runs the risk of “organizational in-breeding” if not enough outside influence is achieved (Eisenberg & Wells, 2000). With this in mind, promotions from within should be the norm unless considering vacant management positions, which should be advertised both within and outside of the organization in order to ensure competition among the candidates.

References

Eisenberg, T. & Wells, M. T. (2000). Inbreeding in law school hiring: Assessing the performance of faculty hired from within. Journal of Legal Studies, 29(S1), 369-388. doi:10.1086/468077

Fallon, L. F. & McConnell, C. R. (2007). Department managers and the recruiting process. In Human resource management in health care: principles and practice (pp. 125-145). Sudbury, MA: Jones and Bartlett.

O’Brien, J. A. (2010). Recruit and hire the best fit for your practice. The Journal of Medical Practice Management, 26(2), 113–118.

Human Resource Management

Mrs. Jackson’s Dilemma

In the dilemma of Mrs. Clara Jackson, as presented by Fallon and McConnell (2007), the emergence of health care professions created a vacuum of administrative roles that, until this time, were haphazardly fulfilled by senior clinical staff. Mrs. Jackson, professionally torn between clinical and adminstrative roles, understood that one would suffer for the attention spent on the other. As this realization set in, Mrs. Jackson allowed non-clinical supervisors to hire employees; however, this tended to decentralize the function of personnel management. This ad hoc methodology would eventually prove detrimental as regulations and legal requirements become standard. Mrs. Jackson could enlist an assistant to help with these administartive roles, but an unprepared assistant would prove as detrimental as the decentralized process previously discussed.

Caldwell, Troung, Linh, and Tuan (2011) show that “reframing an organization’s internal environment [by implementing strategic human resource functions] results in significantly higher organizational outcomes and financial performance that is superior to what firms can attain by implementing individual human resource program elements piecemeal” (p. 172); therefore, reorganizing and restructuring the processes used to handle these administrative personnel issues would benefit the hospital better than the ad hoc use of senior clinical personnel, such as Mrs. Jackson (Fallon & McConnell, 2007), especially with workforce legislation circa 1930 (e.g. workmen’s compensation, Social Security, collective bargaining).

These issues, requiring a sense of increasing specialization and knowledge, helped to form the field of human resource management (HRM) as we understand it today. HRM strives to use a form of “ethical stewardship[,] … a philosophy of leadership and governance that optimizes long-term wealth creation and that honors duties owed to all stakeholders” (Caldwell, Troung, Linh, & Tuan, 2011, 178), to “help their organizations add value to the lives of individuals and organizations” (Caldwell, Troung, Linh, & Tuan, 2011, p. 177). This philosophy helps to gain “commitment from employees which is the key to long-term wealth creation” (Caldwell, Troung, Linh, & Tuan, 2011, 178). Using this philosophy of ethical stewardship, HRM managers would have enlisted the help of Mrs. Jackson to formulate a list of requisite knowledge, skills, and abilities (KSAs) needed to perform each clinical job and hire nurses based on these, while meeting the requirements of employment law and regulation, so as to free Mrs. Jackson to perform her senior clinical role unimpeded.

References

Caldwell, C., Truong, D. X., Linh, P. T., & Tuan, A. (2011). Strategic human resource management as ethical stewardship. Journal of Business Ethics, 98(1), 171–182. doi:10.1007/s10551-010-0541-y

Fallon, L. F. & McConnell, C. R. (2007). Human resource management in health care: principles and practice. Sudbury, MA: Jones and Bartlett.

Marketing Plans in Health Care

Health care marketing is interesting when considering military treatment facilities. Naval Hospital Pensacola, according to Ludvigsen and Carroll (2003), is limited in the scope and manner that administrators are allowed to use federal monies to fund marketing efforts. Since budget cuts forced many military installations to close, and with them the attached military treatment facilities, efforts have been made, through programs like Tricare, to redirect the military health care market to the civilian care providers; however, hospitals that remain in operation, such as Naval Hospital Pensacola, have found that their market share has decreased sharply over time.

Naval Hospital Pensacola developed a marketing plan in 2003 to address the 5,000 enrollment opportunities that were left vacant due to military restructuring and Tricare development.

About Naval Hospital Pensacola

Naval Hospital Pensacola, a 60 bed facility, is the second oldest Naval hospital. The services provided by Naval Hospital Pensacola are primarily primary care, but the facility also has five operating suites and also provides urology, orthopedics, obstetrics and gynecology, among other services and operates with a budget of $64.5-million (Ludvigsen & Carroll, 2003). Naval Hospital Pensacola’s pharmacy is said to be the fourth busiest in the Navy, according to Ludvigsen and Carroll (2003).

Marketing Naval Hospital Pensacola

Purpose

In order to analyze the potential for additional capacity, Naval Hospital Pensacola formed a committee whose recommendation was that an additional 5,000 enrollee capacity was possible. The hospital, at the time of the plan formulation, served approximately 19,000 enrollees. The Managed Care Department of Naval Hospital Pensacola then developed this marketing plan to answer the recommendations of the capacity committee. Additionally, “the hospital implemented a policy which requires TRICARE Prime enrollees moving within [Naval Hospital Pensacola’s] catchment area of 40 miles, to use [Naval Hospital Pensacola]” (Ludvigsen & Carroll, 2003, p. 1). This policy ensured that certain Tricare recipients must utilize services provided by the naval hospital and dissuaded them from using civilian services that other Tricare recipients were allowed to use. This policy, according to Ludvigsen and Carroll (2003), provided additional access to approximately 10,000 Tricare Prime recipients residing within the 40-mile catchment area of Naval Hospital Pensacola.

SWOT Analysis

The marketing plan (Ludvigsen & Carroll, 2003) provided internal and external analyses that showed staffing was adequate for the proposed growth and, unlike the civilian sector, the funding would be made available based on use as Naval Hospital Pensacola is a military treatment facility whose budget relies on enrollment and not on cost-savings. “Because [Naval Hospital Pensacola] derives its funds via Federal appropriations, [Naval Hospital Pensacola’s] administration does not experience the financial pressures that civilian counterparts face, and can focus on quality issues” (Ludvigsen & Carroll, 2003, p. 7). Additionally, Naval Hospital Pensacola relies on the concept of one-stop shopping for enrollee health care needs as a marketing strength.

However, the SWOT analysis detailed within Ludvigsen and Carroll’s (2003) marketing plan admits that the naval hospital suffers access of care issues as a main vulnerability. This, coupled with a broken promise image, allows three other area hospitals to fulfill this marketing void. “Effectively competing requires improving quality of care, creating access, improving facilities, providing amenities, and promoting these accomplishments” (p. 9). Examples of Federal legislation are provided to show the marketing disadvantages of military treatment facilities.

Objectives

The primary objective of the marketing plan (Ludvigsen & Carrol, 2003) is to increase enrollment by 5,000 Tricare Prime recipients, mainly within the internal medicine, family practice, and pediatric clinics. In order to be viewed as successful, the minimum additional enrollment must be 2,000 over the next two years, again targeting 5,000 additional enrollees.

Methods

The marketing plan (Ludvigsen & Carroll, 2003) of Naval Hospital Pensacola utilizes a combination of three models in order to focus the hospital efforts. The first model is the traditional marketing mix model detailed by four components: product, placement, pricing, and promotion. The second model, based on the hospital’s own consumer marketing studies, include four components, “the Four C’s” (p. 21): competence, convenience, communication, and compassion. The final model, based on the Institute of Medicine’s (2001) health care improvement aims and objectives, includes safety, efficacy, patient-centricity, timeliness, efficiency, and equity.

Using a matrix to match the qualities of each of the three models, criteria were developed to further synthesize the goals of the hospital, its marketing theory, and the expectations of the targeted health care consumers. Representation of this combined modeling, however, starts to confound the reader by unnecessary references to concepts of quantum physics. The model is concisely represented by three dimensional representation with patient-focus in the middle of a pyramid formed between product, access, efficiency, and promotion.

Discussion

Being a military treatment facility and being highly governed by Federal legislation, Naval Hospital Pensacola is not a typical health care organization. In order to market improved or underutilized services, the hospital requires a novel approach, which is outlined within the marketing plan of Ludvigsen and Carroll (2003).

Naval Hospital Pensacola does well to focus, first, on the strengths and weaknesses identified by internal and external analyses, then, developing a plan that exploits the strengths to develop a means of overcoming the identified weaknesses. By focusing on industry-accepted aims and objectives, Naval Hospital Pensacola demonstrates improvement in measurable areas to attract additional enrollment. It is important to note, however, that, being a military treatment facility, the hospital enjoys a rare advantage of being able to pass rules mandating enrollment of certain beneficiaries within the prescribed catchment area.

The plan is an effective means of overcoming certain identified obstacles. It is realistic, allowing for fail-soft situations (or, minimal standard improvement), and comprehensive plan that addresses a true marketing need for both the hospital and the target health care consumer.

References

Institute of Medicine. (2001). Crossing the quality chasm: a new health system for the 21st century. Washington, DC: National Academy Press.

Ludvigsen, S. M. & Carroll, W. D. (2003). Naval Hospital Pensacola marketing plan. Retrieved from http://www.tricare.mil/familycare/downloads/marketing_plan.pdf

Measuring EMS: Patient Satisfaction

As a paramedic, I become discouraged when so-called academic literature, like that of McLean, Maio, Spaite, and Garrison (2002), Spaite (1993), and Stiell et al. (2008), turns up describing what little impact the emergency medical services, especially advanced life support procedures, have on patients. Instead of dismissing these writings, I tend to focus within the view of my own practice and experience on how I feel that I impact the patients that I see. This exercise allows me to confront the literature in a specific and meaningful manner that might be used in the future to publish a dissenting view. This discussion gives me a lens through which to dissect the import I feel that the emergency medical services has as a public safety entity.

Public safety is typically viewed as the amalgamation of police, fire, and emergency medical services. In all three, the public seems to have the idea that we stop threats before they take hold; however, we typically respond to the aftermath, the police to investigate crimes that have already occurred, the fire department to conflagrations that have already caused damage, and emergency medical services to traumatic incidents or medical conditions that have already caused distress. There are exceptions. The police have learned to integrate crime prevention techniques, the fire department has learned to adopt a fire prevention model of service, and the emergency medical services in many areas support preventative health clinics, such as community immunization, blood pressure checks, and CPR and first aid classes. The public, I feel, has a skewed perception of each one of these departments (e.g. the police should stop crime in progress, the fire department should save their house, and emergency medical systems should save their loved one whenever called upon to do so). Any deviation from the public perception is, in their minds, a failure of the system.

I ask myself, “What is that we, as the emergency medical services, do that really matters?” For the public, it seems that the answer can be given two-fold: “save me” and “make me feel better.” El Sayed (2012) describes the manner in which both aspects, outcomes and patient satisfaction, can be measured, as both are essential. Unfortunately, El Sayed does not go into much detail regarding patient satisfaction scores, except as a means of measure. In contrast, I feel that the most benefit that we offer patients is that we alleviate suffering. From a confident, yet compassionate, bed-side manner to effective and efficient treatment modalities, emergency medical personnel can prove to be the mediator between illness or injury and definitive hospital-based care. Emergency medical providers should be knowledgeable enough about the hospital to calm and educate patients as to what to expect. Further, medical knowledge allows the provider to restore a choking person’s breathing, to stop an epileptic seizure, and to minimize a crash victim’s pain. In my opinion, these measures are just as important, if not more, to quality management as mortality and morbidity. Again, El Sayed mentions the generality of patient satisfaction; however, with the abundance of competing literature questioning the effectiveness of the emergency medical services, patient satisfaction should be expounded upon as a legitimate and important aspect of quality patient care.

References

El Sayed, M. J. (2012). Measuring quality in emergency medical services: a review of clinical performance indicators. Emergency Medicine International, 2012, 1-7, doi:10.1155/2012/161630

McLean, S. A., Maio, R. F., Spaite, D. W., & Garrison, H. G. (2002). Emergency medical services outcomes research: evaluating the effectiveness of prehospital care. Prehospital Emergency Care, 6(2), S52–S56. doi:10.3109/10903120209102683

Spaite, D. W. (1993). Outcome analysis in EMS systems. Annals of Emergency Medicine, 22(8), 1310–1311. doi:10.1016/S0196-0644(05)80113-1

Stiell, I. G., Nesbitt, L. P., Pickett, W., Munkley, D., Spaite, D. W., Banek, J., Field, B., … Wells, G. A., for the OPALS Study Group. (2008). The OPALS Major Trauma Study: impact of advanced life-support on survival and morbidity. Canadian Medical Association Journal, 178(9), 1141-1152. doi:10.1503/cmaj.071154

Strategic Planning: Strategies & Tactics

Seattle Children’s Hospital (2011, n.d.) was the first pediatric specialty care hospital founded west of the Mississippi River. Seattle Children’s Hospital, supported by the philanthropic efforts of the community, performs at the cutting-edge of pediatric medicine and research. With nearly 60 pediatric specialties and award-winning research faculty, Seattle Children’s Hospital presents expertise in the field of pediatric medicine.

Services

Seattle Children’s Hospital (n.d.) is a pediatric specialty care center associated with the University of Washington to provide medical and surgical residents with the hands-on practical experience and education needed to succeed in the medical profession.

The hospital (Seattle Children’s Hospital, n.d.) has many specialized programs, or sub-specialties, within its pediatric specialty, including urgent and emergency care, oncology and hematology, craniofacial, orthopedic and sports medicine, a heart and transplant center, neonatology, neurosurgery, and general and thoracic surgery.

Seattle Children’s Hospital (n.d.) also boasts an award-winning research facility dedicated to treating and eliminating pediatric disease.

Strategic Planning

The strategic plan of Seattle Children’s Hospital (2011) focuses on the hospital’s vision and four specific goals:

  1. provide the safest, most effective care possible,

  2. control and reduce the cost of providing care,

  3. find cures and educate clinicians and researchers, and

  4. grow responsibly and provide access to every child who needs us (p. 2).

In order to succeed in reaching these goals, the hospital’s plan must have directives that outline the strategies and tactics useful in attaining the goals.

Strategy

Strategy is the broad means directed towards attaining strategic goals. As Seattle Children’s Hospital’s (2011) strategic plan demonstrates, in order to achieve the means of providing the safest, most effective care possible, “[the hospital] will standardize our care processes and strengthen our systems to prevent and respond rapidly to medical errors” (p. 5). This strategy is broadly stated, provides direction, and acknowledges that failures may still occur, which allows for the provision of a secondary, or backup, strategy for response to these failures.

Tactics

Tactics are the individual steps made within a strategy towards attaining a specific goal. Tactics should be moral, safe, efficient and effective towards the strategic goals. For instance, the strategy of “[standardizing] our care processes and [strengthening] our systems to prevent and respond rapidly to medical errors” (Seattle Children’s Hospital, 2011, p. 5) is well-stated, yet broad. In order to employ this strategy, tactics must be employed that are specific to meeting the described goal. In this case, Seattle Children’s Hospital (2011) has identified that “[completing] the transition to an electronic medical record system” (p. 5) is a specific means that can be used to help fulfill this particular strategy and meet the described goal.

Another tactic not presented in Seattle Children’s Hospital’s (2011) strategic plan but helpful in attaining the goal of improved patient safety and drawn from the strategy of “[standardizing] … care processes and [strengthening] … systems” (p. 5) would be the formation of an anonymous, voluntary self-reporting system in which a nurse or physician submits a card detailing a medical or surgical error in the spirit of identifying processes and systems in need of improvement.

Discussion

Strategic plans are guided by strategic goals, and strategic goals can have many strategies that are employed and useful in meeting the stated goals. It is also true that a plethora of tactics can be employed for each strategy.

Strategic plans are often based on lofty, yet attainable, goals. In order to meet these goals, one must only ask a simple question: How? With each broad answer, a continuous and recursive series of How? can be used to work the strategy into a number of manageable tactics to use to reach that lofty goal.

References

Seattle Children’s Hospital. (2011). Shaping the future of pediatric healthcare: Strategic plan 2012 to 2016. Retrieved from http://www.seattlechildrens.org/pdf/strategic-plan-2012-2016.pdf

Seattle Children’s Hospital. (n.d.). About Seattle Children’s. Retrieved from http://www.seattlechildrens.org/about/