CASE STUDY CHISOS MOUNTAINS MEDICAL CENTER YOUR MEDICAL CENTER Imagine that it is December 2020 and you have just accepted the chief financial officer (CFO) position at Chisos Mountains Medical Center (CMMC), which includes a 25-bed critical access hospital, a 36-bed long-term care facility, and a separate freestanding 24-hour emergency facility. You will be reporting to Mr. Chief, the CEO. Also reporting to Mr. Chief are Mr. Operator, the chief operating officer (COO); Dr. Doctor, the chief medical officer (CMO); and Ms. Nurse, the chief nursing officer (CNO). When announcing your appointment, Mr. Chief stated that your primary objective in the coming year, which begins January 1, 2021, would be to reverse the ominous financial trend that began in 2019 and continues in 2020 with a $50,000 budgeted operating loss. CMMC was built with Hill-Burton Funds in 1948 as a 25-bed rural hospital. With the help of Medicare and Medicaid funds, 36 long-term care beds were added in 1968. In 1998, after almost going bankrupt, CMMC was designated a critical access hospital and has been cost-based reimbursed from Medicare and Medicaid ever since. In 2010, Chisos Mountains Hospital became Chisos Mountains Medical Center with the addition of the freestanding 24-hour emergency facility 40 miles west of the hospital in the rugged Chisos Mountains of western Texas. CMMC is accredited by The Joint Commission and licensed by the Texas Department of State Health Services. To acquire background information, you decide to meet with executive team members individually first as well as with other key personnel such as the controller, the human resources director, and the materials manager. MEETING WITH DR. DOCTOR The CMO Dr. Doctor tells you: We only have eight physicians who practice at CMMC, but they have been very loyal to the medical center and the community. Most of the physicians are in family practice, though we have one general surgeon and one orthpedic surgeon who also runs a physical therapy clinic. MEETING WITH MR. OPERATOR Mr. Operator, the COO and a recent graduate from a program in healthcare administration, expresses the following concerns regarding the hospital: Its easy to understand how we lost money last yearMr. Chief just wont say no. Our revenues are down because of the pandemic and our expenses continue to increase. While we have applied for COVID-19 relief, that probably will not be enough to get us out of financial trouble. Furthermore, we need your help on some potential problems. Mr. Operator asks you to do the following. [Note: For reference, see corre- sponding chapters in this textbook as noted at the end of each step, and use the additional information in the tables at the end of the case study.]

5.Several states have passed surprise billing legislation. The federal govern- ment included surprise billing legislation in the COVID-19 relief package tied to the spending bill that President Trump signed on December 27, 2020. What is in our states [or your states] surprise spending legislation and what is in the federal governments surprise spending legislation? What actions should CMMC take to protect our patients from surprise billing? [See chapter 9.]

6.Analyze Mr. Chiefs managed care agreement with the city. Using differential cost analysis, tell me the full cost gain/loss and the differential cost gain/ loss for two scenarios: keeping the agreement and killing the agreement (use FY 2020s financials). In the event that the city will negotiate a rate in- crease, what percent increase do I need to ask for to cover our full costs and what percent increase do I need to ask for to cover our differential costs? What is your recommendation? [See chapter 8.]