Competency

Inthisproject,youwilldemonstrateyourmasteryofthefollowingcompetency:

• EvaluatefundamentaleconomicpoliciesandpracticesfortheirimpactontheU.S.healthcaresystem

Scenario

YouareahealthcaremanagementconsultantcontractedbyaruralhospitalcalledCountryHillsMedicalCenter.CountryHillshasbeenpresentedwithanopportunitytomergewithSkylineHealthServices,thenearbycitywidehealthcaresystem.YourroleistoadvisetheboardofCountryHillsastheydecidewhethertheyshouldremainindependentorintegrateintothelargerhealthcaresystem,whichwouldincreasethesmallhospital'spowerandmarketshare.ProponentsofthemergerbelievethatitwouldprovideCountryHillswithresourcestohelpreducecostsandfocusonincreasingquality.However,thereareconcernsfromcertainstakeholdersthatamergerwouldresultinresourcesbeingallocatedawayfromtheruralhospital,forcingstaffandpatientstocommutetothecityforemploymentandhealthservices.

Reviewthefollowingoutlinesdescribingtheeconomiccontextandstakeholdersassociatedwitheachorganizationbelow:

CountryHillsMedicalCenter

Servesaruralcommunitywiththefollowingcharacteristics:

• Thesurroundingareaconsistsofabout9squaremilesandatotalpopulationof4,815people(2,349malesand2,466females).Therearenoothercompetinghospitalsinthearea.
• Incomestatisticsforthearea:
  • Medianhouseholdincomeisapproximately$30,647.
  • Medianincomeforafamilyisapproximately$34,542.
  • Medianincomeformalesis$26,118versus$19,952forfemales.
  • Percapitaincomeis$17,567.
  • About18.1%offamiliesand20.1%ofthepopulationlivebelowthepovertyline,including25.5%ofthoseunderage18and27.9%ofthoseage65orover.
• Thecurrentunemploymentratefortheareais4.3%.

Stakeholdergroups:

• BoardofCountryHillsMedicalCenter:Consistsoflocalbusinessprofessionals,clergy,andpoliticaladvisors.
• CountryHillsStaff:
  • Doctors:Afewlocalphysiciansprovidegeneralmedicalcareandfamilypractice.Severalspecialists(ex.cardiologistandmentalhealthprofessionals)commutefromothercountiesforlimitedofficehours.
  • NursingStaff:Thenursingstaffislicensedandqualified,andmostlivelocally.
  • Non-medicalStaff:Thestafflivelocallyorinthesurroundingareas.Staffconsistofsomefull-timeandpart-timeemployees,asneeded.
• PublicHealthDepartment:TheCountyHealthDepartmentisopenonMondaysonlytoservethecommunitywithHepatitisBvaccines.
• Patients:AmajorityofthepopulationisonstateMedicaidreplacement.Othershavecommercialinsurance(ifemployedfull-time),andotherswhodonotqualifyfortheMedicaidreplacementareonthehealthcareexchanges(iftheirincomeexceeds$12,500annually).Thereare24%ofthepopulationundertheageof65thatarenotinsured.

SkylineHealthServices

Servesacitywiththefollowingcharacteristics:

• Theestimatedpopulationis179,139,makingitthefourth-largestcityinthestateandoneofthetwoprincipalcitiesoftheregion.Itisatransithubservedbymultiplerailroadsandinterstatehighways,anditisconsideredtourist-orientedwithmanyattractions.
• Thecity'seconomyincludesadiversifiedandgrowingmixofmanufacturingandserviceindustries.
• Incomestatisticsforthearea:
  • Medianhouseholdincomeisapproximately$41,278(2.74%growth).Averagehouseholdincomeis$59,388.
  • Medianincomeforafamilyisapproximately$64,839(three-person,average2.31perhousehold).
  • Medianincomeformalesis$30,536versus$23,264forfemales.
  • Percapitaincomeis$27,135.
  • Thepovertyrateis21.1%,including32%ofthoseunderage18,20.1%ofthosebetweentheagesof18-59,and33.7%ofthoseage60andover.
• Therearethreehospitalsystemsthatservethecity,includingSkylineHealthServices.
• Theunemploymentratefell0.1percentagepointslastmonthto3.5%.

Stakeholdergroups:

• BoardofSkylineHealthServices:Consistsoflocalbusinessprofessionals,clergy,andpoliticaladvisors.
• SkylineHealthServicesStaff:
  • Doctors:Thereisavastdiversityofmedicaldoctors,includingalmosteverytypeofspecialty.
  • NursingStaff:Thenursingstaffislicensedandqualified,andmostlivelocally.
  • Non-medicalStaff:Thestafflivelocallyandinthesurroundingareas.Mostarefull-time,somearepart-timeandcontractemployeestocovertrends,asneeded.
• PublicHealthDepartment:Fullystaffed,full-timehealthclinicservingthecommunitywithmedicalvisitsandvaccineswithratesbasedonincome.
• Patients:Amajorityofthepopulationisinsuredthroughemployer-basedinsurance,privateinsurance,stateMedicaidreplacement,andthehealthcareexchanges;13.3%ofthepopulationundertheageof65arenotinsured.

YouhavealsolearnedthatSkylineHealthServiceshasadoptedtheTripleAimframework,whichwouldbenewtothestaffofCountryHills.Itisimportantthatyoutakethegoalsoftheframeworkintoconsiderationwhenevaluatingthedecisiontomergewiththelargerhealthcaresystem.

Directions

Yourtaskistodevelopareportthatpresentstheimplicationsofeachoptionfortheboard,includingyourrecommendationtoinformtheirdecision.

1. Beginyourreportbyestablishingaconceptualframeworkforyouraudience.Inotherwords,explaintotheboardthekeyeconomicprinciplesinvolvedinyouranalysis,keepinginmindthatmanywillnotbefamiliarwiththeseideas.Besuretodefineandillustratetherelevanceofthefollowingconcepts:
   1. Scarcity
   2. Supplyanddemand
   3. Opportunitycosts
   4. Competitiveadvantage
   5. Needvs.demand
2. Then,moveontopresentingyouranalysis.Notethatyouwillneedtodrawupongeneralitiestoroundoutthedataprovidedtoyouinyourscenario.Inotherwords,youshouldfeelfreetospeculateorstipulatelikelypotentialitiesaslongastheseareinformedbysoundeconomicreasoning.
   1. Assessthecurrenteconomicclimateasitrelatestothemergerdecision.Inotherwords,towhatextentdoesthecurrentconsumerbasesupportthecontinuedindependenceofthehospital?
   2. Analyzetheperspectivesofeachofthelistedstakeholdergroups.Whataretheirlikelyconcernsandagendasrelatedtothemerger?Towhatextentdothoseperspectivesconvergeordiverge?Whichperspectiveswouldyourecommendbegiventhemostweightbytheboard?
   3. EvaluatetheimplicationsofmergingforCountryHill'smarketshareandpower.Isincreasingmarketsharealwaysagoodthing?HowwouldthemergerimpactCountryHill'spatients(i.e.,healthcareconsumers)?Besuretoaddressthefollowinginyouranalysis:
      1. Whatarethepotentialbenefitsoradvantagesofincreasedmarketpowerforthepatients?Howcouldtheybebetterserved?
      2. Whatarethepotentialcostsordisadvantagesofincreasedmarketpowerforthepatients?WhatwouldCountryHillshavetogiveupasaruralhospital?
   4. AssesstheimplicationsofmergingrelatedtotheTripleAimframework.WhatcoulditmeanforCountryHillsinadaptingtothisframework?Whatmightthechallengesoradvantagesbe?Besuretoaddresseachofthegoalsoftheframework:
      1. Improvingthepatientexperienceofcare(includingqualityandsatisfaction)
      2. Improvingthehealthofpopulations
      3. Reducingthepercapitacostofhealthcare
3. Finally,concludeyourreportbysynthesizingthefindingsofyouranalysisandarticulatinganultimaterecommendationfortheboard.Besurethatyourrecommendationlogicallyflowsfromyourprioranalysisandrestatethekeytakeawaysforyouraudiencethatsupportyouroverallclaims.

WhattoSubmit

Everyprojecthasadeliverableordeliverables,whicharethefilesthatmustbesubmittedbeforeyourprojectcanbeassessed.Forthisproject,youmustsubmitthefollowing:

MergerRecommendationReport Yourreportshouldwalktheboardthroughyourconceptualframework,presenttheimplicationsofeachoption,andincludeyourrecommendationtoinformtheirdecision.ItshouldbeformattedasaWorddocumentrangingfrom1,000to1,500wordsinlengthandciteanyreferences.