Hello I need help solving this Health Care Study Case. Hays County Integrated Delivery System. I am stuck with problems 2-16. This is not for homework. This is a study case for which I can use for practice.
Case Study: Hays County integrated Delivery System MEETING WITH DR. SPOK Dr. Spok, hospital medical director, tells you: Most doctors have been on the medical staff for at leastten years. There is little lo] to the hospital, and most doctors also have admitting privileges at St. Teresa's, a ne hospital with better facilities. While it is a hassle for the doctors to drive the 25 m from San Marcos to St. Teresa's to see patients, there are a few good reasons for doctors to admit their patients to St. Teresa's. St. Teresa's has a hospitalist and 53 physicians for menial service assign ments like committee work (a practice that Colin has refused to implement). ' ' MEETING WITH MR. SALTER Mr. Salter, chief executive ofcer, states: [just don't understand why we are losing money. I spent a considerable amount oftime 5, l recruiting new doctors while keeping the existing doctors happy. The new, younger ,: doctors just don't seem to have a sense ofloyalty to County. Furthermore, I've tried to , { establish a "family atmosphere" for our employees that stresses getting along well with 7 others in return forjob security. Everyone seems happyeveryone except Mr. Finance Myway, whom you'll be replacing. He and I both started in January 2015 and he seemed increasingly frustrated with the way 1 do things herehe just didn't t in. I tried to. accommodate him by implementing some of his recommendations, even though they were against my better judgmentlike charging visitors for parking, which generated $100,000 in other operating revenue in 2017, but I have discontinued the practice for 2018 because no other organization in San Marcos, other than the university, charges for parking. And when 1 announced that l was bringing in more business to the hos- pital by entering into a two-year capitated managed care agreement with the city (it expires this month) -we get $250 per month per family for taking care of the 300 city employees and their families, whether they're sick or notMr. Myway threw a t at an executive team meeting. He claimed that my decisions were driving County deeper into the red, and as a result, I had to show Mr. Myway the highway for insubordination. That happened last month. Mr. Salter has asked you to do the following [Nora Steps in the case correspond to chapters in the textbook]: 1. I would like you to make a fteenminute, 25slide PowerPoint presentation during our board strategic planning retreat regarding the effects of the economy [see appendix 1.2 in chapter 1] on the healthcare industry. Case Study: Hays County Integrated Delivery System expense budget using the stafng found in Table VI-B, in statement of operations format including detailed footnotes explaining any changes in the numbers. I would like to see at least four di'erent expense scenarios: (1) Maintain expenses at 2017 levels after adjusting for volumes and mandated expenditures identied in earlier steps (2) Maintain expenses at 2017 levels after adjusting for volumes and mandated expenditures identied in earlier steps and bartering all requests (i.e., raises, additional personnel, etc.) (3) Cut expenses (from expense scenario 1) to break even in 2018 (4) Cut expenses (Front expense scenario 1)_ to break even in 2.018 and recover rm! year 20171052: 15. Calculate the nancial impact of buying a CT [computed tomography] unit that would cost $3 million, would have a ve-year useil life, would have a 10 percent salvage value, would have a prot per procedure of $400, and would generate an estimated volume of450 procedures per year. The bank tells me the discount rate should be 10 percent. If the project loses money, let me know how many procedures in addition to the 450 projected per year we would need to generate to break even. Our longterm debt represents the remaining balance on a 30year loan taken out in 1997 at 7 percent with options to renance every ten years. If we renance for the remaining ten years at 3 percent, how much interest expense will we save over the remainder qfthe loan? 16. Please give me your thoughts on the operational and nancial implications of the ACA of2010 and MACRA [Medicare Access and CHIP Reauthorization Act] of 2015 on our hospital. MEETING WITH MR. WANNABE Mr. Wannabe, the chief operating ofcer and a recent graduate from a program in healthcare administration, expresses the following concerns regarding the hospital: I It's easy to understand how we lost money lastyearMr. Salterjust won't say no to the doctors, or the nurses, for that matter. Our revenue is down for a variety of reasons and 399 CASE STUDY HAYS COUNTY INTEGRATED DELIVERY SYSTEM YOUR INTEGRATED DELIVERY SYSTEM Imagine that it is December 2017, and you have just accepted the chiefnancial oicer (CFO) position at Hays County Integrated Delivery System (IDS), hereinafter referred to as County. You will be reporting to Mr. Salter, County's chief executive ofcer, a retired schoolteacher who was hired last year. Also reporting to Mr. Salter are Dr. Spelt, County's medical director; Mr. Wannabe, County's chief operating oicer; Ms. Pincher, County's controller; and Ms. Care, County's director of nursing. When announcing your appointment, Mr. Salter stated that your primary objective in the coming year (2018) would be to reverse the ominous nancial trend that began in 2016 with an operating loss and continued in 2017. Previous operating losses were funded with invesnnent income (investment income was $200,000 in 2017); however, your board recently passed a resolution discontinuing that practice and restricting investment income to capital expenditures in 2017. ' County is a notforprot county-owned urban hospital and includes a"l30bed acute care hospital, a 35-bed skilled nursing facility (SNF), a iS-hed rehab facility, a home health care agency, and an outpatient clinic. It has a 40'member medical staff- that bills 1 independently. The hospital, Hays County Hospital (HCH), is one of two hospitals in the county (population is 175,000) and the only hospital in San Marcos, Texas, with a popu- lation of 50,000. St. Teresa's, a notfonprot Catholicowned hospital, is the only other hospital in Hays County. St. Teresa's is about 25 miles from Hays County IDS. To acquire background information, you decide to meet rst with each member of - the executive team and then with selected members of senior management. 395 little loyalty a's, a newer he 25 miles ;on5 for the st and pays that County ount oftime aw, younger . I've tried to mg well with Mr. Finance 1 he seemed in. I tried to though they h generated practice for iity, charges . to the has n the city (it the 300 city 1W 3 t at an deeper into nation.That correspond to aresentation 3f the :tt'y. And I would like you to make a fteen-minute, 2.5slide PowerPoint presentation to the medical staff regarding the role of the CFO and the roles of the primary direct reports to you. Develop a statement of operations for 2017 using Tables ii, IVA, IVB, and IVC [at the end of this case study} and a balance sheet for 2017 (you can assume the format and numbers are correct on the 2016 balance sheet in Table I, and you can further assume that all balances on the 2016 balance sheet carry forward to the 2017 balance sheet with the exception of accounting for the prot or loss from the 2017 statement of operations). Analyze the nancial statements using ratio analysis with benchmarks found in Table III and identify strengths and weal-messes and then make recommendations for improvement in 2018. The Treasury Department has issued nal regulations on the ACA [AHordable Care Act] requirements for not-forprot hospitals. Hospitals must be in compliance with regulations beginning in 2016. Please explain the requirements to me; please identify the penalties for noncompliance found in the IRS regulations (501(1)); and please recommend ways to protect our tax- exempt status. Please explain the concept of cost shifting to me and tell me why it has become increasingly less effective in generating more income. \What is taking its place in generating more income? Medicare talks a lot about value-based purchasing. What is it and why is Medicare talking about it? Are there implications to our hospital? Explain the Medicaid expansion and why some states expanded Medicaid and why some states did not expand Medicaid. What are the nancial implications of Medicaid expansion to our hospital (be specic with revenue forecasts)? Analyze my capitated managed care agreement with the city. Using differential cost analysis for 2017 data, tell me the hill cost prot/loss and the differential cost prot/loss. Should we renew the contract for next year at present rates, or should we ask for a rate increase and if so, how much rate increase do we need to cover our fuli cost? To cover our diEerential cost? Our imaging department is in violation ofantiiIust statutes because it produced charges using relative value units developed by another organization. You must establish new relative value units and then set 2017 imaging rates using activitybased costing. Total imaging expenses for 2017 are projected to be $6.5 million, and the imaging manager has already nished some of the work that you will need (see Table V). Case Study: Hays County Integrated Delivery System . 'W'hat is the best ratio for measuring accounts receivable performance? i is our hospital doing? What are your recommendations on improving- , accounts receivable performance? . I also need your assistance in calculating the following economic order I quantity [Qe] given new data for 2.017. Our inventory generally follows-{31' Paretos Law; therefore, I have emphasized controlling those items representing the majority of our inventory activity. One of those items '_ [intravenous] setups. Our current situation is as Follows: ' 2016 Price $50 for each IV setup 2017 Demand 50,000 2017 Ordering cost $25 2017 Interest 6.25% 2017 Holding cost $0.50 The W distributor would like to distribute a new model setup in .1' at the same price, but he tells us that he 15 willing to reduce our Carrying I- ' making monthly deliveries. After discussing this proposal with Ms. Care, I "j_ ered that training will be required for the new setup. Ms. Cate believes, and ] distributor agrees, that each registered nurse will be required to attenda ' - ll seminar. I'm not sure where we put this training cost in the total cost f0 1- : ' 1, Ms. Care tells me there are signicant quality advantages with the newscttp' she would prefer the new setup. What do you think? If we lose money on v?" model, what price can we negotiate with the IV distributor to cover curious? . I would like you to develop a veyear strategic nancial plan for Hays County IDS inciuding benchmarked nancial metrics. Our strategic pk .. calls for a replacement facility in about ten years. 7 . For 2018. develop a statistical budget using regression analysis; then . ' ' -. a revenue budget (using a nancial model, determine whether to incrmsc .'.' charges found in Table W-C and ifso, how much) and then develop an l.' 9 8 Case Study Hays County Integrated Dellvery System 10. Dr. Garcia is thinking about retiring this year and has asked us if we - buy her practice. She would like annual income of $250,000 for the u - " years. If we can put the purchase price in an annuity that earns 4 pe -- " year compounded annually, what is the purchase price necessary to - - 3 her desired income? What other factors should we consider before b ' ' physician practice? What is your recommendation
