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Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. The Cases . 2012c. \"Criteria for Performance Excellence.\" National Institute of Standards and Technology. Accessed August 3. www.nist.gov/baldrige/publications/criteria .cfm. . 2011. \"2011-2012 Health Care Criteria for Performance Excellence.\" National Institute of Standards and Technology. Accessed August 3. www.nist .gov/baldrige/publications/upload/2011_2012_Health_Care_Criteria.pdf. Garman, A., A. S. McAlearney, M. Harrison, P. Song, and M. McHugh. 2011. \"HighPerformance Work Systems in Health Care Management, Part 1: Development of an Evidence-Informed Model.\" Health Care Management Review 36 (3): 201-13. McAlearney, A. S., A. Garman, P. Song, M. McHugh, J. Robbins, and M. Harrison. 2011. \"High-Performance Work Systems in Health Care Management, Part 2: Qualitative Evidence from Five Case Studies.\" Health Care Management Review 36 (3): 214-26. Song, P., J. Robbins, A. Garman, and A. S. McAlearney. 2012. \"High-Performance Work Systems in Health Care, Part 3: The Role of the Business Case.\" Health Care Management Review 37 (2): 110-21. Case N An Investment Decision at Central Med Health System Emily Allinder, Jason Dopoulos, Breanne Pfotenhauer, David Reisman, Erick Vidmar, Jason Waibel, and Ann Scheck McAlearney Background Central Med Health System (CMHS) was created on January 1, 1996, with the mission of \"providing expert healthcare to the people of North Central Iowa.\" The nonprot organization is composed of two general, acute care hospitals, Central Med Hospital and Shelty Hospital, with a combined total of 395 beds. The service area consists of a six-county region in North Central Iowa: Rich, Crawford, Ashville, Morris, Huron, and Knowell counties. Central Med is the largest provider of healthcare services between the cities of Cletan and Flagship. The health system provides a complete range of primary care and specialty practices. Central Med Hospital offers a Level II trauma center and a Level II perinatal department. Other featured services include cardiac care, comprehensive neurological services, cancer care, behavioral health, maternity services, sports medicine, surgical services, pediatric therapy EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 333 Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 334 Adaptation services, speech therapy services, industrial health and safety services, home care, and hospice care. All services and business units are driven by the mission, vision, and values of Central Med. Central Med's vision is to provide \"expert care close to home.\" The organization seeks to be the provider of choice for residents of North Central Iowa and strives to dissuade residents from traveling to Cletan or Flagship for care. The core values as stated by Central Med include: Quality: We will be known for excellence in all that we do. Customer service: We will work to fulll the individual needs of every patient, family member, and visitor. Innovation: We will continually strive to develop and work with the latest processes available in every department. Teamwork: Our staff will work together to provide our patients with the best care possible. Financial Status CMHS is a nancially stable organization. Operating margins have been consistent with similar BBB bond-rated organizations over the past three years and currently stand at 3 percent. A $12 million endowment provides consistent investment returns, which contributed to a total margin of 8 percent last scal year. CMHS maintains a prudent balance sheet with a debt-to-capitalization ratio of 25 percent. Days cash on hand has averaged 225 over the last three years, and the current ratio was 2.5 last year, demonstrating the facility's ability to cover its operating expenses. CMHS has historically used debt to nance capital projects, but due to evaporation of liquidity in the municipal bond markets, the system decided to fund certain projects with cash from operations. The Problem Like other nonprot healthcare providers, CMHS struggles to enhance patient care with limited nancial and capital resources. Investments in new clinical programs are evaluated carefully to ensure that patients have access to the appropriate new programs and services. CMHS strives to balance the need to invest in the clinical programs that are most important to its patient population with the need to remain nancially viable. EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. The Cases 335 CMHS leadership is currently faced with a difcult decision. The system has $13 million to invest in a clinical expansion project, and stakeholders throughout the organization have varying ideas about which program is most deserving of the new capital investment. While certain members of the leadership team want to invest in an expanded radiation oncology program, others are interested in bolstering heart services by enhancing the interventional cardiology program. Option 1: Radiation Oncology The American Cancer Society, the Journal of Oncology Management, the Health Care Advisory Board, and other expert sources project a 20 to 25 percent increase in the number of newly diagnosed cancer cases in the next ten years. In addition to newly diagnosed cases, the ve-year relative survival rate has increased signicantly as a result of newer technologies and treatments. As people live longer, the demand for cancer services will grow. Exhibit V.3 provides additional information about projected demand for radiation oncology services, and the sidebar describes the perspective of a nurse executive interested in expanding this program at CMHS. Dr. Moh, the only radiation oncologist at CMHS, sees up to 70 patients a day, which is 40 percent more patients than the average radiation oncologist. The facilities are cramped and the schedule is tight, but somehow he is able to complete the day's work. Perhaps the friendly culture of CMHS Total 2007 Radiation Oncology Pts. Central Med 2007 Radiation Oncology Pts. Central Med 2007 Radiation Oncology Market Share Ashville Crawford Huron Knowell Morris Rich 138 135 189 163 68 419 50 61 15 24 3 327 36.2% 45.2% 7.9% 14.7% 4.4% 78.0% Total 1,112 480 EXHIBIT V.3 Current Market Share Radiation Oncology 43.2% Projected Market ShareRadiation Oncology 2007 Conservative (43%-51%) Year 1 Year 2 Year 3 Year 4 Year 5 43.2% 43.3% 45.2% 47.2% 49.2% 51.1% EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 336 Adaptation A Nurse Executive's Argument for Building a New Radiation Oncology Facility Isabelle Gonzalez had served as the chief nursing ofcer at CMHS for 20 years. She had worked in several different departments, and was well respected and admired by her colleagues and superiors. She was known for her solid work ethic and unwavering dedication to the success of CMHS and to the provision of excellent patient care services. Isabelle felt that building a new facility to house the radiation oncology department and its equipment was the best option. She noted that the existing facilities were \"old, inefcient, cramped, and not patient friendly.\" She was concerned that Central Med could lose a considerable amount of market share if the health system did not remain on the leading edge of cancer care. \"Cancer patients are very sick and require a high intensity and frequency of care,\" Isabelle stated. \"We have a duty to our patients to provide comprehensive cancer services close to their homes. Besides, radiation oncology is a growing service line that contributes signicantly to our operating margin.\" keeps the staff content with current operations, but Dr. Moh believes something needs to be done differently to continue to provide high-quality care. Every radiation oncology department in the country needs two components: a board-certied radiation oncologist and the essential equipment to create a treatment plan. CMHS has both of these components, but there is growing concern regarding the need for additional equipment to accommodate treatment plans. Linear accelerators are traditionally used to program a patient's treatment plan and can be accessed for each appointment. CMHS currently has two machines and averages between 40 and 50 patients per day. The literature recommends that one machine treat 30 to 35 patients per day; therefore, it is important that CMHS has two machines running. Technical difculties are a problem because CMHS's linear accelerators are unmatched. This means that if one machine goes down, the patient plan for that machine cannot be transferred to the other machine. This results in wasted time and resources. In addition to these operational challenges, Dr. Moh is concerned that CMHS is vulnerable to competitors who might want to enter the radiation oncology market in CMHS's primary service areas. Such competition would be difcult to withstand with CMHS's current facilities. Dr. Moh knows he needs to act quickly to secure the future success of the program. EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. The Cases 337 Option 2: Interventional Cardiology Although the cardiology program has been quite successful for CMHS, further investment in the interventional cardiology segment of the department is desperately needed. Current industry trends favor interventional cardiology procedures over traditional open-heart operations. Expert industry organizations predict that this trend will continue. CMHS needs to make a signicant investment in its interventional cardiology program if it wants to retain and expand market share in this specialty. Additional data about interventional cardiology are provided in Exhibit V.4, and the perspective of a board member interested in expanding the program is provided in the sidebar. As the number of patients requiring specialized cardiology care continues to increase throughout the service area, CMHS has been struggling to expand its service offerings to this patient population. New cholesterol-lowering and antihypertensive medications introduced over the past ten years have resulted in signicantly extended life spans for cardiology patients. However, Americans leading more sedentary lifestyles and eating high-fat diets have contributed to a larger number of patients requiring specialized cardiac care. At the same time, a large competing health system in the area has recently invested in a signicant expansion of its cardiovascular service line. Dr. Peak, an interventional cardiologist and CMHS's director of cardiology, knows that Total 2007 Interventional Cardiology Pts. Central Med 2007 Interventional Cardiology Pts. Central Med 2007 Interventional Cardiology Market Share 276 270 378 326 136 838 75 92 23 36 5 491 27.2% 34.1% 6.1% 11.0% 3.7% 58.6% 2,224 722 32.5% Ashville Crawford Huron Knowell Morris Rich Total EXHIBIT V.4 Current Market Share Interventional Cardiology Projected Market ShareInterventional Cardiology 2007 Conservative (32%-52%) Year 1 Year 2 Year 3 Year 4 Year 5 32.5% 39.7% 43.2% 46.8% 49.9% 52.3% EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 338 Adaptation A Board Member's Argument for Expanding the Interventional Cardiology Program An inuential hospital board member, Brandon Gerner, argued that CMHS should invest the $13 million in an expanded interventional cardiology program. Gerner felt the radiation oncology program was not headed in a positive direction. In his opinion, the program should be discontinued and the money should be allocated to the interventional cardiology program, which would produce higher margins for the institution. \"Let's beef up our interventional cardiology program,\" stated Gerner. \"The future impact of radiation oncology has been drastically overestimated, and the need for interventional cardiology will continue to grow as the population continues to age. Furthermore, favorable reimbursement for interventional cardiology procedures is likely to continue in the future, making this a sound nancial decision for the organization.\" to ensure the future success of the cardiology division, he needs to secure additional nancial support from hospital leadership. The cardiology program at CMHS has overcome signicant challenges in the past. Several years ago the division faced a need for more cardiac surgeons and operating rooms to handle the increased number of coronary artery bypass graft procedures. The solution to the problem was to remodel the cardiac operating rooms and recruit several highly qualied physicians. The program has since become one of the more protable units at CMHS and a model that other divisions within the hospital hope to emulate. Advances in treatment options for cardiology patients have focused on minimally invasive interventional procedures that are more comfortable for patients and have signicantly reduced recovery times. In fact, the number of minimally invasive interventional cardiology procedures performed at CMHS has nearly doubled in the past few years. These procedures are completed in specially designed treatment areas where sophisticated imaging equipment is used to guide small catheters and instruments through patients' cardiovascular systems. The single interventional cardiology suite at CMHS is no longer adequate to serve this expanding clinical need. Dr. Peak knows that to retain market share in this competitive environment, CMHS needs to invest signicant capital in the creation of additional interventional cardiology treatment areas. EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 Copyright 2013. Association of University Programs in Health Administration. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. The Cases Implications of the Investment Decision Given CMHS's location, the health system is continually concerned about its ability to retain market share and avoid losing patients to hospitals in Cletan or Flagship. While the nancial stability and reputation of CMHS are enviable, the hospital has been unwilling to expand beyond the North Central Iowa region. Further, CMHS's clear mission and strong organizational culture have made afliation options such as alliances or other cooperative arrangements with competitors virtually impossible to consider. As a result, any CMHS investment will be pursued on its own. In previous discussions about investment options, hospital leadership has raised alternative uses for the $13 million at CMHS. However, the board has rejected other alternatives and has narrowed the options to the two currently on the table. They are unwilling to further explore avenues that might make the two options jointly possible. Even though an exclusive investment in radiation oncology will threaten the success of the interventional cardiology program, and vice versa, the board wants to force a decision between the two, and it wants the decision made now. Case Questions 1. What are the pros and cons of each alternative investment? Does the radiation oncology project or the enhanced interventional cardiology program better align with CMHS's mission and vision? Why? 2. Whom does CMHS serve? At what cost? 3. Which stakeholders at CMHS will be affected by this decision? Which stakeholders should be included in discussions leading to a decision about which alternative investment to pursue? 4. What time sequence would you propose for the planning process around this investment? 5. What additional information would you need to make a solid business decision? Are there nonnancial data you should consider? 6. What implications would exist for the alternative service that is not selected for investment? What might happen to volume and market share for that service? 7. If the two alternatives were not mutually exclusive, what types of nancing strategies would you propose to permit investment in both options? EBSCO Publishing : eBook Academic Collection (EBSCOhost) - printed on 2/4/2015 7:59 PM via SETON HALL UNIV AN: 643675 ; Kovner, Anthony R., McAlearney, Ann Scheck.; Health Services Management : Cases, Readings, and Commentary Account: s8475574 339 Management of Health Care Organizations Case Study Analysis Outline HCAD 7513 NB - Seton Hall University Case Analysis Steps 4-Step Approach: 1. Diagnose the Problem 2. Generate Alternatives 3. Recommend a Solution 4. Develop an Action Plan 1-Diagnose the Problem Define the problem o Clearly state the core problem in the case o Differentiate between the \"root cause\" and symptoms o Determine if there are multiple problems o If yes, prioritize them What must you deal with first? What issues are time sensitive vs. those that can be deferred? 2-Generate Alternatives Determine the possibilities that exist to address the problem(s) you defined o List all of the alternatives o Identify the pros & cons of each o Determine the criteria for your decision o Critically evaluate your possible alternatives for solving the problem 3-Recommend a Solution Recommend an alternative(s) for addressing the problem o Decide on a course of action to address the root cause of the prioritized problem o Recommend secondary alternatives to the problems with lower priority o Make a decision, support your reason with the decision based on course concepts and theories and \"best practices\" (e.g. Baldridge) 4 - Develop an Action Plan Determine how you will turn your decision into action o Develop a short implementation plan o Specify: What will be done Who will do it When it should be done o Determine how, when and what you will do to monitor implementation o Present a clear plan for executing your recommendation and monitoring to ensure it is implemented and working as intended Case Study Presentation and Discussion Total Grade Weight: 20% Due as assigned in class A \"case\" is a description of a situation or problem actually faced by a manager and one requiring analysis, decision, and planning of a course of action. While not any answer is the \"correct\" one, some clearly lead to better management decisions than others. As with real life, most cases are ambiguous, presenting many viable alternatives, some of which are better than others. Some cases present information and data, not all of which will be relevant or necessary to the analysis. Many cases will lack important information upon which decisions rely. The future and chosen outcome goals are uncertain. You need to make assumptions about the data and its effect on outcomes. Decisions about the future involve uncertainty, but all managers face risk in decision-making. Be creative with your solutions, but be realistic. Solving a case is akin to solving any problem. First, the issues are defined, information is gathered, and alternatives are generated, evaluated, selected and implemented. The following steps might be helpful in your analysis: 1. Summarize the facts, organize the information, and classify the information into groups of available data and gaps in data. Illustrative categories might include but not be limited to expectations about the organization by stakeholders, financial performance indicators, internal organizational strengths or weaknesses, and environmental issues, demands and challenges. Getting the facts may mean performing analyses, such as financial analyses, with the data presented in the case. 2. Infer other information from the facts. For example: Who are the major players and what are their perspectives and interrelationships? What are the critical issues as defined by the key players? How does the influence of the player affect or alter the importance of the issue? 3. Identify themes, issues, and problems raised by the case. Questions to consider might include: Why do these problems exist? Who needs to be involved in the solution? From where will support or resistance come in resolving the issue? To what extent are these system problems or people problems? 4. Generate alternatives to solve the problem or address the issues. 5. Evaluate the alternatives. Examine the rationale and data to support each alternative. Criteria helpful in evaluating alternatives include judging the alternative's relative merits and suitability in solving a problem. Questions to guide decision-making might include: Which alternative provides the greatest benefits? What are the relative costs of each alternative? Are the choices consistent with organizational mission, culture, philosophy, and objectives? Do the organizational competencies exist to carry out recommendations? How acceptable are the possibilities to the internal and external stakeholders? What are the expectations of support or resistance? 6. Make a recommendation and support your reasons with evidence from the course literature. 1 Tips for Preparing Your Case Analysis Initial Preparation Read the case and answer the following questions. Who is the decision maker in this case, and what is their position and responsibilities? What appears to be the issue (of concern, problem, challenge, or opportunity) and its significance for the organization? Why has the issue arisen and why is the decision maker involved now? When does the decision maker have to decide, resolve, act or dispose of the issue? What is the urgency to the situation? Review any exhibits to see what numbers have been provided. Review the case questions in the textbook. This may give you some clues are what the main issues are to be resolved. You should now be familiar with what the case study is about, and are ready to begin the process of analyzing it. When you are doing the detailed reading of the case study, look for the following sections: Opening paragraph: introduces the situation. Background information: industry, organization, services, history, competition, financial information, and anything else of significance. Specific (functional) area of interest: marketing, finance, operations, human resources, or integrated. The specific problem or decision(s) to be made. Alternatives open to the decision maker, which may or may not be stated in the case. Conclusion: sets up the task, any constraints or limitations, and the urgency of the situation. Most, but not all case studies will follow this format. The purpose here is to thoroughly understand the situation and the decisions that will need to be made. Analyzing the case should take the following steps: 1. Defining the issue(s) 2. Analyzing the case data 3. Generating alternatives 4. Selecting decision criteria 5. Analyzing and evaluating alternatives 6. Selecting the preferred alternative 7. Developing an action/implementation plan Defining the issue(s)/Problem Statement The problem statement should be a clear, concise statement of exactly what needs to be addressed. This is not easy to write! The work that you did in the short cycle process answered the basic questions. Now it is time to decide what the main issues to be addressed are going to be in much more detail. Asking yourself the following questions may help: What appears to be the problem(s) here? How do I know that this is a problem? Note that by asking this question, you will be helping to differentiate the symptoms of the problem from the problem itself. Example: while declining sales or unhappy employees are a problem to most companies, they are in fact, symptoms of underlying problems which need to addressed. What are the immediate issues that need to be addressed? Differentiate between importance and urgency for the issues identified. Some issues may appear to be urgent, but upon closer examination are relatively unimportant, while others may be far more important than urgent. You want to deal with important issues in order of urgency to keep focused on your objective. 2 Important issues are those that have a significant effect on: Quality of care Financial Sustainability Strategic direction of the company, Source of competitive advantage, Morale of the company's employees, and/or Patient/customer satisfaction. Analyzing Case Data In analyzing the case data, you are trying to answer the following: Why or how did these issues arise? You are trying to determine cause and effect for the problems identified. You cannot solve a problem that you cannot determine the cause of! It may be helpful to think of the organization in question as consisting of the following components: o Where are the problems being caused and why? o Who is affected most by this issues? You are trying to identify who are the relevant stakeholders to the situation, and who will be affected by the decisions to be made. o What are the constraints and opportunities implicit to this situation? It is very rare that resources are not a constraint, and allocations must be made on the assumption that not enough will be available to please everyone. o What do the numbers tell you? You need to take a look at the numbers (where relevant) given in the case study and make a judgment as to their relevance to the problem identified. Not all numbers will be immediately useful or relevant, but you need to be careful not to overlook anything. Generating Alternatives This section deals with different ways in which the problem can be resolved. Typically, there are many (the joke is at least three), and being creative at this stage helps. Things to remember at this stage are: Be realistic! While you might be able to find a dozen alternatives, keep in mind that they should be realistic and fit within the constraints of the situation. Not making a decision pending further investigation is not an acceptable decision for any case study that you will analyze. A manager can always delay making a decision to gather more information. The point to this exercise is to learn how to make good decisions, and having imperfect information is normal for most business decisions, not the exception. Doing nothing as in not changing your strategy can be a viable alternative, provided it is being recommended for the correct reasons, as will be discussed below. Keep in mind that any alternative chosen will need to be implemented at some point, and if serious obstacles exist to successfully doing this, then you are the one who will look bad for suggesting it. Once the alternatives have been identified, a method of evaluating them and selecting the most appropriate one needs to be used to arrive at a decision. Key Decision Criteria A very important concept to understand, they answer the question of how you are going to decide which alternative is the best one to choose. Other than choosing randomly, we will always employ some criteria in making any decision. Think about the last time that you make a purchase decision for an article of clothing. Why did you choose the article that you did? What criteria did you use? 3 For a healthcare situation, the key decision criteria are those things that are important to the organization making the decision, and they will be used to evaluate the suitability of each alternative recommended. Key decision criteria should be brief, preferably in point form, such as: o improve (or at least maintain) profitability, o increase sales, market share, or return on investment, o maintain customer satisfaction, corporate image, o be consistent with the corporate mission or strategy, o within our present (or future) resources and capabilities, o within acceptable risk parameters, o improve quality of care, o employee morale, safety, or turnover, The criteria must also be related to your problem statement, and alternatives. If you find that you are talking about something else, that is a sign of a missing alternative or key decision criteria, or a poorly formed problem statement. Evaluation of Alternatives If you have done the above properly, this should be straightforward. You measure the alternatives against each key decision criteria. Each alternative must be compared to each criteria and its suitability ranked in some way, such as metot met, or in relation to the other alternatives, such as better than, or highest. This will be important to selecting an alternative. Another method that can be used is to list the advantages and disadvantages (pros/cons) of each alternative, and then discussing the short and long term implications of choosing each. Recommendation You must have one! Health care managers are decision-makers; this is your opportunity to practice making decisions. Give a justification for your decision. Check to make sure that it is one (and only one) of your alternatives and that it does resolve what you defined as the problem. 4