Introduction Carefully read the Pediatric Dental Care Center, Case # 18 located on page 269 in Darr, Farnsworth. & Myrtle's Case book. This case study presents a not-for-prot Pediatric Dental Care Center (PDCC) that has struggled nancially for years as it serves a Medicaid population. It is offered the opportunity to become part of a federally qualied health center, but to do so requires expanding services and signicantly changing its governance structure. There is several interconnected issues which have no single answer or cookbook approach. Funding for safetyrnet programs has been declining, and this has led to limitations on the type and frequency of care visits, as well as reductions in payments to providers of services. This has led many organizations to limit the number of safetyrnet clients served, or to withdraw from sewing that population group. This has increased demand for organizations that continue to provide care. Unit Learning Outcomes - ULO #3: Evaluate ethical considerations when making operational, nancial, and strategic decisions. (CLO 7) 0 ULO #4: Analyze implications of nancial retrenchment in public and private health service organizations. (CLO 7) - ULO #5: Consider the public welfare and political pragmatism when formulating recommendations for making operational, nancial, and strategic decisions in public and private health service organizations. (CLO 7) Ref ences Directions The students are expected to carefully read the assignment instructions. then thoroughly and explicitly address each component of the corresponding case study questions. Case Study Questions: 1. Is the PDCC at a crossroads? Must the PDCC change its operational strategy? How can the PDCC meet its mission to provide oral healthcare to underserved children in the greater South Bay community? How should PDCC respond to the request to partner with the hospital and the children's clinic and become a federally qualied health center? What other options should be considered? 999'.\" Submission Expectations: - The submission should reect higherrlevel cognitive processing (analysis, synthesis, and evaluation), which is essential for someone being prepared to serve in an operational capacity within the healthcare and related industry. 0 To earn the maximum number of points, the submission should reect graduate-level execution with clear evidence of critical thinking, synthesis of relevant information from credible sources, and clear mastery of the concepts necessary to successfully execute each component of the assignment. - The submission should not exceed four (4) pages in length, excluding the title and reference list pages, and explicitly address all required components of this assignment. 0 The document must be double-spaced, adhere to the APA writing style (7th ed), and include at least three (3) references of credible or peer-reviewed sources to support any suppositions and recommendations. - Finally. the document should be prepared as a Microsoft Word document and uploaded to Submit Assignment 280 Organizational Effectiveness the organization. Since a federally qualified health center must serve all of the underserved population, PDCC might be required to treat adults. Such a change would mean a major investment of time and money for training and supplies and development of new treatment protocols. A federally qualified health center designation alone would not provide the funding to meet higher-cost procedures, such as operating room time and intravenous sedation. An additional concern is that the federally qualified health center payment system might incentivize providers to provide less treatment, or to spend less time with each patient. And, as with any gov- ernment program, what might be economically feasible today may not be in the future. As Blake Johnson reflected on changes in the healthcare environ- ment, he wondered how the organization should respond. He wondered if there were other collaborative options with the children's clinic or other organizations that might not require changes to PDCC's governing board or its range of services. DISCUSSION QUESTIONS 1. Is the PDCC at a crossroads? 2. Must the PDCC change its operational strategy? 3. How can the PDCC meet its mission to provide oral healthcare to underserved children in the greater South Bay community? 4. How should PDCC respond to the request to partner with the hos- pital and the children's clinic and become a federally qualified health center? 5. What other options should be considered? ENDNOTES 1. From PDCC's website. The mission statement was used for 8 years on PDCC's Internal Revenue Form 990 filing. 2. Information on federally qualified health centers and the dental services required may be found at http://www.ada.org/en/public-programs/action for-dental-health/access-to-care/federally-qualified-health-centers-faq; http://www.bphc.hrsa.gov/programrequirements/index.html.Table 18.1. Six-year financial results 6/30/11 6/30/12 6/30/13 6/30/14 6/30/15 6/30/16 Assets Current assets Cash $300 $300 $295,726 $351,008 $322,632 $263,521 Savings and temporary cash investments $758,547 $702,297 $1,396 $180 $180 Pledges and grants receivable-net $521,220 $433,640 $254,913 $155,962 $103,018 $50,500 Accounts receivable-net $94,771 $84,289 $116,576 $75,335 $96,541 $358,966 Prepaid expenses and deferred charges $371 $371 Subtotal $1,375,209 $1,220,897 $668,611 $582,485 $522,371 $672,987 Noncurrent assets Land, buildings, and equipment at cost $3, 116,802 $3,406,504 $4,010,612 $4,085,617 $4, 148,237 $4,357,618 Pediatric Dental Care Center Less accumulated depreciation $985,815 $1, 127,464 $1,275,045 $1,420,783 $1,584,944 $1,761,651 Subtotal-land, buildings, and $2, 130,987 $2,279,040 $2,735,567 $2,664,834 $2,563,293 $2,595,967 equipment Investments-publicly traded securities $5,074,322 $5,646, 158 $5,649,023 $5,574,716 $5,536,835 $5, 134,810 Other assets $47,755 $47,755 $104,359 $27, 134 $20,990 $12,231 Subtotal $7,253,064 $7,972,953 $8,488,949 $8,266,684 $8, 121, 118 $7,743,008 Total assets $8,628,273 $9, 193,850 $9, 157,560 $8,849, 169 $8,643,489 $8,415,995 (continued) 271276 Organizational Effectiveness Because PDCC is a children's dental clinic, the dentists and their staff have seen many patients grow up. Many patients feel close to the dentists even though a patient might see many different dentists during their treatment at PDCC. Patients are not assigned to a specific dentist. Instead, when appointments are made the patient will see whichever den- tist is working that day. Since each general dentist works one or two days a week, it is common that more than one dentist completes a patient's treat- ment plan. This process increases collaboration and oversight because the treating dentist reviews the work of the previous dentist before proceeding with treatment. The dentists believe this ensures the clinic's standard of care is high because the quality of work one day is visible to a different dentist at the next appointment. Johnson knew that, although he could not pay competitive salaries to attract high-quality dentists, he could offset this disadvantage by pro- viding a rewarding and enjoyable experience to the dentists who worked there. Since most of the dentists are part time, Johnson felt that the most effective use of their time was treating patients rather than participating in the clinic's staff meetings. While this approach creates an environment in which dentists feel their services are valued and make an impact, most learned little about the financial and operational challenges at the clinic. Without a way for dentists to get information about the issues faced by the clinic they had to rely on their staff to "fill them in." Unfortunately, most staff were not able to provide the detailed information the dentists sought. The most expensive treatments performed at the clinic are procedures involving a dental surgeon and a dental anesthesiologist. Reimbursement for these services pays some of the additional expense but does not cover the actual cost of providing the care. This is true for nonsurgical dental procedures too. The problem of "less than cost" reimbursement is exac- erbated when residents provide care because the reimbursement rate for their services is much lower than that received by a fully licensed dentist. Even though the dentists are key to providing patient care, Johnson believes it's the clinic staff who make it different from other area dental clinics. This view of the importance of staff to the clinic's operations is reflected in its pay and benefits. Dentists are generally compensated at a rate lower than the market average, but dental assistants and clerical staff are paid at market rates. Since nearly all staff are women, the organization adopted policies that reflect that reality. Among the more significant is the paid maternity leave policy and flexible work schedules that allow staff to deal with the inevitable family or childcare issues. More than half of employees have benefited from these policies. These "progressive" policies can cause significant problems scheduling employees, which reduces efficiency. Despite the problems, however, most staff enjoy working at the clinic and working as a team. Because ofPediatric Dental Care Center 277 the camaraderie, they know each other well, and some have formed friend- ships that continue outside work. Even though there isn't much room for advancement, most find the work they do and the team-oriented environment unique to the PDCC. THE PATIENTS One factor that makes working and volunteering at the PDCC unique is the patients, who are grateful for getting the care they need in a way that makes them feel special. Most patients are poor, and finding afford- able dental health services is difficult. While most patients (about 75%) are covered by Denti-Care (Medicaid), reimbursement for those services fails to cover the cost of care. The next largest group (17%) is covered through a public-private partnership between the county department of health services and private, community-based providers, who try to meet the needs of families who do not qualify for Medicaid or other assistance programs. The remainder (roughly 8%) of patients are billed on a slid- ing scale according to income. Reimbursements from non-Denti-Care sources are higher than those from Denti-Care, but here, too, costs are not covered. While 85% of pediatric patients are bilingual, 90% of parents speak only Spanish. This is problematic; the majority of dentists have limited Spanish proficiency. Most office staff are bilingual in Spanish and English, so dentists often have to rely on bilingual assistants to translate treatment information, postoperative instructions, and information for patients and families. Since dental treatment makes many people nervous, talking about the procedure in the patient's native language is important. Staff does an excellent job providing a calming atmosphere for children, but that does not overcome the problem of most dentists being unable to communicate directly with parents about the treatment and associated risks. The clinic averages 225 new patients monthly. Key factors attracting patients to the clinic are its reputation and the affordability of its services. Unfortunately, what was affordable for patients was not affordable to the clinic. In 2013, the state program, Denti-Care, reduced benefits because of poor economic conditions. This resulted in fewer covered patients, and those who were covered had limits on the number and types of treat- ment that would be reimbursed. While the state recently rescinded these across-the-board reductions in its Medicaid programs, the clinic still had financial shortfalls. Johnson notes that, although the clinic has been somewhat successful in offsetting deficits with grants and fundraising, it has been increasingly difficult to find enough donor support to cover reimbursement shortfalls.Expenses Grants and assistance to individuals $12,500 $8,000 $3,500 $4,000 $4,000 $O Salaries and wages $1,457,588 $1,556,441 $1,249,791 $1,388, 160 $1,390,283 $1,567,406 Employee benefits $166,633 $326,463 $188,290 $232,427 $213,721 $258,380 Fees, dentists $1,078,301 $1,017,299 $1, 117, 103 $931,911 $822,663 $744,648 Office expenses $258, 113 $151,012 $176,424 $164,228 $159,923 $146,692 Rent $108,534 $145,247 $119,449 $122,347 $123,768 $113,980 Depreciation $179,006 $150,050 $147,581 $160,299 $164, 161 $176,706 Dental supplies $183,220 $152,657 $170,348 $159,942 $156,231 $165,670 Total expenses $3,443,895 $3,507,169 $3, 172,486 $3, 163,314 $3,034,750 $3, 173,482 Operating surplus (deficit) ($284, 128) ($69,173) $57,673 ($492,634) ($171,731) ($196,551) Pediatric Dental Care Center 27318 Pediatric Dental Care Center Eleanor Lin Children's Dental Health Clinic, Long Beach, CA CASE HISTORY/BACKGROUND Dr. Blake Johnson, executive and clinical director of the Pediatric Dental Care Center (PDCC), summarized the situation facing the clinic's leadership and board in 2016. In a climate where federal and state reimbursements are insufficient to cover our costs, how is the clinic supposed to survive since the majority of our patients require federal and state aid for payment of services? In only one out of the past 6 years did the PDCC generate surpluses sufficient to cover the full cost of doing business. We are at a crossroads now as to how to change our strategy. How could we uphold our mission to pro- vide oral health services to the underserved children in the greater South Bay Community, when the clinic is already running at a loss, with little prospect for increased reimbursement for treating Medicaid patients, which account for about 80% of our patient population? Recent trends in healthcare had challenged both PDCC's financial health and its mission. Dr. Johnson is determined to continue providing dental treatment to one of the most vulnerable populations, Denti-Care (dental Medicaid) children. His vision is that all children, especially those who are uninsured and/or indigent, should have access to and receive excel- tent, comprehensive dental care. The clinic has always had a large patient volume. After the 2007 recession, however, demand for services soared. 269Table 18.1. Six-year financial results (continued) 272 6/30/11 6/30/12 6/30/13 6/30/14 6/30/15 6/30/16 Liabilities Current Liabilities Accounts Payable and Accrued Expenses $141,512 $175,860 $169,206 $209,904 $158,157 $191,434 Other Liabilities $136,900 $224,279 Subtotal $278,412 $175,860 $169,206 $434, 183 $158,157 $191,434 Noncurrent Liabilities Organizational Effectiveness Long-Term Debt $632,631 $685,208 $636,264 $577,531 $518,800 $460,068 Subtotal $632,631 $685,208 $636,264 $577,531 $518,800 $460,068 Total liabilities $911,043 $861,068 $805,470 $1,011,714 $676,957 $651,502 Unrestricted $1,463,635 $1,636,683 $2,501,294 $1,947,853 $2,238,731 $2,421,347 Temporary restricted $1,437,605 $1,227,324 $355,026 $413,454 $279,133 $314, 158 Permanently restricted $4,815,990 $5,417,825 $5,495,770 $5,476, 148 $5,448,668 $5,028,988 Subtotal $7,717,230 $8,281,832 $8,352,090 $7,837,455 $7,966,532 $7,764,493 Statement of activities Income Contributions and grants $1,043,053 $1,283,723 $1,052,569 $749,572 $942,997 $1,298,649 Program Services revenue $1,743,251 $1,786, 154 $1,749,625 $1,543,617 $1,824,639 $1,657,221 Investment income $373,463 $368, 119 $402,804 $377,491 $95,383 $21,061 Other revenue $25, 161 $0 Total revenue $3, 159,767 $3,437,996 $3,230, 159 $2,670,680 $2,863,019 $2,976,931Pediatric Dental Care Center THE STAFF 275 Healthcare Providers The PDCC employs 6 general dentists, 2 orthodontists, 4 pediatric den- tists, 1 endodontist, 1 oral surgeon, and 1 dental anesthesiologist (when there are intravenous sedation cases). The PDCC also provides train- ing for the region's school of dentistry's residency programs. There are 2-3 oral surgery residents who come one day per month and 3 full-time pediatric residents who see patients daily at the PDCC. The regional U.S. Veterans Affairs Hospital also sends an endodonticsresident for training one day a month. The PDCC attracts dentists who enjoy working with underprivileged children and giving back to the community. Although the majority of dentists at the clinic have their own successful full-time practices, they see their PDCC practice as rewarding, part-time community work. They like the work, they like the fact that patients are appreciative, and they like the people with whom they work. This commitment is not without some personal sacrifice, however. To meet the needs of children on Belle Vista Island, 25 miles off shore, dentists have to take a ferry several times a month. Other dentists sometimes work in the clinic's mobile dental trailer to examine children at schools they visit. Dentists work 7:20 a.m. to 3:30 p.m.; other staff work 7:20 a.m. to 4 p.m., Monday through Friday, with a 70-minute lunch break. Each dentist works with a dental assistant. As in private practice, dentists typi- cally treat two patients simultaneously. This method allows the dentist to dedicate one chair to patient treatments that require a longer time and the other chair to examinations lasting 10-15 minutes. The back-office clinic staff helps with clinical work and sterilization, and a front-office staff handles billing, scheduling, and clerical work. Dental assistants regularly rotate among the clinic's dental specialties to keep their skills sharp and versatile. Some assistants even rotate to work at the front desk with billing and scheduling. This proves helpful because if clarification is needed for coding or eligibility during a procedure, den- tal assistants with experience working at the front desk can answer these questions without stopping treatment. The dentists usually work different days, so they don't have much contact with each other. However, the dental assistants and dentists have established good rapport because most have a long-term working rela- tionship with the clinic. Some pediatric dentists were pediatric residents recruited by PDCC for part-time employment. Dental assistants who rotated through PDCC during their training also wanted to work at the clinic, but openings are scarce. As Johnson proudly put it, "We have a lot of life-timers."Organizational Effectiveness 278 Cash, 9% Public-Private Partnership, 19% Denti-Care, 72% Figure 18.1. Payment mix. The effects of reimbursement that did not cover the cost of care, increasing dental needs in the community, and the inability of fundraise ing to provide enough support were a threat to the long-term viability of PDCC. The largest expenditure in clinics like PDCC consists of salaries and wages. Other clinics report that salaries and wages account for 74% of total budget. In contrast, salaries and wages at PDCC are higher. Nonetheless, the PDCC board and senior executives feel that current sal- ary and benefits are appropriate and fair. Unfortunately, continuing reim- bursement shortfalls may force management to eliminate one full-time equivalent dentist and reduce the days of coverage by community-based dentists. RESPONDING TO THE CHANGING ECONOMIC LANDSCAPE Faced with declining revenue and increasing demand for services, the state made severe cuts to a range of safety net programs. Since healthcare is a major budget item, the state opted to meet increased need by reducing reimbursement for most services, as well as limiting the number of services provided and the frequency with which they are offered. These changes rippled through the provider network, causing some to limit services of reduce access to patients they would otherwise serve.Pediatric Dental Care Center 279 Other Native 832 American Asian 1% 1,202 14,427 1% Black 14% White 14,544 49,876 47% 14% Hispanic 23,817 23% Figure 18.2. Pediatric population in South Bay. The impact on the PDCC was significant. Consistent with their mis- sion, however, they strove to provide the same quality and amount of care. Simultaneously, the PDCC sought ways to improve efficiency and find other sources of revenue. One way to increase revenue was to join The Children's Clinic (TCC) at the South Bay Memorial Hospital and become a federally qualified health center. Federally qualified health centers must provide primary care for all ages. They are reimbursed with a more gen- erous capitation rate. Required services include preventive health, mental health and substance abuse, transportation, and dental care for adults and children on site or by arrangement with another provider. In his report to the board, Johnson noted that generous reimburse- ment as part of a federally qualified health center would improve the PDCC's financial status. As an example, he noted per visit reimbursement ranged from $100 to $400 per patient, depending on the treatment. By comparison, reimbursement for similar treatment under Denti-Care was no more than $80. One challenge to qualifying as a federally qualified health center is that at least 51% of the clinic's board members must be persons served by274 Organizational Effectiveness underserved is best captured by the phrase in its logo and letterhead \" child deserves to smile.\" eVe Dr. Blake Johnson Dr. Johnson's relationship with the PDCC started in high SChoo his parents encouraged him to research career choices such as law m d' cine, and dentistry. He shadowed a practitioner of each profession: 1- was especially drawn to the staff at the PDCC. He volunteered at 13136313 during high school and college while he earned his business degre Following graduation, he went to the University Of the Pacic School 3% Dentistry. On graduating from dental school, Johnson worked part time as an associate dentist and continued working at the PDCC. A year later, he and his twin brother opened a private ofce and practiced there for about 8 years. Then he bought out his brother and became a solo practitionen After a year in solo practice, and even though his business was booming, Johnson felt some emptiness regarding his profession. He wondered if he could do more. Through personal contacts, he heard about a dental clinic being established for HIV/AIDS patients at the St. Joseph's Medical Center. He sold his practice and became director of that program, but he continued to work part time at the PDCC. A year later, the PDCC's clinical director wanted to step down and Johnson was recommended for the position. Once he found a qualied replacement for his direc- torship at the HIV/AIDS clinic, Johnson accepted the position as PDCC's clinical director. Five years later, PDCC's executive direc- tor asked Johnson to replace her on her retirement. Even though this added signicant administrative responsibilities, Johnson accepted the challenge and became executive director while continuing to serve as clinical director. . As a leader, Johnson had a reputation as a handson manager- H15 director of operations said, \"He is everywhere at once, but he always gets things done. Since he has practiced at the clinic himself, he has a rapport with the general and specialty dentists who work here. They know h: understands their perspective in providing patient-centered treatmenli He has worked with all of the veteran staff here as well, so he is very_ we liked. Whenever he does a walkthrough of the clinic he will offer f0 lung} in and help if the dentists are running behind schedule. ' e helping out wherever it's needed is the culture that pervades her established a norm here where there is no such thing as 'mY wor 'my- the 'team's work' instead. The work culture at the clinic is one Oihfa best Everyone helps one another, and everyone is motivated to do 6 work possible efciently.\" 1 When Organizational Effectiveness 270 Due to reductions in reimbursements-now approximately 35% of the national average-many private pediatric dentists dropped out of the government-insured programs, even as an increasing number of families were qualifying for Medicaid. Initially, PDCC's main clinic was located inside South Bay Memorial Hospital. About five years ago the hospital renovated clinic offices next to the inpatient tower, and the clinic had to move to the clinic building. Housed in a state-of-the-art building, PDCC was able to implement an electronic dental record system and added new equipment, including digital X-rays. Because the clinic is right next to the hospital PDCC'S dentists with surgical privileges use the hospital's operating room to per- form oral surgery. This unique arrangement differentiates the clinic from competitors and gives it a marketing advantage. However, in recent years, the clinic has been unable to cover its expenses. Partly, this is because the rent in the new building is much higher than when it was housed in the hospital. Compounding the prob- lem were reimbursement rates that had not changed since 2000 and a 10% across the board funding decrease in 2013 because of the state's burgeon- ing budget deficit. While the state rescinded the across the board budget reductions in 2015, reimbursement rates have not changed. Like PDCC, the hospital is also experiencing decreases in reimburse- ment for Medicaid and Medicare patients. To respond to changes caused by the Affordable Care Act, as well as offset declines in reimbursement, the hospital is exploring the possibility of having one of its outpatient clinics become designated as a federally qualified health center. Aware of PDCC's financial situation, the hospital encouraged it to become part of the federally qualified health center proposal. THE ORGANIZATION History of the Pediatric Dental Care Center The PDCC was founded in 1932 as a not-for-profit organization. Its mis- sion is "to deliver oral health education and comprehensive treatment for economically disadvantaged children, including complex medical consid erations, while providing premier treatment in pediatric and multispecialty dentistry." Helped by its relationship with South Bay Memorial Hospital, the PDCC expanded its services to include dental care for disabled chile dren. In 2016, the clinic provided dental services to 10,000 children who made 33,000 visits to the main clinic, as well as to two satellite clinic located in Center City and Belle Vista Island. A dental education center located in the main clinic and a mobile clinic travels into the commune to treat those who cannot come to it. This commitment to serving