Marketing of Health Care

Topics: Hospital, Board of directors, Corporate governance Pages: 11 (2904 words) Published: June 30, 2013
In 1997, Congress passed legislation establishing a hospital payment classification that came to be termed the “Critical Access Hospital (CAH).” The bill’s intent was to improve Medicare reimbursement for small rural hospitals so that local residents would continue to have access to acute hospital care. There are two primary requirements for CAH status: a) a rural location; and b) 25 beds or less. Today, more than 60% of rural hospitals in the U.S. are designated as Critical Access Hospitals – roughly 1,200 facilities. The states with the most CAHs are in the nation’s heartland: Texas, Kansas, Iowa, and others.

Lessons from Successful Critical Access Hospital Turnarounds

The early warning signs of financial/operational distress are markedly different for a Critical Access Hospital (CAH) than for urban and suburban hospitals. This paper examines the symptoms of distress that every CAH board member needs to recognize, along with a roadmap for a successful turnaround. 888.766.2799 105 Continental Place Brentwood, TN 37207 ©October 2010

Limitations of the Board

Negative Community Perception

No Strategic Plan

hospital maintains tight financial controls. They also need to carefully monitor any significant changes to the cost structure. Turning around a CAH often involves greater alignment of physician and hospital interests, especially as health reform compels greater hospital-physician integration. When a physician expresses interest in being employed or having his/her practice purchased, the board often turns to local legal counsel. Those attorneys may not have a comprehensive understanding of the compliance requirements of physician contracting – or how to attain the most favorable structures for the hospital.

Increased Competition Declining Inpatient/ Outpatient Volume

A Major Surprise

CEO Turnover

Cost Structure Changes

Cash & Cash Flow Deterioration

Staff Reduction/ Perceived Drop in Quality

Federally Qualified Health Centers (FQHC)

Limitations of the Board
Given that CAHs are key community assets, the composition of most CAH boards is primarily local leaders such as bankers, businessmen, and politicians. Consequently, these boards often lack an essential level of healthcare expertise. Without the fundamental financial and operational knowledge to provide effective oversight, these boards usually depend on the hospital management team for the success or failure of these hospitals. Yet most CAHs have very limited management resources – and the administrative team often consists of only the CEO, CFO and CNO. CAH board members often lack a necessary understanding of hospital finance, compliance, quality, and industry best practices. Especially in this era of health reform, board members need to dedicate more time to Board Development so that they understand their fiduciary responsibilities and have enough information to strategically address the challenges their hospitals are facing. Although Medicare reimburses qualified CAHs at 101% of cost, some of these facilities still barely break even. Board members with an understanding of healthcare financials can review key financial indicators on a monthly basis, including days cash on hand, collection rates, and debt service coverage ratios, to assure that the

Negative Community Perception
A not-for-profit hospital depends on community trust, and its board members are the public face of the organization. Because the hospital is such an integral part of the community, the local media will focus on your hospital during troubled times. It is a huge mistake to pretend that there’s no problem or to hide from the media. Communication and transparency with the community and media are essential – especially during financial downturns. The board’s first communication should be internal, making sure all employees and medical staff members understand the...

References: Consulting Case Study: Financial Improvement Process Success Story: Gritman Medical Center 3 Consulting Case Study: Group Purchasing Services 4 Success Story: Abbeville Area Medical Center 5 Success Story: Washington County Hospital 6 Success Story: Gritman Medical Center
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