Introduction

This paper strives to answer questions based on the case study “Emanuel Medical Center: Crisis in the Health Care Industry”. As excerpted directly from the case study, Mr. Robert Moen, Emanuel Medical Center (EMC) president and CEO, was experiencing a number of challenges in 2002. The medical center faced numerous challenges in its external and internal environment. First, EMC garnered an onslaught of negative attention for the “Haley Eckman incident” in which a young man, who happened to be a gang member, died within view of EMC’s Emergency Department (ED) medical personnel rendered no care and watched. The emergency department at EMC was also experiencing greater pressure to deliver services in an increasingly difficult health care environment, particularly after the federal Emergency Medical Treatment and Active Labor Act (EMTALA) was enacted; legislation that required access to emergency medical care for all, regardless of one’s ability to pay. Additionally, larger, for-profit managed care facilities were making substantial advances into EMC’s service area.
Internally, the cost of operating the ED had increased significantly and patient traffic had vastly exceeded the capacity for which the ED had been designed. In addition, reimbursements for services from health maintenance organizations (HMO) and government programs had been drastically reduced. At the same time that other regulatory burdens had increased, EMC began to experience labor shortages, namely among nurses, that drove up EMC’s operations costs. The net effect of all of these factors was increasing pressure on the profitability of EMC. EMC’s operating margins had been negative for some time, contributing to increased pressures on cash flow.

Analysis

Strategic