YOU DECIDE

As a CEO of Middlefield Hospital, I have learned recently that the financial performance of the Hospital has been deteriorating past six months. As I investigated the situation, I found out that there are many problems which are affecting the budget of the hospital.
First I need to assess the problems and find out what are the revenue generating things and what are the expenses. The first dimension of financial health is that revenues and expenses be in balance. The fact that our Hospital offers multitude of services from in-patient and out-patient services, there are multiple sources of revenues.
1) Mix of Payers As I observed that the payer mix of this hospital is comprised of more uninsured patients, I understand the problem. One of the largest financial burdens that hospitals face is uncompensated care that is provided to uninsured individuals, especially in the emergency room department. This is causing more expenses for our Hospital. Other important factor is that the reimbursement rate from Medicare, Medicaid patients is also affecting the budget. While our hospital cannot control the underpayments from Medicare, Medicaid and other governmental payers, if we had more patients with commercialized insurance we could have been able to negotiate the rate of reimbursement.
We have to find the ways to attract people with commercialized insurance, one way is to invest in new technology, infrastructure and to open a wellness center.

2) Managed Care Contracts I also find one major problem in balancing the budget, that most of Middlefield's managed care contracts are more than two years old. There are little reliable utilization and reimbursement data available. No one at our Hospital is assigned to manage these contracts or maintain ongoing relationships with managed care companies. Our hospital must take action to address this issue.