Whittaker Memorial Hospital. Case Analysis - Research Paper Example

? Whittaker Memorial Hospital Case Analysis The problems relating to accounting and administrative functions ultimately led towards deteriorated financial position of Whittaker Memorial Hospital. Consequently, the hospital was renamed to Newport News General Hospital in order to develop its various medical facilities and services. Due to the demographic changes in the community of East End and incompetent hospital care pricing, the institution had to face huge financial loss and ultimately became bankrupt. Taking into account the major problems faced by Whittaker Memorial Hospital, the paper utilizes SWOT and cause and effect analysis frameworks to obtain an in-depth view of the case scenario. Based on the obtained findings, in order to improve its financial position, certain actions have been suggested. These include hiring qualified accounts personnel as well as effective physicians and developing hospital care pricing structures in a more effective way. Summary Whittaker Memorial Hospital was established in the year 1908 in the East of Newport News. Further in the year 1914, Whittaker Memorial Association was founded as a community based non-profit organization for the purpose of offering effective governance and monetary help to the hospital. The association had raised considerable funds within a year to construct a hospital building in the East end of Newport News. Alike several African American hospitals, Whittaker Hospital established a school of nursing in order to train personnel required for its smooth operations. The association reconstructed the hospital in the year 1956 for delivering effective medical facilities due to increased demand of shipbuilding and naval role of the East end. Gradually, the financial position of the hospital became detrimental. In this similar context, the expenditures of the hospital were recorded to exceed its revenues by a significant percentage by the end of 1984. Apart from the demographic changes witnessed within the community of East Newport News, the incompetent healthcare pricing strategies at Whittaker Hospital was also one of the major reasons for its deteriorating financial position. In this regard, it has been observed that the average charge per day of the hospital was US$ 381,000 as compared to other hospitals which amounted to US$ 456,000. The hospital also experienced significant problems in its accounting procedures owing to its lacuna in maintaining transparency and thus disclosing incomplete financial recordings. The management of Whittaker thereafter decided to merge the hospital with other reputed brand in the community with the intention of coping up with its financial difficulties. Subsequently, the financial health of the hospital was observed to be improving due to the introduction of new administrative functions and restructured service operational procedures, even though at a fluctuating rate (Makamson, 2006). . Discussions of the Major Problems One of the major problems relating to Whittaker Memorial Hospital can be identified as its inefficiency to conduct the operational procedures and to maintain transparency in the accounting treatment of its financial statements. This may be explained with reference to the fact that after restructuring its corporate name as the Newport News General Hospital in 1985, it had to face a significant financial loss of US $184,000 due to its managerial and administrative problems. The importance of this particular problem can be identified as it focused primarily on the integrity enhancement and brand image strengthening of the hospital through the appointment of the city Mayor to take up the charge as an administrator and likewise enhance the management system of the hospital. The Mayor took certain deliberate measures which included the purchase of a mainframe computer, laying off the unproductive personnel as a cost retrenchment strategy and reducing hospital staffs for the purpose of solving the identified problem. Apart from the administrative and accounting problems, another critical problem of excessive debt was also identified relating to the case of Whittaker. In this regard, it has been viewed that the hospital had incurred a total debt amounting to US$ 20 million by the year 1990 as the accumulation of its liabilities since its establishment. By taking into concern this significant problem, the board of the Association of the filed for bankruptcy under Chapter 11 which was granted in the year 1993. The importance of this problem is that it made the management officials of the hospital reorganize as well as to develop a suitable financial plan for more efficient future operations (Makamson, 2006). Another important problem of Whittaker can be identified in accordance with the conflicts among the board members when instigating the plan to reorganize the hospital. After the hospital being positioned on a stagnant situation, a discussion among the board members was organized to restructure the hospital by expanding its functions to a psychiatric care establishment. In this context, the board members attempted to consider government funding as a beneficial source of finances which can be availed to support the restructuring plan. However, the policy was later observed to fail due to the objection of the stakeholders and thus by the year 1995, the Newport News General Hospital faced increasing debt. After witnessing failure in the implementation of the planned strategies, the President of the hospital board and the administrator proposed that the New General Hospital must merge with Riverside, one of the branded hospitals within the community, in order to mitigate its increasing debt and improve its profitability. However, there were strong oppositions towards the proposal due to the reason that it might hinder the quality of medical care owing to any managerial dilemma or fluctuations witnessed by Riverside when conducting its business with the New General Hospital. As a result, the medical staffs belonging to Whittaker filed suit against the Board to forestall the merger. Dr. Bryant, an active member of the medical staff of the hospital took a leadership role of the opposition and claimed community control over the hospital. He identified that the board is unable to adopt significant measures in order to reorganize as well as to recover the hospital from substantial financial losses. The importance of this problem can be identified as it redirected the managerial vision towards resolving the identified issues (Makamson, 2006). A Detailed Analysis of the Case SWOT Analysis Strengths One of the major strengths of Newport News General Hospital can be identified as its vision to become one of the leading hospitals in the East of Newport News. The other strength of the hospital can be identified as the level of commitment deciphered by its employees. To be illustrated, as can be observed form the case, the medical staffs were much concerned about the development of the hospital by claiming community control to the management. In this similar context, under the leadership of Dr. Bryant, emergency rooms were established for contacting with different patients and huge numbers of medical beds were made available for the patients that were allocated to medical as well as surgical patients (Makamson, 2006). Weaknesses One of the major weaknesses of Newport News General Hospital can be identified with reference to its pricing strategies. It has been viewed that the hospital lacked in maintaining profitability at a sustainable rate due to inefficient pricing strategies which were fundamentally focused on obtaining competitive advantages by rendering healthcare services at a substantially discounted price than that compared to the other community hospitals. Consequently, the management board of the hospital had to face increased level of financial losses as well as huge amount of financial debts. Moreover, the management board took certain significant policies in order to reorganize the hospital by merging with one of the biggest hospitals named Riverside which could revitalize its market position, but failed due to massive oppositions performed by the in-house medical staffs. Furthermore, there were certain critical allegations against the hospital regarding integrity and transparency in its accounting practices. In addition, the different factors such as non-encashment of payroll checks due to insufficient funds, major retrenchment through lay-offs and irregular payments of the hospitals’ mortgages also served as major weaknesses for Newport News General Hospital (Makamson, 2006). Opportunities Opportunities for any hospital include introducing better technologies, increasing effective medical services and hiring as well as retaining competent medical staffs within the hospital (Healthcare Success Strategies, 2012). In relation to the case of Whittaker, it has been viewed that the General Hospital possessed the opportunity to improve its financial position by appointing a new administrator. In this regard, the hospital planned to operate its administrative functions by introducing 126 beds for the patients, but the management board of the hospital decided to open only 80 beds. Consequently, the hospital reported a loss of US$ 184,000 due to its ineffective administrative related operational functions. Though, the demand of shipbuilding and the naval role of the East End has been increased, it can be stated that the Newport News General Hospital possessed the opportunity to flourish better as compared with other community hospitals (Makamson, 2006). Threats In relation to the case study, it has been observed that in the year 1995, the region i.e. the East End was served by various hospitals. In this regard, Newport News General Hospital faced significant threat of fierce competition within the market relating to its industry type. It is in this context that the biggest Riverside Regional Medical Center, which was located in Newport News, was one of the major competitors of General Hospital or Whittaker. One of the competitive advantages of Riverside and a major threat of Whittaker was that Riverside possessed 60% occupancy in terms of admission of patients comprising large number of beds for patients along with modern and technologically sophisticated medical facilities. Moreover, the hospital also faced the threat of its other competitor named Catholic, owned by Mary Immaculate Hospital which possessed 80% patients’ occupancy rederring 225 beds facility (Makamson, 2006). Cause and Effect Analysis The cause and effect analysis is fundamentally based upon three steps which include identifying a problem, recognizing the possible causes and finally establishing action plans to eliminate the possible causes of the problem. With regard to the case of Whittaker, it has been identified that certain significant problems prevails in relation to the administrative and managerial functions of the hospital. The problems were partially related to accounting in which the accounts were not periodically updated and often the financial statements are misinterpreted. Moreover, the financial position of the hospital also declined due to its lacuna in maintaining pace with the demographic changes within the community being strongly influenced by its incompetent pricing structures as compared to other community hospitals. The major reason behind the declining financial position of the hospital was primarily its ineffective managerial operations along with deficiencies in the organizational leadership skills. Accumulatively, the aforementioned causes affected the business as well as the financial performance of the hospital by a significant extent. It has been noted that the expenditures of the hospital was exceeding the revenues substantially and thus became financially impoverished. Moreover, the financial position of the hospital was deteriorating in such a manner that resulted towards increased financial debt and bankruptcy (Makamson, 2006). Thus, on the basis of the above discussion, it can be stated that the aforementioned causes of the problems imposed extensive negative impact upon the financial position of the hospital. The cause and effect analysis relating to the case can be better understood by the flowing graphical representation. The ethical issues related to the case can be identified as the conflicts among the management and the Board of Directors after Whittaker Memorial Hospital was renamed as Newport News General Hospital to mitigate its inefficiency in terms of its brand management. Moreover, the strategy to lay-off medical staffs and the reluctance of the management to render due significance towards the employees’ concerns, can be identified as major constituents for the rising conflict within the organization. These complications further gave rise to various ethical issues which in turn limited the scope of the organization to grow as per expectations (Makamson, 2006). Action Plan The problems related to the Whittaker Memorial Case indicate towards certain issues related with inefficiency in accounting as well as administrative business operations. The problems ultimately deteriorated both financial as well as business performances of the hospital by a considerable extent. The problems also led the hospital towards bankruptcy through rapid augmentation in the aggregate amount of financial debts. Moreover, the problems generated significant ethical issues among the different member staffs of the hospital. Hence, in order to cope up with the aforesaid problems and to mitigate with the factors which were reported to be causing inefficiencies, the hospital i.e. Newport News General Hospital can implement certain actions or rather strategies. Initially, it is required for the hospital to hire efficient and qualified accounting staffs who could maintain the financial records of the hospital efficiently. The hiring of appropriately skilled and experienced staff would support the hospital to prevent any sort of accounting frauds and can enhance the overall accounting procedures of the hospital toward a well-defined strategic direction. Moreover, the management officials belonging to the hospital must structure its hospital care pricing in such a way so that it can keep pace with other community hospitals without hampering its profitability. In this regard, the hospital should increase its average daily charge for hospital care in order to strengthen its business as well as financial position from a long run perspective. The other suggested strategy would be to form an efficient management that would be capable enough to view that all the important paper works relating to business operations are efficiently handled and proper care is taken towards strategic planning, transparency in the operational process and other ethical concerns. Besides, the management is also required to formulate strategic policies in order to enhance productivity as well as profitability. Another significant strategy for the hospital in order to increase its profitability along with mitigating its weak financial position can be identified as the introduction of necessities including the establishment of large number of patient beds, modern or innovative medical services and technologically sophisticated medical facilities. It has been observed in the case that there were internal conflicts among the board members regarding the suggested restructuring process of the hospital which also contributed in causing the problems. In order to solve this issue, the board members must establish an environment of strong teamwork which would further assist in facilitating a smoother execution of the operational functions (Healthcare Preparedness Capabilities, 2012).Another vital reason for decline of Whittaker’s financial and business performance after being renamed as Newport News General Hospital can be identified as it deficiency in acquiring larger market share within the region as compared to other community hospitals. The market share of an organization is linked with profitability where many firms seek to increase the selling of products or services in an efficient way towards attaining a significant market share in comparison with their major business market competitors. Hence, in order to increase the captured market share, the hospital needs to take certain important actions which might include improving the quality of its medical services by introducing innovative as well as technologically sophisticated medical facilities and most importantly promoting its services through effective promotional strategies. Moreover, the hospital can augment its market share along with attaining significant competitive position over its chief business market contenders by hiring qualified physicians. Newport News General Hospital might hire effective physicians for delivering quality care to the patients as well as improving its productivity and profitability by a considerable extent. Although, this particular action would cost much higher, it would extensively support the hospital to raise its market share along with mitigating the causes of weak financial positioning. In addition, the strategy of hiring effective physicians would also assist the hospital to compete with other major players such as Riverside and Catholic (Healthcare Preparedness Capabilities, 2012). References Borkowski, N. (2009). Organizational behavior in health care. United States: Jones & Bartlett Learning. Healthcare Success Strategies. (2012). SWOT: The high-level self-exam that boosts your bottom line. Retrieved from http://www.healthcaresuccess.com/articles/swot.html Healthcare Preparedness Capabilities. ( 2012). National guidance for healthcare system preparedness. Retrieved from http://www.phe.gov/preparedness/planning/hpp/reports/documents/capabilities.pdf Kreimer,S. (2010). Five ethical challenges in healthcare. Retrieved from http://www.amnhealthcare.com/News/news-details.aspx?Id=34512 Makamson, E.L. (2006). Whitttaker Memorial Hospital. Journal of the International Academy for Case Studies 12(5), pp.83-92. Read More