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Emanuel Medical Center - Case Study Example

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1.) Health care financing has undergone numerous changes since Robert Moen became CEO of Emanuel Medical Center (EMC) 23 years ago, and continues to be in a state of flux and red ink. To deal with these changes, stay in business, and remain competitive, EMC is faced with some major operational challenges…
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Emanuel Medical Center
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Download file to see previous pages While this was a public relations problem in the short term, the issue pointed out the larger systemic problems that exist at EMC. The ED has increasingly become a cost center, and staff morale and quality of care is reflected in this dilemma.
The Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986 mandated that emergency rooms must treat all patients, without regards to their ability to pay. This legislation took effect at the same time that the numbers of under and uninsured people in California began to escalate. Lacking primary care physicians, the uninsured have made the ED the primary clinic for their health care. This further exacerbated EMC's financial position from two aspects. First; uninsured people were using the most expensive delivery system available, which overloaded the capacity of the ED. Second; people were waiting until their condition was chronic or terminal before seeking treatment, which further drove up costs. The outdated ED was operating well in excess of capacity, which put an additional strain on nurse availability, response time, and specialty services. With half of the patients that were admitted through the ED either uninsured or underinsured through Medi-Cal, Moen's challenge was to find areas that could compensate for the large losses incurred by the ED.
With all of health care experiencing declining reimbursements and increasing expenses, it has been a difficult task to find areas of profitability. EMC expenses have outpaced revenue growth in the period of 1997-2002. Wages and salaries, the largest single expense, grew by 28 percent during this period, while revenues increased by only 23 percent. The nursing shortage has contributed to the problem, as it has forced EMC to hire temporary nurses, and reduce the number of beds available, which have both negatively impacted the bottom line. During this same era, reimbursements from Medi-care, Medi-Cal, and HMOs were declining. An experiment with capitation in the late 1990s did not prove successful, and the hope of vertical integration became an insurmountable expense.
Area competition has also put pressure on EMC. Specialties and high-tech procedures are largely not available at EMC, and this business goes to the competition. The financial reality of EMC operating at a loss for the past several years has made capital investment in new equipment and technology out of reach of financing. In addition, closures and consolidations have increased the hostility of the external operating environment.
All of these factors; increasing expenses, reduced reimbursement, competition, and escalating salaries have all combined to form the perfect storm. The only bright spot on the balance sheet has been the investments that EMC made in the 1990s, which managed to keep them operating into the 21st century. In fact, without these investments the financial solvency of EMC would be in doubt. In addition, EMC enjoys a significant amount of community support, and has aggressively sought community involvement through a matching grant from the Mary Stuart Rogers Foundation. Moen's greatest operational challenge will be to reduce operating expenses, and increase patient revenue within the realities of their current financial situation.
2.) There are numerous strategic options available to Robert Moen, though they all have a large degree of uncertainty in regards to their financial ...Download file to see next pagesRead More
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