You have been the Director of Operations for Middlefield Hospital for 2 and a half years and finally resolved the workforce challenges that plagued the hospital, and in particular the mental health unit. In a recent meeting, the chief financial officer (CFO) indicated that the financial performance of the hospital’s mental health unit has been deteriorating over the last 6 months. The hospital is not meeting its budget and he is concerned about the future. The new facility across town has continued to cut into Middlefield’s market share by admitting more patients. The number of admissions to Middlefield Hospital is declining each month, and more uninsured patients are seeking services at your facility. You convene the Middlefield Hospital management team and discover a few interesting facts, which are identified below.
1. The payer mix of Middlefield Hospital is comprised of more and more Medicare, Medicaid, and uninsured patients, and fewer patients have commercial insurance. This is reducing overall reimbursement and net income for the hospital.
2. The nearby hospital that competes with Middlefield has opened a wellness center that offers a comprehensive array of preventative and wellness services to the community. This facility is attracting young families to seek services at this location.
3. Most of Middlefield’s managed care contracts are more than 2 years old. There are little reliable utilization and reimbursement data available. No one at Middlefield Hospital is assigned to manage these contracts or maintain ongoing relationships with managed care companies.
4. The Joint Commission survey is scheduled for next year, and there are significant problems with the hospital’s quality improvement program.
5. The health plan offered to employees is getting more expensive each year. In fact, the costs are increasing at a rate of 20% each year. This is adding significantly to the hospital’s operational costs.
6. The inpatient mental health services and neonatal intensive care unit continue to lose money for the hospital.