Answer Question #2 only
The Cases
Case L
It’s a Balancing Act: Improving Clinical
Operations at Blackwell Medical Center
Anthony R. Kovner
Pedro Santana is the departmental administrator for the department of sur
gery at Blackwell Medical Center, one of three large academic medical centers
in Eastern City.
At Blackwell there are two lines of authority-the hospital line and the
school of medicine line. The hospital is profitable. The department of surgery
operates under the medical school, where there are separate lines for faculty
IJ.i
14=•
Pro fe ss i o n a I I n t e g ra t i o n
practice and managed care contracts. The chief of surgery, Dr. Will Blinick,
reports to the dean of the school of medicine and the president and GEO of
the medical center.
The medical center has 19 clinical departments and 12 nonclinical de
partments. The department of surgery, which has 45 full-time and 85 volun
tary attending faculty, is one of the largest and fastest-growing departments in
the school. Since 2006, the department has added 15 surgeons. The medical
center subsidizes them at an annual rate of $7.9 million each year. This sup
port is used to offset physician salaries and cover operating overhead, such as
ancillary staff malpractice and programmatic expenses.
The Chief’s Priorities for the· Departmental Administrator
Dr. Blinick’s priorities for Santana are financial: growth in practice revenues
and ensuring the fiscal health of the department. The dean of the school of
medicine sets financial targets for the chairs. Surgery targets for 2009 are
revenues of $31 million, net collection rate of85 percent, accounts receivable
days of80 or less, and operating within budget.
Santana’s Challenges in Meeting Financial Targets
The following are the department’s four biggest challenges for 2009:
l. Space. The dean is constantly urging the chair to recruit more surgeons,
but the department has no place to house them. Practice space is full,
and new recruits need clinical space. The department has no effective
process for space allocation.
2. Net collection rate (NCR) tar;get. The NCR target is based on a national
benchmark. Practicing in New York presents different challenges
that make achieving this target difficult to·reach. Two-thirds of the
department’s practice revenue comes from seven surgeons who do not
participate in insurance plans. While these physicians generate more
revenue because they are nonparticipating, their accounts receivable take
longer to collect and negotiate. To meet the NCR target, the department
must change its strategy, such as considering writing down its charges or
inputting contractual allowances sooner, which might negatively impact
its revenue potential.
3. Recru#111ent issues. While the department has a standard recruitment
process for bringing a new physician on board, the nuances are different
Th e Cases
on a case-by-case basis. Specifically, the process for obtaining funding and
space to support each recruit is not standardized or timely. In addition,
the department has no system to track the necessary approvals for all
aspects of the recruitment process; This lack of organization creates
frustration for the department and for the person being recruited. The
medical center is working to develop a more standardized process.
4. Managed care systems. The department has no mechanism in place
to find out in real time whether the managed care companies are
paying appropriately. As a result, Santana does not know the revenue
opportunities that surgery is missing (such as over- or underpayments
by insurance companies). The centralized managed care office holds the
details of managed care contracts, and it will not share these details with
the department of surgery or with any department.
Challenges as Viewed by the Department of Surgery
Dr. Mike McKenzie, the associate chief of surgery, suggests that the chief of
surgery wears four hats: clinical, academic, research, and administrative. In
an uncertain time, he is trying to grow all missions, which are different from
each other and not consistent. “It’s a balancing act,” he says.
McKenzie suggests, “We need at least 50 percent more staff to do
what we’re supposed to be doing, and we have already grown 40 percent over
the past few years. With one-third less space, we’ve doubled our visits. We
had an agreement with attending surgeons that we would not expand space
beyond these walls. But times have changed, management has changed; and
we have new leadership. Full-timers now admit 70 percent of the patients,
whereas we used to admit 30 percent of the patients. We need to reconsider
our options.” Exhibit IV.6 shows the surgery department’s areas of growth.
According to McKenzie, “The hospital views our department as a sav
! ior. The medical school has seen tremendous growth in revenues. Our prac
tice plan belongs to the school, as a wholly owned subsidiary. Now we’re
working on customer service and quality. The faculty practice administration
wants centralization; we think we can do it better. Our strategy is to keep
demonstrating how good we are.”
,;\
The chief of surgery, Dr. Blinick, spends 30 percent of his time in
l clinical practice and 70 percent on departmental affairs, clinical best practice,
‘(,education, research, and business and development. His three goals for 2009
:’. are ( 1) clinical excellence, (2) medical and surgical advancement, and ( 3) gen
!, erating a profit. He says these goals are aligned with the goals of the hospital
tand the medical school. Management is the central instrument that allows the
\�hief to operationalize these goals seamlessly and effectively.
ii¥i
l&t-1
Pro fe ss I o n a I I n tegra ti o n
Dr. Blinick indicates that the hospital and the school support the de
partment financially and help in �eveloping administrative strategy. As exam
ples, they provide legal support to develop contracts and marketing support
through advertising. Dr. Blinick says that Santana is doing a spectacular job.
“His priorities are in order, and he’s moving the ball down the court. Santana
manages people well, creates a positive environment, and is a hard worker.”
$6
EXHIBIT IV.6
Surgery: Areas
of Growth
Number ofTotal Faculty
135 -�———————–
�·. Full-Time Faculty
90 _,__________________________,
2007
2008
2009*
2006
Year
$0
*Projected
Source: Department of A&P Files.
*Projecte,
Source: T
Outpatient FPA Visit Volume
30,000
$28,000
$22,000
10,000 5,000 -1————
——— –j
-+- Volume
0-1————————2006
2007
2008
Year
*Projected
Source: IDX.
$16,000
$10,000
2009*
*Projected
Source: FR
The Cases
,:
EXHIBIT IV.6
Contribution Margin (all faculty)
$80
$70
$66
$60
$50
$40
38% Growth
$30
$20
$10
$0
·+: Contribution Margin
2006
2007
Year
2008
2009*
*Projected
Source: TSI.
FPA Gross Receipts (in millions)
-:+-,Volume.
$10,000 -+——–,——-r——–,——-j
2008
2009*
2007
2006
Year
*Projected
Source: FPA Scorecard/lDX.
1$!1
Surgery:
Areas of
Growth
( continued)
iifj
Pro fe ss i o n a I I n tegrati o n
The Medical School’s View
Dr. Bruce Percy is associate dean for operations at the medical center and VP
for school of medicine operations. He was formerly dean of the dental school.
According to Dr. Percy, none of the departmental administrators report to
him-they report to their respective chiefs. “We have to get things changed
by consensus.” He also does not have any reporting line to the medical center
faculty practice administration (FPA). His current time is spent as follows: 30
percent on contracts, offers, and business plans; 30 percent on departmental
work for clinical and nonclinical departments; 20 percent on faculty com
pensation; and 20 percent on research, budgeting, compliance, and human
resource activity.
Percy ‘s goals for 2009 are as follows: ( 1) raising the level and edu
cation of departmental administrators, (2) reducing costs and keeping the
school fiscally prudent by breaking even, and ( 3) establishing a voice in
the FPA.
Percy’s View of the Department ofSurgery
Percy says that while the department is doing well overall, “they [surgery]
have decided the compensation of certain surgeons without sufficiently in
volving us [the medical school], so the school loses a lot of money because
the incentives were based on relative value units rather than on the rela
tionship between revenues and expense. Also, many of the surgeons get
50 percent of the receipts, while the corresponding overhead for them is way
over 50 percent. The formula doesn’t make sense to us, and more and more
the hospital is asking the school to help pay for these shortfalls, even though
they [the hospital] are encouraging these types of deals.”
Percy’s View ofAll Departmental Administrators
There is variation in department administrators’ performance, and their
bosses are the department chairs. Percy believes many of the departmental ad
ministrators lack the appropriate skills set and experience in managing clinical
operations. “My office has to provide much oversight and micromanagement.
Chairs should be advocates. But administrators must keep the medical center
out of trouble. Maybe we should tie some of the administrators’ compensa
tion to this.”
Case Study Questions
1. What can Percy do to facilitate a more meaningful relationship with both
the chairs and the administrators?
The Cases
2. Should faculty compensation be left to the individual departments to
determine? Who else might be able to assist with this process?
3. Conceptually, is it acceptable to have faculty who do not generate a
profit? If so, how are these losses typically covered?
4. Should the faculty practice be centralized or decentralized? Why?
Conversation at Tony’s Coffee Shop
On December 20, 2008, three departmental administrators discussed man
agement issues, and a summary of their discussion follows:
Sam Sabathia (cardiology administrator): Another financial crisis. The car
diology chair wants to keep recruiting, and the dean of the medical
school wants us to cut costs and show a profit.
Liz Burnett (medicine administrator): Well, at least we’re employed.
Bruce Percy wants us to enroll in a leadership development pro
gram. That’s certainly going to keep me from getting a lot of my
work done.
Joe Rodriguez (orthop�dics administrator): Pedro Santana has some special
circumstances going for him in surgery. First of all, it’s surgery, and
second of all, his chair understands business and is not hesitant to push
for what he wants.
Sam Sabathia: But Pedro runs a good show, too. His accounts receivable
days are way down. Their overhead percentages are down. Surgery
gets good ratings on quality and customer service. They make money
for the hospital.
Liz ,Burnett: It’s a lot easier for them to get what they want.
Joe Rodriguez: But what is Pedro doing right, and what can we learn from
him?
Sam Sabathia: Pedro doesn’t always spell out precisely what he’s doing.
He’s got a lot of staff and good staff. Dr. Blinick has a business
background, and he is focused on bringing in a lot of revenue. He’s
got a strategy in mind, even if it’s in his head, and he acts on that
strategy.
Liz Burnett: So how do we get the support to allow us to produce the num
bers that Dr. Percy wants?
Joe Rodriguez: And what do we want, and how do we get the support that
we need from our chairs?
1¥\•
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Achiever Papers is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Dissertation Writing Service Works
First, you will need to complete an order form. It's not difficult but, if anything is unclear, you may always chat with us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order formOnce we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignmentAs soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download