1- Exhibit 3.1 in White summarizes the functions that sustain operational infrastructure.

write a paragraph for each: (separately)

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1- Exhibit 3.1 in White summarizes the functions that sustain operational infrastructure. Which of these do you consider the most important and why?

2- Pages 97 and 98 of White suggest several risk factors associated with the evidence based management model. Which of these do you consider the biggest danger? Also, which do you consider the hardest to overcome?

3- The US News and World Report rankings of hospitals is probably the most well known of all the various ranking services for the hospital industry. The attached article from Fierce Healthcare suggests that the US News rankings are flawed and should not be considered the gold standard.

U.S. News Rankings Should Not Be the Gold Standard.docx

Please read the article and give your thoughts on the issue. Do you place credence in such rankings? Would you use them as a source of information when choosing a hospital facility? What might you consider in addition to or in place of such rankings when choosing a hospital facility?

4- read the case :

Act I

At the December board meeting for Christian Health System, board member Sam Brown received the following 2008 Operating Budget Highlights from Larry Dolan, chief financial officer:

HOSPITAL 2008 OPERATING BUDGET HIGHLIGHTS

• The surplus for 2008 is projected to be approximately $640,000.

VOLUME

• The budget is based on 28,000 inpatient discharges, or 76 discharges per day. This rate is 1.6 discharges a day higher than the hospital’s projections for 2007 (74.4).
• The closing of Clark Hospital and the recruitment of new physicians are expected to produce the projected growth in discharges.
• Other hospital outpatient services (emergency, ambulatory surgery) are conservatively budgeted to continue at current volumes.

REVENUE

• Total revenue is budgeted to increase by 5.7 percent: – Net patient service revenue is projected to increase by 7.6 percent. – Other revenue is budgeted to decrease by 17.8 percent, mostly due

to the loss of one-time items such as donations, and a projected

decrease in investment income. – The reduction in investment income is a product of an anticipated

decline in cash and investment balances due to amounts owed to

Eastern State, pension payments, and capital purchases. • New rates were included in the budget for Medicare, Medicaid, and

other payers: – New Medicare rates included an inpatient increase of 1.5 percent. In

the 2008 rate, the city wage index decreased. – Medicaid rates have been budgeted at the preliminary January 2008

issued rates, which includes an adjusted trend factor of 1.88 percent.

• New negotiated rates for managed care are included in the revenue model by payer. The following are some examples of these increased rates: – Blue Cross: +6 percent

– Aetna: +4 percent – Plan 1: +10 percent – Plan 2: +6 percent – United Medicaid: +15 percent, and Commercial: +3 percent – Plan 3: +5 percent

• Case-mix indexes for Medicare (1.43), Medicaid (1.38), and Plan 4 nonmaternity (1.22) are budgeted at the actual levels through October 2007.

EXPENSES

• Total expenses are budgeted at 5.8 percent above projections of 2007 spending.
• This reflects the following: – The expansion of the available medical/surgical acute care beds by

16, with 8 beds as of January 1, 2008, and another 8 beds as of

February 29, 2008, for a total increase of 16 beds. – The following contractual increases:

ß RN union: 3 percent, as of January 1, 2008 ß Technical and professional union: 3 percent as of January 1,

2008, and 3 percent as of December 1, 2008 ß Security guards union: 3 percent as of January 1, 2008 ß A 3 percent salary increase for nonunion staff as of April 1, 2008

– Supplies and other expenses were increased for inflation at a rate of 3 percent.

• Other noteworthy expense changes included in the budget: – Benefits: an 11.8 percent increase from projected 2007 to 2008 as

a function of the increased cost of union benefits and increases to

nonunion healthcare benefits – Physician contracted services: an 11.9 percent increase reflecting both

changes in salaries and increased coverage (e.g., labor and delivery, 24/7

coverage) – Bad debt: a decrease of 10.4 percent from projected 2007 to

2008 as a continuation of the “Stockamp Effect” and increases in charity care

(Answer this): What is your overall reaction to the information contained in the 2008 Operating Budget Highlights from Larry Dolan?