Case of Perpetual Mercy Hospital

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  • Topic: Ambulatory care, Physical examination, Hospital
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  • Published : March 5, 2011
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Case of Perpetual Mercy Hospital

The broad focus of this case is one of strategy planning. Perpetual Mercy Hospital has to determine the best course of action to help the Downtown Health Clinic achieve its stated objectives of expanding the hospital’s referral base, increasing referrals of privately insured patients, establishing a liaison with the business community, and becoming self-supporting within three years of its opening. This last objective is jeopardized by the possibility of a competing clinic opening 5 blocks north of the DHC’s location. The underlying problem is that the DHC may not be self-sufficient within the projected timeframe, regardless of competition. Alternatives

The following alternatives have been identified for this case: 1.Selling the Downtown Health Center to competitor
2.Adding gynecology services
3.Developing employer services through promotion
4.Extending hours of operation
5.Combining options 2-4
Our recommendation is option 5. This alternative presents the DHC with the best possibility of achieving its stated objective of self-sufficiency in 2 more years.

The potential users of DHC consist of 11,663 office workers, young people or upwardly mobile families from the cities, that are expected to grow 6% per year. CUSTOMER ATTITUDE:
Increase of new family/young people in downtown. Among 400 people interviewed, 64% would use or try DHC if necessary, even if they have a regular physician. The expected frequency of DHC use for personal illness/exam is once every other year for 60% of the patients (both female and male), once per year for 25%, twice per year 10% and three or more times per year for 5%. Furthermore, people interviewed in total are 256, composed of 160 (male) and 240 (female), said that they would use or try the DHC if necessary. CUSTOMER PROFILE:

Office workers (employees/workers) are divided into clerical 48%, professional/technical/managerial 23%, operator 19% and other 10%. They are composed of 30% Male and 70% Female (most are 35-years old). The distance between them and DHC are 28% to two Blocks, 25% to one Block, 22% to three Blocks, 15% to four Blocks, 8% to five blocks and 2% to more than five blocks. The direction from 25% of them is south of DHC, 20% east of DHC and 15% southwest of DHC. The majority (82%) does not have a regular physician. CUSTOMER BEHAVIOUR:

Working hours (9am – 5pm) From Monday to Friday, lunch hours from 11am to 2pm. Their offices are located nearby the DHC. SEGMENTATION OF MARKET:
The most frequent reasons for patient visits from the first 11 months of operations of DHC is presented in details as follows: personal illness exams (53%); worker’s compensation exam/treatment (25%); employment/insurance physical exams (19%), and; emergency (3%). Market

The current market for DHC is limited to an urban area comprising 11,663 office workers during the work week. The expected population growth rate is 6 percent annually. A random survey indicated that approximately 50% of workers in the area would be willing to try the DHC, and 40% of those so inclined expected to visit the DHC at least once per year. Worker population11,663 people

Willing to try DHCx50%
Expecting to go at least once per yearx40%
Expected annual patient base2333 people
Female proportionx60%
Average annual gynecological visitsx1.5
Expected annual gynecological visits2100 visits
Average charge per visitx$104
Expected annual revenue$218,369
Gynecologist cost (2 days times 52 wk times 8 hr/day at $70/hr)-$58,240 Expected annual profit from gynecological service$160,129

Promoting employer services is expected to gain an additional 65 physical examinations over the existing 50 exams per month. The advertisements would not feature any pricing and be paid on an annual basis. Additional employment physicals per year (65 x 12)780

Employment physical examination revenuex$101.52
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