Perpetual Mercy Hospital - Case Study

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SEPTEMBER 20, 2010

Perpetual Mercy Hospital (PMH) a 600 bed, independent, not-for-profit, general hospital is one of six general hospitals located in a major western city. Financially stronger than most metropolitan-based hospitals in the United States, it is debt-free and has the highest overall occupancy rate among the city’s of six general hospitals (Rodger and Peterson, 2010, p. 230). In May 1999, PMH formally opened a new Health Clinic in the city’s downtown area. The reasoning behind opening the new clinic was to help PMH expand its referral base through establishing a connection with the business community, and to increase referrals of privately insured patients. Until the 1960s, hospitals were largely charitable institutions that prided themselves on their not-for-profit orientation. Hospitals functioned primarily as workshops for physicians and were guided by civic-minded boards of trustees. Federal intervention in the 1960s changed the concept of health care services from privilege to entitlement (Rodger and Peterson, 2010, p. 228). Since the 1960s, the health care industry has experienced drastic changes that included cutbacks in subsidy programs and cost-control regulations, such as the Balanced Budget Act of 1997 that among other things was aimed to reduce Medicare spending, through reduced payments to providers such as hospitals and nurse practitioners (Wikipedia). Due to the unfavorable demographic shift that has taken place over the years at PMH a large majority of the hospital’s existing patients are covered under Medicare and therefore alternative health care reimbursement programs need to be added and or pushed through their existing or expanded patient care system. Before opening their new center, PMH collected data to determine the types of patient care services needed within the targeted area. Resulting from the information collected the hospital’s newly opened Downtown Health Care (DHC) services would include preventive health care, minor emergency care, referral for acute and chronic health care, offers specialized employer services (pre-employment examinations and treatment of workers’ compensation injuries), primary health care services, and basic x-ray and laboratory tests. Initially the center would operate 206 days a year (Monday-Friday) and from the hours 8:00 am to 5:00 pm (Rodger and Peterson, 2010, p. 230). Recent events have pointed towards the possibility of a privately owned suburban ambulatory facility, Medcenter moving to within five blocks directly north of DHC. Research done by DHC estimated the number of office workers within that five-block radius to be 11,652 in 2001 and 13,590 in 2002, and to grow at an annual rate of 7% through 2005 from new construction and building renovations. DHC and their competitors are believed to be marketing to the same socioeconomic profile, usage and employment characteristics (Rodger and Peterson, 2010, p. 238). DHC collected the following selected health care and demographic information to assist in monitoring its performance: Profile of Downtown Health Clinic Patients: Personal Illness/Exam Visits Only (Rodger and Peterson, 2010, Exhibit 6, p. 237) • Occupation: 48% - clerical, 23% - professional/technical/managerial , 19% -operator ,and 10% other • Sex: 30% - Male and 70% Female

• Referral Source: 35% Friend/colleague, 60% employer, 5% other • Patient Origin (distant): 25% One block, 28% two blocks, 22% three blocks, 15% four block, 8% five block, 2% more than five blocks • Have Regular Physician: 18% Yes, 82% No

In general, some of the things that patients consider when choosing a hospital or clinic for care are the location, waiting times, clinical results and parking facilities. Evidence shows that if you choose a hospital or clinic in which you feel comfortable and confident, you...
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