Community Hospital Operations Management Assignment Help

Community Hospital

In 1983, Community Hospital, which had served the downtown area of a large We t Coast city for more than 25 years, closed and then built a new hospital in a thinly populated area about 30 mile's' west or the city. The new hospital, also named Community Hospital, was located on a parcel of land owned by the original hospital for many years. This new hospital, which opened October I. 1983. is a four-story structure that includes all the latest innovations in health-care technology. The first floor houses the emergency departments: intensive care unit; operating room: radiology, laboratory. and therapy departments: pharmacy: housekeeping and maintenance facilities and supplies, as well as other supportive operations. All administrative offices. such as the business office, medical records department, special services. and so forth. are located on the second floor. as are the cafeteria and food service facilities. The two upper floors contain patient rooms divided into
surgical, medical, pediatric, and obstetric units.

Community Hospital has a total capacity of 177 beds assigned as follows:

Community Hospital

Community Hospital

For the first six months of the hospital's operation things were rather chaotic for the administrator. Sam Jones. All his time was occupied with the multitude of activities that go along with starting a new facility such as seeing that malfunctioning equipment was repaired, arranging for new staff to be hired and trained establishing procedures and schedules making necessary purchasing decisions and attending endless conferences and meetings. All during this period Mr. Jones had been getting some rather disturbing reports from his controller Bob Cash regarding Community Hospital's financial situation. But he decided that these financial matters would simply have to wait until things had settled down. Finally in April Mr. Jones asked Mr. Cash to prepare a comprehensive report on the hospital's financial position and to make a presentation with his new assistant administrator Tim ewrnan who had recently received a degree in hospital administration. In his report. Mr. Cash stated: "As you both know we have been running at an operating cash deficiency we opened last October. We expected of course to he losing money at the start until we were able to establish ourselves in the community and draw in patients. We certainly were right. During our first month we lost almost $ 221 ,000. Last month. in March, we lost 58,000.
"The reason, of course, is pretty straight ward. Our income is directly related to our patient census (i .e., patient load). On the other hand, our expenses are taxed and are running at about $235,000 a month for salaries and wages. $75.000 a month for supplies and equipment, and another $10,000 a month in interest charges. Our accumulated operating deficit for the six months we've been here totals $715.000, which we've covered with our hank line of credit. I suppose we can continue to borrow for another couple of months, but after that I don't know what we're going to do.

Mr. Jones replied, "As you said, Bob, we did expect to be losing money in the beginning, but I never expected the loss to go on for six months or to accumulate to almost three quarters of a million dollars. Well, at least last month was a lot better than the first month.

Do you have any figures showing the month-to-month trend?"

Bob Cash laid the following worksheet on the table:

Community Hospital

Community Hospital

Questions
1. Evaluate the situation at Community Hospital with respect to trends in daily patient census, occupancy rate, and income.
2. Has there been any change in revenue per patient-day over the six-month period (assuming a 30-day month)?
3. At what capacity level will the hospital achieve break even?

4. What questions might we raise about the constant level of salaries and supplies relative to past and future operations?

Posted by: anderson

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