Recently, the Affordable Care Act of 2010 was implemented with a stated goal to change the traditional system from fee-for- service to an Outcome based system (Watson, 2014). Even as these issues are occurring ISM Health Care System is forced to deal with a serious issue concerning its long term ability to provide the same level of service to residents. Problem Statement ISM Healthcare System, a non-profit healthcare provider, is concerned with taking care of the poor, but currently does not have adequate revenue to cover business expenses resulting in an operating loss.
Audited financial data for ISM Healthcare revealed in 2013 revealed an operating revenue shortfall f over $74 million dollars (ISM, 2014). ISM Healthcare System is the second largest healthcare system by market share in the SST. Louis, Missouri area and serious consequences of a continued loss of operating revenue could include reduction or elimination of services to that community or staff layoffs at some or all of Ism’s facilities. Managers at ISM Health Care are faced with a dilemma of how to reduce costs associated with collecting revenue and shortening the cycle of payment in order to reduce operating loss.
From the above discussion, questions about if, in an effort to reduce its operating horntail, ISM Healthcare decided to change how it collects payments for the services it delivers present an interesting opportunity for research. Design of the Study The design of our proposed study will include exploratory, descriptive and causal methods of research approach to look at the management problem from different perspectives. The details and data collected will be summarized under the detail of each section of our analysis before we make an overall conclusion of our study at the end.
Hypothesis: Are people willing to pay for health services based on a sliding fee scale based on their ability to pay? This and a number of other questions will be coming as we explore ways within which to advise the Sisters of SST. Marry’ on how to cut down their costs and increase their revenues. The above question will be our main hypothesis during this study but we will also test people’s attitudes about our proposals to see and make sure the Sisters of SST. Marry’ and the people they server are still on the same expectations with each other.
Exploratory Research- In depth Interviews: Even nonprofit charitable organizations are in business to make a profit. Just like regular ordinary c-corporations all businesses imperatively need their venues to exceed their costs to stay in business. The only difference is nonprofits do not distribute or share their profits among the shareholders; they use them to keep on meeting their operating objectives. Sisters of SST. Mary healthcare has increasing operating costs, diminishing operating revenues and a gaping deficit into the hole all businesses go as they cease or meet their demise.
In the recent past there have been changes made to the way the government pays for services through Medicaid. The system has been implemented with more accountability. Doctors and hospitals are no anger just paid for services but for results. In the past when a service was performed, regardless of the quality of work the doctors and hospitals were paid. If the patient developed complications due to the negligence of the doctor’s service and the hospitals it was at the cost of the patient.
It was very profitable not to be efficient; they turned patients into micro projects and as such a steady stream of revenues. Now with the new Medicaid the government wants to see the results before it pays and as because of that the overflowing river of revenues is drying up. Furthermore, with cuts at the Barnes Jewish Centre in charity care as well as introducing a sliding scale pay system and the increasing costs associated with the collection of the reeve uses are not helping it either. And not only is Sisters of SST.
Mary incurring increased costs in the collection of the revenues by hiring more personnel and collection agencies’, it is also having increasing amounts of bad debt due to failure to collect on the these payments or receivables. In order to speed up the collection of revenues; sometimes Sisters of SST. Marry’ Health care is also forced to factor its receivables or sale them out at a loss in order to attain funds with which to maintain operations. With the current management problem, Sisters of SST.
Marry Healthcare System, a non-profit healthcare provider, concerned with taking care of the poor, currently does not have adequate revenues to cover its business expenses resulting in operating losses. Managers at Sisters of SST. Mary Health Care are faced with a dilemma of how to reduce costs associated with the collecting of the revenues and shortening the cycle of payment in order to reduce operating losses and make profits instead. From the above discussion, questions about if, in an effort to reduce its operating shortfall, Sisters Of SST.
Mary Health care decided to change how it collects payments for the services it delivers and as such presents an interesting opportunity for research. We would like to use in-depth interviews from a collection of fifteen members of management including executive officers and board members, key-employees and industry experts to collect and measure their attitudes and opinions about management’s efforts to cut the collection costs of its revenues and reduce the deficit by answering a number of questions exploring options.
We will also gauge their responses on scale ranging from 5 for strong approval to 1 Ewing strong disapproval as well as 3 being a neutral stand about the sliding fee scale as well as cutting the charity care like Barnes Jewish. We will provide them with the topics and questions to discuss ahead of time as well the fact that Barnes Jewish a leading player in the region recently cut its financial aid and introduced a sliding scale pay system.
We will collect their opinions on topics regarding the increasing costs of collections and operating costs in general as well as the looming operating losses and decreasing revenues while looking for strengths, opportunities, weaknesses and threats as well as efficiency. We will sum this up by collecting and summarizing their responses. Us Mary In conclusion, we will use the following keys to gauge and classify the tabulated data as well as a recorder. The interviewees will have the option to opt out of the recorder but they will all receive a copy of our summarized report at the end of the study.
With this management should be able to find a balance of charity, a solution to reduce collection costs and overall operating costs as well improve revenues and gain a profit. Data collected According to our in-depth interviews with a seasoned industry expert that is en of the managers of an accounting department of one of the regional and nationally growing healthcare providers with more than twenty years in the industry. She said the problems faced by Sisters of SST. Mary are industry wide and the suggested measure were appropriate to maintain operation and cut deficits.
However she said that applying changes to charity care by cutting the ceiling from a 400 % federal poverty as well introducing a sliding scale should be done on an experimental and gradual basis as needs arise. She also mentioned that introducing these changes in line with raising costs is justifiable and advised management to also include consultation with some of their major donors on this issue. In her conclusion she said all the players in the hospital field are going to have to make some adjustments although not at the same rate but based on their needs and goals as well as objectives.
Having been this long in the industry she has known about Sisters of Mercy for a long and credits its management with a high approval on most on the issues we discussed listed below. The other two interviews were with an internal auditor of a national health insurance provider in the industry and a cent graduate with a masters in healthcare management. Their experience comes from years Of accounting operations and business advisory respectively. The recent graduate also has a background in the banking industry as a business advisor.
They both highly recommend the suggestion to make changes to meeting the changing demands based on the industry as well as the needs of the establishment. They are also in agreement of a gradual application of the changes as well as prior discussions with major donors. A summary of the data collected indicates a high approval of the recommendations to adjust the charity care provided to patients as well as he introduction of a sliding fee scale but as needed to keep in line with goals and demands.
Table 1 Us rive Strongly approve Strongly disagree Management-?TM Employees= EKE Industry Expert-?II In light of the new affordable care act and decreasing revenues: What are our competitors doing better? What are we doing better? Where can we improve? What’s your take on a sliding fee scale? Due to increasing operating cost and high collection costs and financing cost: What are our competitors doing better? What’s your take on changing our financial aid? In light of changes to Medicaid requiring payment for results: How do we ampere to the industry?
How can we improve the collections process? How are the competitors coping and what can we learn from them? What would you do today if you were the CEO? Descriptive Survey Research: In a recent exploratory research using individual in-depth interviews with three professionals who had a certain degree of knowledge of the healthcare industry, we attained a general consensus of approval regarding recommending to management to consider introducing a sliding fee scale to those clients who have no health insurance as well as continue providing financial aid as determined based on need.
One Of the other healthcare providers, Barnes Jewish Hospital, recently made the same changes that the Sisters of SST. Marry healthcare is contemplating. They introduced a system where everyone must pay, even a little bit; on a sliding fee scale. They also cut the ceiling for the charity care from a 400% federal poverty level to a 300% federal poverty level. In the past, Barnes Jewish Centre would provide healthcare service at no charge if your income was below the 400% federal poverty level.
Another point worth mentioning is that historically all the regional hospitals have not used the same level of ceiling based on the deader poverty level. They each set a ceiling based on their unique goals and needs. If anyone made adjustments to their ceiling, there was reasonable concern about the changes that may be due to the impact of that change. Lowering the ceiling sends people away but who knows where they will go such that other hospitals have to follow suit to maintain the equilibrium or find a new equilibrium.
Furthermore with the new Affordable Care Act that includes the individual healthcare mandate and changes to Medicaid re- imbruement, it is only fair to apply certain changes and measures to match the economic times. It is imperative to make changes to meet the changing needs but how? According to our exploratory research through in-depth interviews, while all the industry experts Were in approval of making similar changes they recommended that the Sisters of SST.
Marry’ implement these changes on a gradual basis and just as much as they need to in order to be able to meet their core objectives. In addition, the Sisters of SST. Marry cannot just wake up to announce that there will be no more free services in the form of free charity healthcare. That would collide with their core values like a head on collision. The question is; what do the patients and consumers of the services feel about managements problem and plans to be able to take care of them without going out of business?
Furthermore, whereas management’s problem is operating expenses exceeding their revenues, management also has a fear of the growth of the operating expenses due to changes at Barnes Jewish hospital listed above. This would cause a strain or increased demand for its charity care and higher operating costs without new streams of revenues. Management’s major problem stems from the uninsured, low income and unemployed and they re the ones who would be affected if management introduced a sliding scale system of payment.
They are also the ones within the federal poverty level ceiling below 400% which management is contemplating making adjustments to. Before management considers all these changes it has questions about the attitudes and opinions of that target group or what they would think about the sliding fee scale based on income or ability to pay. We conducted an intercept survey of potential consumers in this category, which included students and regular individuals 18 years and older.
We roped the participants by gender, employment status, and whether they were insured and collected their responses for managements review. In a correlation study of participants, we found that there is a positive relationship between levels of unemployment, students, and under insured or uninsured with increasing operating costs for healthcare. Our study group was targeted for participants who fit that category of people to get their poplin. Us Nee Background We made the participants aware of the facts that the individual healthcare mandate is in effect based on the affordable care act.
Secondly, the fact that he hospitals are planning on cutting costs now that everyone should have some kind of health coverage by introducing a sliding fee scale for the uninsured. And in light of this information we are asked the participants for their opinion on the following questions. Survey Questions 1 -Would you be willing to pay on a sliding fee scale if you for healthcare services? Yes or NO 2-if hospital X charges people based on their ability to pay using a sliding fee scale what do you think about that? – Highly approve, 2- Neutral, I-Disapprove Table 1 Data Collected: Summary of opinion with high approval Gender Males Females Employed & insured 10 23 Employed & uninsured 15 17 unemployed & Insured 12 unemployed & uninsured 5 Total 37 57 Table 2 Summary of participants on willingness to pay on a sliding fee scale Total of Male Yes No Total of Female Total men and Women Employed & Insured 13 36 32 Other 60 Based on the information we collected We were able to conclude that a majority of the survey participants were in willing and glad to pay for healthcare based on the sliding fee scale.
And their attitudes and opinions were just as favorable towards the opportunity to pay on a sliding fee scale; early all the participants indicated that they highly approved the method. Those who did not approve may have been for personal reasons or unsure. While the sisters of SST. Marry healthcare are concerned with taking care of the poor while battling increasing operating costs and not sure about whether the sliding fee scale is in line with its core values, it looks like they may have a partner willing to help as much as they can among those who cannot afford.
In order for management to cut its operating costs they must act fast with a plan of their own by finding a balance between meeting their operating costs and core values of taking care of those in need. Causal Analysis: Research Questions: In order to explore the problem that the Sisters of SST. Marry (ISM) Healthcare System faces; a lack of adequate revenue to cover business expenses, we conducted a survey of SST. Louis area residents, the insured and uninsured as well as the employed and unemployed.
Our survey asked participants about the willingness to pay on a sliding scale if they had no insurance and about their attitudes on the sliding fee pay scales in general as they relate to paying for services at hospitals. Previous research among the anus Of the uninsured in the SST. Louis area indicate that there is little expectation that “charity care” In which hospitals like ISM provide can be a source of revenue (Missouri Foundation of Health, 2012). To understand this expectation and what it means to the Sisters of SST.
Marry problem our research made an assumption about a willingness to pay on a sliding scale and then tested that assumption. Hypothesis Is a willingness to pay based on the ability to pay? We think this question is an important one to answer. ISM provides services to the “economically marginalia” (ISM, 2014) including the unemployed. Would this segment of heir patients have a willingness to pay if they found it difficult to do so is an assumption we will test? Our hypothesis is that people are willing to pay for health services based on a sliding fee scale based on their ability to pay.
This is also our null hypothesis to see if people’s willingness to pay for health services on a sliding scale is based on their ability to pay for those services. This question is important because ISM has a mission to serve members of the community even those who cannot afford. It was stated and tested in a quantitative hypotheses and then tested using an independent variable and wow dependent variables. The independent variable in this experiment was willingness to pay and the dependent variables were employment and insurance Status. Treatment Levels We assigned numbers to each group for the purposes of testing the experiment.
For example, males with insurance were assigned a number of 1 that answered yes to survey question were assigned a number of 1. Males with insurance that answered no to the survey questions were assigned a value of 2. We found that there were eight different groups that differed on whether they were employed or unemployed, insured or uninsured, and said yes” or ” no ” to the survey question of a willingness to pay for medical services on a sliding scale. We found that for males, of the 40 participants that over 87% indicated a willingness to make a payment on sliding scale.