2. PROBLEM
In April of 2000, Sherri Worth, assistant
administrator at the Downtown Health
Clinic (DHC), which is run and
overseen by Perpetual Mercy Hospital
(PHC), found out some troubling news
and was very concerned about it.
Perpetual Mercy Hospital found out
about the possibility of establishing a
similar clinic five blocks north of their
facility. The main problem is that the
new clinic may take away DHC’s
current patients and put a damper on
3. HOSPITAL INDUSTRY AND AMBULATORY
HEALTH CARE SERVICES
Till 1960s
• Hospitals were largely charitable institutions & were
proud of their not-for-profit orientation
• Hospitals functioned primarily as workshops for
physicians and were guided by civic-minded boards
of trustees.
4. 1960s
• Federal legislation introduced which created boom for
hospital industry.
• Hill-Burton Act provided billions of dollars for hospital
construction.
• Additional funds were poured into expansion and
construction of medical schools.
• Medicare and Medicaid subsidized health care for the
indigent, disabled, and elderly.
• Federal intervention changed the concept of health care
services from privilege to entitlement.
5. 1980s
• Skyrocketing health care costs had forced the federal
government to
reassess its role in health care.
• Stringent controls were placed on hospital construction &
expansion , & utilization
Late 1980s & Early 1990s
• Hospitals were hard hit by the changes
• On one hand the federal government sought to reduce health
care costs through cutbacks in subsidy programs
• On the other hand , innovations in health care delivery
severely reduced the number of patients serviced by
6. INNOVATIONS
1) PREVENTIVE HEALTH CARE PROGRAMS
a) Health Maintenance Organizations : An HMO encourages
preventive health care by providing medical services & enter
into contractual relationships with designated physicians &
hospitals & have been successful in reducing hospital days &
health care expenditures.
b) Preferred Provider Organizations : PPOs establish contractual
arrangements between health care providers & large
employer groups. PPOs generally offer incentives for using
preferred providers rather restricting individuals to specific
hospitals or physicians .
7. 2) AMBULATORY HEALTH CARE SERVICES &
FACILITIES
• Minor emergency centres , known by acronyms
such as FEC (Free-Standing Emergency Clinic)
& MEC (Medical Emergency Clinic)
• Clinics that focus on primary or episodic care
8. FACTORS FOR THE GROWTH OF AMBULATORY
HEALTH CARE SERVICES
• Advances in medical technology , miniaturization , and
portable medical equipment have made more diagnostic
& surgical procedures possible.
• Customers often choose the hospital at which they wish
to be treated
• The mystique of medical & health care has been altered
with the growth of paramedical professionals &
standardized treatment practices.
9. PERPETUAL MERCY HOSPITAL
• 600 bed independent not-for-profit hospital
• One of the six general hospitals in city & twenty in the
country
• Financially stronger than most of the metropolitan-based
hospitals in United States
• Debt free & highest occupancy rate
10. DOWNTOWN HEALTH CLINIC (DHC)
PMH realized that they were strongly dependent on inner-city
residents who higher incidence of Medicare coverage. PMH found
itself in need of privately insured, short stay patients in order to
stay in good financial standing. Therefore they planned to open
the Downtown Health Clinic (DHC), a n ambulatory facility in the
downtown area close to ten blocks from PMH. Here are a few key
points about the DHC :
• Opened May 1st of 1999
• Open 260 a year Monday through Friday
• Hours of operation are 8 AM to 5 PM
• Specialize in six services includes preventive health care ;
minor emergency care ; referral for acute & chronic health
care problems ; specialized employer services ; primary health
care services ; basic X-ray laboratory tests .
11. ALTERNATIVES
• Thirty of the patients suggested expanded service
hours between 7Am – 7PM
• One half of the female patients requested that
gynaecological services be added
• There were concerns about waiting time i.e.
between 11 AM to 2 PM as 70% of patients visits
occurred during this time & one half of the visits
were for personal illness.
• If possible a second physician
12. EVALUATIVE CRITERIA
What’s being considered in deciding on one of the
alternatives
1. Profitability
2. Customer Satisfaction
3. Attracting new customers
4. Cost Benefit
