Hi!!

Can you help with the last two part (highlighted below).

Instruction: Based on case study from Edgewood Lake Hospital ( I will attach the case study

with email)

Outline:

1. Background

2. Introduction

3. Analysis of Case Issues

4. Methods to Address Identified Issues

5. Evaluation (still need this part done)

6. Conclusion (Still need this part done)

What started off as a way to promote health in a rural community quickly turned to the

downfall of many. In a rural city in California, Edgewood Lake Hospital accompanies a 30-bed

independent, not-for-profit hospital that provides both inpatient and outpatient services.

Edgewood is considered the largest rural hospital within their region for quality of care. A few

years prior, CEO Richard Fuchs decided to implement a wellness center that was near $1.2

million to build. Shortly after the wellness center was established there was a major loss in

revenue for the hospital which concluded in the removal of the CEO, Fuchs. Upon arrival of the

new CEO, Shannon Johnson, there were many downfalls that stood in the way of encouraging

success for an organization besides the wellness center revenue loss. Edgewood was receiving

less government reimbursement due to the decreases in quality and following compliance

regulations. Edgewood was unable to keep up with the demands of maintaining compliance and

government program standards which resulted in many fines and denied claims. Edgewood is
also having a hard time retaining and recruiting their physicians which is increasing the financial

problems for the organization. Having inefficient staffing for the hospital increases operating

costs. Since the hospital is unable to retain physicians the organization has had to hire locum

tenens at a significantly higher cost. These financial losses are extremely detrimental to the

success of the organization as a whole. Lastly, Edgewood has experienced some competition in

a neighboring community called Creekside Trails. Creekside is a for-profit hospital that is locally

known for performing mass amounts of cardiac procedures. Creekside is only 15 years old and

the facilities are considerably grander than those of Edgewood and Creekside is able to perform

more specialty services than Edgewood. With a major loss in revenue, inability to recruit and

retain staff, and the competition of a neighboring facility, Johnson must come up with solutions

in order to successfully save this organization from plummeting.

Analysis of Case Issues/Dilemmas: provide a clear analysis of the issues of concern in the case

and thoroughly analyze why these issues must be addressed.

The incoming CEO of Edgewood Lake Hospital has been tasked with several initiatives

in her new role: solving the current financial crisis of the hospital, achieving fiscal stability and

addressing physician recruitment. A directive from the board has been placed that she achieves

fiscal profitability of the hospital within the next two fiscal years. This will be a challenge,

considering the hospitals most recent financial shortcomings and ongoing national directives

driving up the cost of healthcare. Beginning in 2013 and through 2016, the hospital recorded

annual overall negative profit margins. In 2016, the net income was a loss of nearly $5 million

dollars (Archer, Cheung, Myrtle, & Pottenger, 2017). Edgewood Lake Hospital’s recent financial

losses stem from multiple avenues.

represent a portion of the hospital’s financial struggles. The median household’s annual income

is lower than the national average and the average age is older than the national average. This

combination increases the hospital’s reliance on reimbursement from government programs

which have significantly decreased their reimbursement rates. In fact, Medicare encompasses

54% of Edgewood Lake Hospital’s payer mix as well as a rise in charity care spending $1.4

million over budget for 2016 (Archer, Cheung, Myrtle, & Pottenger, 2017). Closure of rural

hospitals is on the rise, and those with a negative operating income are at the most risk of

closure. Rural hospitals with negative operating incomes are more likely to occur in areas where

the resident demographics represent an older and poorer population (Kaufman et al, 2015). One

strategy to assist rural hospitals to obtain higher reimbursement from Medicare is to be

designated as a critical access hospital. Edgewood Lake Hospital is not eligible for this

designation due to it’s operating bed number. However, they do meet other benchmarks

including distance to neighboring hospitals and average length of stay. Improving reimbursement

is a crucial aspect to obtaining fiscal stability for the hospital.

Despite the hospital’s recent net negative income, the former CEO embarked on costly

initiatives during his tenure. The most glaring of which was establishing a $1.2 million wellness

center revolving around prevention and wellness (Archer, Cheung, Myrtle, & Pottenger, 2017).

While the venture was respected amongst community members, only 10% of the cost of the

center was raised from donations costing the already financially ailing hospital precious

resources. Revenue from the wellness center has not proven to be profitable since it’s opening in

2013. While the opening of the wellness center was met with enthusiasm by the community it
has underperformed since its inception. Continuing to fund this project will only worsen the

financial forecast for Edgewood Lake Hospital.

Rural hospitals such as Edgewood Lake Hospital face rising costs to answer the

increasing demands for quality and compliance regulations in healthcare. One such initiative is

the focus on quality services. Edgewood Lake Hospital has been previously recognized as a rural

region’s leader in quality care. They have received recognition for quality project interventions

such as discharge instruction delivery, and smoking cessation programs for patients with heart

failure (Archer, Cheung, Myrtle, & Pottenger, 2017). However, an increase in quality services

comes with an increase in hospital costs to accommodate staffing needs and implementation of

best practices. This will certainly continue for the foreseeable future. Also, rural hospitals such

as this one often struggle with the financial burden of costly electronic healthcare records and

coding software. The financial burden these technologies place on small rural hospitals is

significant and increases operating costs. These increases in cost must be managed in a setting

where fiscal stability is already in question.

Edgewood Lake Hospital revels in a loyal local customer base with only 16% of patients

seeking care at outside hospitals (Archer, Cheung, Myrtle, & Pottenger, 2017). However, in most

recent years they have noticed increased competition from their closest competitor, Creekside

Trails, which touts superior facilities with more access to specialty care. Edgewood Lake

Hospital must come up with

strategies to compete with Creekside Trails to increase patient volumes and decrease potential

leakage of current patients.

Rural hospitals often struggle with adequate staffing. While the rural population makes

up approximately one fifth of the U.S. population, only approximately one tenth of U.S
physicians’ practice in rural hospitals (Macqueen, et al. 2017) Edgewood Lakewood Hospital is

no exception as it has struggled retaining their physicians. As a result, they have been forced to

rely on locum tenens which has resulted in an increase in cost for physicians staffing. They also

share similarities with other rural hospitals in terms of difficulty staffing specialty physicians.

This necessitates referral of patients outside of the hospital system to receive the care they need

resulting in loss of revenue. Servicing an aging population, such as Edgewood County, typically

requires comprehensive medical care including assistance of specialty services, making outside

referrals for services even more commonplace. Shortage of medical staff, lack of specialty

physicians and need for costly locum tenens are all staffing inefficiencies that lead to loss of

revenue. Stabilizing the medical staff by improving recruitment and retainment of physicians and

considering alternatives to attaining specialized services can increase potential revenue, decrease

outside referrals and increase the financial stability of the hospital.

Obtaining status as a critical access hospital (CAH) is a key component of our turnaround

plan for Edgewood Lake Hospital. CAH designees receive higher Medicare reimbursement

rates, at the cost to provide services, plus 1%. To be designated as a critical access hospital,

acute care sites must be located at least 35 miles from the nearest hospital, have fewer than 25

licensed beds, maintain an average length of stay under 96 hours, and offer 24/7 emergency

services. (Archer, Cheung, Myrtle, & Pottenger, 2017)

Edgewood already meets most of these criteria, however they’re currently licensed for 30

beds. A review of their financials shows an average daily census for the last two years of 20.38

days. If they decommission 7 beds, it will bring their licensed bed count to 23, making them

eligible for the CAH designation.

average daily census of 27.2 patients and a salary expense of 25 million. In 2016, census was

down to 20.16, but they were still budgeting and staffing for 28.2 occupied beds. Executive

leaders need to develop a realistic budget, and cut staffing down to the appropriate levels using

the industry benchmark of 5.2 FTE’s per occupied bed. This, coupled with the higher

reimbursement rate from their CAH status will increase revenues and decrease expenses.

Another benefit of the CAH designation is access to federal grants for financial and

operational improvements, quality improvement, and population health improvements. (Rural

Health Information Hub, 2019) Edgewood has invested considerable money in the Edgewood

Lake Wellness Center. They can easily demonstrate their commitment to wellness and disease

prevention and their excellent quality scores to obtain additional funding through these grant

programs.

The emergence of new technologies for providing telemedicine services provides another

opportunity for Edgewood. Given the remote location of the facility and the rural setting of their

patient base, telemedicine is a natural fit for their patient population. They’ve already

established themselves as a brand leader in preventive services. While the Wellness Center has

never been profitable for Edgewood, they can leverage their existing infrastructure and launch

virtual primary care services. A recent study in the New England Journal of Medicine shows

that patient satisfaction with video visits is extremely strong, at 93%. (Ballard, et al., 2018)

Recruiting physicians to provide primary care services remotely will be much easier than

recruitment that requires physical relocation, and will reduce their reliance on expensive locum

tenens providers. Branching out to offer specialty telemedicine services like psychiatry and
dermatology would also allow them to meet the area needs for specialty care while keeping

patient referrals in house.

Evaluation and Conclusion: One Page each

The initial and most apparent issues to the outside eye is hospital profitable after 3 years

of losses. The issues includes time retaining and recruiting their physicians which is increasing

the financial problems for the organization, inefficient staffing for the hospital, and the

competition of a neighboring facility, Johnson must come up with solutions in order to

successfully save this organization from plummeting.

Conclusion:

Edgewood Hospital still has the ability to expand and Johnson has the ability to lead the

organization toward success. It will, however, take some time to build financial strain at

Edgewood Lake Hospital. The hospital can turn around to increase potential revenue and

decrease outside referrals Edgewood Lake Hospital by stabilizing the medical staff and

improving recruitment. It also taking time to obtaining CAH plan for the hospital. This CAH will

help improve higher reimbursement rate, the cost to provide service and plus 1%. While

Edgewood Lake Hospital serves a large population, thus, there is a lot at stake in ensuring that

these people do not lack a place to get healthcare. In additional, The hospital currently has done a

good job at ensuring that there is adequate preventative as well as diagnostic facilities. There is

just a little more research needed to ensure that these facilities become profitable to ensure the

sustainability of the hospital and to build a good reputation for the hospital.
 REFERENCES:

Archer, D., Cheung, S., Myrtle, R. C., & Pottenger, B. C. (2017). Edgewood Lake Hospital - Leadership

in a Rural Healthcare Facility During Challenging Economic Times. In K. Darr, T. J.

Farnsworth, & R. C. Myrtle, Cases in Health Services Management - Sixth Edition (pp. 109-

120). Baltimore: Health Professions Press, Inc.

Ballard, D. W., Barr, I., Huang, J., Parikh, R., Reed, M. E., & Wargon, C. (2018, October 11). Real-

Time Patient-Provider Video Telemedicine Integrated with Clinical Care. The New England

Journal of Medicine, 1478-1479.

Kaufman, B. G., Thomas, S. R., Randolph, R. K., Perry, J. R., Thompson, K. W., Holmes, G. M., &

Pink, G. H. (2015). The Rising Rate of Rural Hospital Closures. The Journal of Rural Health,

32(1), 35–43. doi: 10.1111/jrh.1212

Macqueen, I. T., Maggard-Gibbons, M., Capra, G., Raaen, L., Ulloa, J. G., Shekelle, P. G., … Hempel,

S. (2017). Recruiting Rural Healthcare Providers Today: a Systematic Review of Training

Program Success and Determinants of Geographic Choices. Journal of General Internal

Medicine, 33(2), 191–199. doi: 10.1007/s11606-017-4210-z

Rural Health Information Hub. (2019, August 20). Critical Access Hospitals (CAHs). Retrieved from

RuralHealthInfo.org: https://www.ruralhealthinfo.org/topics/critical-access-hospitals#benefits