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The first issue is the funding problem. The government and insurance companies are using their buying power to reduce payouts, and costs associated with running the hospital are increasing. This creates a long-term disconnect between revenues and costs. The second issue is that there is a chronic nursing shortage. This increases costs and increases turnover. The current solution, temporary nurses, is a very expensive solution that does not address this issue in the long run. The third issue is the gap in patient care. As seen in the Eckman case, sometimes patients fall through the cracks and this leads to adverse health outcomes.
The fourth issue is that the hospital is faced with the inability to invest in technology. This makes it difficult to build for the future. It also makes it difficult to attract key talent as well as patients. There is no capital left over for investment in technology. The fifth issue is a lack of ability to fill key doctor positions. Several such positions remain unfilled, for a variety of reasons, but ultimately this makes the patient suffer and reduces the ability of the hospital to meet the needs of the community. Lastly, the sixth issue is that the hospital has no relationship with an HMO. They have not been able to come to an agreement with Kaiser Permanente. This reduces revenues, reduces traffic flow and creates a problem where Kaiser is building a new hospital in the area that will directly compete with EMC.
3. Perform a financial analysis of EMC. Based on the analysis, where is the company strong and where is it weak?
EMC's financial position is weak. The company is faced with a steep decline in its cash position, which makes it difficult to invest in the future. The company is also relying on its investments for cash flow, and the current investment climate makes this a challenge. EMC has seen a strong increase in net patient revenue in 2002, reversing a flatlining trend. However, operating expenses have been a long-term increasing trend, and ballooned in 2002. Salaries and wages are increasing significantly, without any improvement in the ability of the company to attract and retain talent. Supplies are another cost that is rapidly increasing, having grown at around 25% since 2000. The company has also been relying on its investments for income but tough markets in 2001/2002 have delivered poor performance from the financial portfolio. Ideally, the company would not be dependent on its investments as a source of financing.
4. Recommend the best strategic option available to President Moen?
In deciding a course of action for EMC, Moen needs to be cognizant of the fact that most of the pressures on the hospital are coming from external sources. Internally, the hospital is relatively strong, but the changes in the industry are too rapid and too intense for the hospital to be able to keep up. EMC is too small to operate a high-volume, low-cost model for long, as it will not have enough capital to invest in technology, physicians and nurses. It also needs capital to be flexible enough to restructure its operations to meet changing environmental conditions[continue]
"Emanuel Medical Center Crisis In The Health Care Industry" (2011, September 03) Retrieved February 5, 2016, from http://www.paperdue.com/case-study/emanuel-medical-center-crisis-in-the-health-45237
"Emanuel Medical Center Crisis In The Health Care Industry" 03 September 2011. Web.5 February. 2016. <http://www.paperdue.com/case-study/emanuel-medical-center-crisis-in-the-health-45237>
"Emanuel Medical Center Crisis In The Health Care Industry", 03 September 2011, Accessed.5 February. 2016, http://www.paperdue.com/case-study/emanuel-medical-center-crisis-in-the-health-45237