Intermountain Healthcare Case Study

organizations to face future challenges due to the Affordable Care Act as well as other

Performance Management at Intermountain Healthcare Key Points   Operational focus - strategy rather than management. How will the organization prepare for the future if their primary customer (government) reduces spending? How will they address decreasing revenues caused by their increasing effiencies?

Since the establishment of Intermountain Health Care, they have grown to become an internationally recognized system of 22 hospitals, a medical group with more than 185 physician clinics, and an affiliated health insurance company. They have been recognized for their achievements and innovations in the development of systems and management, in order to produce effectiveness and efficiency within the processes of healthcare through high quality services and minimisation of costs. Intermountain Health Care’s performance has proved to be advancing exponentially as of the mid 90s, due to clinical-improvement projects routinely showing significant cost savings.

In 1997 University of California, San Francisco (UCSF) merged its two public hospitals with Stanford’s two private hospitals. The two separate entities merged together to create a not-for-profit organization titled UCSF Stanford Health Care. The merger between the health systems at UCSF and Stanford seemed like a good idea due to the similar missions, proximity of institutions, increased financial pressure with cutbacks in Medicare reimbursements followed by a dramatic increase in managed care organizations. The first year UCSF Stanford Health Care produced a profit of $22 million, however three years later the health system had lost a total of $176 million (“UCSF-Stanford Merger,” n.d.). The first part of this paper will address reasons

The finance department has reported that Elijah Health Center is facing a potential working capital shortfall which means the hospital may not have enough cash to sustain itself. The reasons for this shortfall is due to huge discounts given to managed care companies, higher wages given to contract nurses, low Medicare reimbursement levels, growth in current liabilities, and unused equipment. I will provide the best strategy in order to sustain the cash flow problem that Elijah Heart Center is facing. My strategy will consist of three phases. These phases include: capital shortage, funding options for equipment acquisition and funding options for

Mountain States Healthcare (MSH) is a regional system of hospitals located in several large metropolitan areas of Colorado, Idaho, Utah, and Wyoming. MHS started as a single hospital in Salt Lake City, Utah, and, due to the business acumen and experience of its officers and Board of Directors, was quite successful and profitable ( MG371, Article). During the years MHS started to collect different hospitals and clinics that were not profiting and turning them around by treating them as their own entities but applying their successful management strategies. As the MHS grew they created the Utah Health Group and then the MSH.

Intermountain Healthcare ("Intermountain" or "IHC") is widely regarded as a successful model of low cost, high quality delivery. The Midwest-based integrated delivery system achieved this reputation by adopting an approach that emphasizes reducing healthcare costs through process-driven delivery quality improvement. The three most important elements of this approach are: 1) the focus on minimizing variation in key processes to enhance treatment quality; 2) a robust clinical information management system which enabled measurement for improvement; and 3) a responsive management structure that effectively seized improvement opportunities.

The IHC mission is: Helping people live the healthiest lives possible. Their values are outlined in the 5 areas listed below.

I have been brought in as a financial advisor to assist Mr. Gilbert Sanchez, CEO at Elijah Heart Hospital (EHC) to find some cost efficient ways to continue to provide quality care but at the same time reduce costs for the organization. EHC is a hospital that specializes in Cardiac surgeries and procedures. They would like to expand and have a promising growth in patients as well as revenue, but with the decrease in reimbursements from their primary sources of revenue, new strategies to save money are a much needed organization-wide goal.

Managers at Baptist Memorial face the challenge of being a recognized leader in the health care industry. To spread the word of extraordinary care and excellent customer service the organization is making its presence known in the community. The organization offer free health screenings to those who are unable to pay for these life-saving screenings. The organization also provides clothing and food to the homeless within the community. The organization will receive recognition in the process reaching influential members of the community. Organizations today are met with heavy competition daily. Strategic managers are faced with the challenge of doing what they think is best. When more than one hospital exists in a local area they compete for market share. The greater market share impacts the economies of scale positively. To obtain a competitive edge over the competition, Baptist Memorial Hospital focuses on attracting physician alliance since they are directing patients to specific hospitals. The competition for physician alliance has an impact on the services offered to patients. Enhanced services attract physicians and their

The future and direction of health care has been the topic of discussion amongst politician and U.S citizens today. There are several challenges surrounding the future and strategic direction in which health care should be heading. Accreditation, quality of health care and organization’s compliance; access to health care, maintaining a skilled workforce, information technology and pay for performance are some of the challenges that currently presenting itself in healthcare today. If health care is not dealt with appropriately it will have a significant effect an impact on the strategic direction in the future and direction of care.

In the Harvard Business School case study of Intermountain Health Care (IHC), we learned about the efforts made by IHC to adopt a new strategy for managing health care delivery that is focused on improving care quality while simultaneously saving money. Beginning in 1986 as a series of experiments tying cost outcomes to traditional clinical trials, IHC’s approach to delivering care became known as “Clinical Integration” which “referred to both an organizational structure and a set of tools” (Bohmer, 2002). The organizational structure required a departure from the traditional administrative management model to one that “involved administrative and medical

First, the cost of healthcare was rising at an alarming rate. Second, ambulatory and primary care facilities were on the rise and since the Cleveland Clinic was more involved in hospital and specialty care, this started to negatively effect business. Third, managed care was increasing. Lastly, there was increased competition. On top of these issues, the former practices of hospital management were becoming a thing of the past. The reimbursement process was changing which affected the financial viability of the organization. The Cleveland Clinic Florida was losing over a million dollars per month, the conversion to an electronic medical record and billing system had failed costing the organization millions of dollars, and the land that the clinic in Florida was on was not appraised before construction and was actually only worth half of what the organization paid for it (Clough, 2004). It was estimated that based on this financial status, if the organization choose to do nothing, then within 18 months the Cleveland Clinic would have generated a negative cash flow of $75 million (Clough, 2004). Having this amount of negative cash flow would have made it impossible to recover. All of these changing healthcare factors, lead to some poor financial decisions and essentially led to the third project, the Economic Improvement

Mountain States Healthcare, or MSH as we will continue to refer to it in the rest of the paper, started off as a single hospital in Salt Lake City, Utah. When MSH began to become more profitable and successful, their board of directors decided to begin purchasing other hospitals in the tristate area. MSH ended up being wildly successful after the merger. All of the different installations were treated as different subsidiaries, all falling under the same executive management. After some time, however, managers and shareholders realized that some of its administrative costs were much higher than other medical facilities of similar comparison. In response to these revelations, MSH decided to hire a consulting firm to analyze where costs could

For several decades health care has been tied to the economy and with the current downturn we see continued efforts to control and reduce over-head costs. Health care organizations in their effort to become more efficient and address changes in the industry have altered their strategic business plans. Lee & Alexander (1999) researched organizational change in hospitals and their survival, in this paper I hope to discuss their findings and add other examples to validate their conclusions.