It is December 2008, and you have just accepted an appointment as the Chief Financial Officer (CFO) position at Midwest Healthcare System. Dr. Montana is the system’s President and Chief Executive Officer (CEO). Your peers on the Executive Team include Mr. Clark, the Chief Operating Officer (COO), Dr. Jordan, the Medical Director, and Ms. Palfrey, the Vice President of Nursing.
When Dr. Montana announced your appointment to the organization, he stated that your primary objective would be to reverse the ominous financial trend of operating losses that started early FY 2008; the trend is expected to continue into FY 2009.
During FY 2008, some of the operating losses were offset with emergency infusions of investment income from restricted net assets; however, in November, the Midwest Healthcare System Board of Trustees passed a resolution prohibiting that practice. Consequently, investment income is now restricted to capital expenditures only.
Midwest Healthcare System is a not-for-profit corporation that comprises a 120-bed acute care hospital, a skilled nursing facility, a rehabilitation center, a home healthcare agency, and some outpatient clinics. The hospital is the only major facility within 50 miles of the rural community of approximately 40,000 that it serves.
Action Items
Based on the scenario in the Overview, you will need to meet with each member of the executive team to determine how best to address the various issues surrounding Midwest’s operating losses and the effect of the board’s resolution.
Write a 3-5 page paper in which you:
Develop a specific set of realistic questions (at least five per member) that you will ask each of the three executive team members based on their specific roles, responsibilities, and perspectives regarding the causes of the operating losses and the potential resolutions. Focus on questions related to the following topics. However, you may address other topics not included in this list:
Assets, liabilities, and net worth
Sources of revenue
Expenses
Direct and indirect costs
Inventory
Staffing
Operating budget
Capital expenditures
Trends
Develop a list of specific actions, which will form the foundation of an action plan, that you will take to begin address Midwest Healthcare System’s operating losses.
