Case Study

Assignment is what we talked about attachments to follow.

Assignment 10.2: Case Study

Due no later than Week 10 (Midnight CST) (200 Points)

Begin writing your case study. Specific guidance to complete this case study is available within the “Course Documents” Tab.

Detailed format guidelines to follow for your case study are found within your “Research in Organizations” e-book (refer to your Assigned Reading and Research). The general timeline to follow for this case study is:

1. Case Research (Weeks 1-4)

0. Identify the Problem, Purpose, and Research Question

0. Using Literature/Literature Review

0. Selecting and Bounding the Case/Selecting a Design

0. Designing the Case

0. Considering Issues of Validity and Reliability in Designing Case Study Research

1. Data Gathering (Weeks 5-8)

1. Collecting Data

1. Analyzing Data

1. Integrating the Study Findings

1. Presenting the Case (Weeks 9-12)

2. Interpreting Findings and Drawing Conclusions

2. Writing and Reporting the Findings

2. Presentation with Conclusions

Assignment 3.2: SWOT Appendix

Due Fifth Day of Week 3 (Midnight CST) (50 Points)

Over the next three weeks, you will perform a SWOT Analysis specific to your topical area for your case study. This SWOT Analysis will become “Appendix A” for your case study.

Additional guidance for this SWOT Analysis is as follows:

1. The over-arching theme of the analysis should be focused on developing a particular business strategy that integrates sound business policy and sustainable competitive advantages.

1. The analysis should address how the various forms of business capital are integrated with business strategy, policy, and governance to effectuate the desired business strategy identified.

1. The analysis should address main business functions, to include: finance, marketing, operations, and human resources.

1. The analysis should be suitable for review by a senior business executive demonstrating evidence of logical analysis, reasoned judgment, attention to organizational ethics, and value creation.

1. Please be sure to include your recommendations for action in your narrative.

The SWOT Analysis should be at least 1,000 words in length. This assignment will be due in Week 3.

SWOT Analysis on

Developinga Case Study

Overview:

The final project for this course is the completion of a comprehensive case study. Components of the case study will be completed at designated intervals throughout the course.

Students will be provided with a focus area from which to construct their case study. The case study will represent an empirical inquiry investigating a significant contemporary issue in the business sector. As a summative project in your MBA program, it is expected that you will draw from the skills and competencies developed throughout your MBA program.

Prepare your case study as if you were a senior executive of the corporation preparing a document for review by the organization’s Board of Directors. Therefore, the quality of your presentation should be of a caliber appropriate for this audience.

Case Study Theme
:

You must select from one of two topical areas in the development of your case study. The two areas are: 1) Human Capital Management or 2) Healthcare Cost Containment. For the topic selected, a problem scenario is provided in which to address.

You will also be given a choice to select the type of the organization in which you will be developing your case study. You may also have a choice of identifying an existing corporation/organization or creating a hypothetical corporation from which to base your case study.

Topical Areas for Student-Written Case Studies

1.
Human Capital Management

The average age of your workforce has increased sharply over the last 10 years. Within the next 10 years, a significant number of your workforce will be within the normal age range for retirement. As a senior staff member leading a team on success planning, you are concerned that valuable knowledge, skills, and abilities will not transfer to existing and new employees and will be lost with the employees that will retire. How would the increased talent shortfall affect the development and approach of your organization’s succession planning strategy and what might such a strategy look like? Please present your case to the Board of Directors.

2.
Healthcare Cost Containment

The political environment specific to healthcare continues to be unstable. However, recent legislation has specified some employer-based requirements for the provision of healthcare to employees. In addition, as the demographics workforce changes so does the use pattern for employer-sponsored healthcare coverage. This increased utilization effects rate structure for a company. How would recent governmental legislation affect your organization’s strategy of providing continued healthcare benefits to its employees?

Selecting your Organization
:

For your case study, you may select an actual organization or you may create a hypothetical organization. The organization selected or hypothetically constructed one must be a publicly traded company, government sponsored organization or nonprofit. The type of the organization must be selected from one of the following sectors:

· Options for Types of Organizations:

· Financial Services Organization

· Transportation Organization

· Public Utility Organization

· Service Sector Organization

It will be important to dive into your case study development immediately. For example, your selection of an organization must be made in Week 1, as your SWOT Analysis Appendix (due Week 3) will reflect this choice.

Time Frame:

1. Case Research (Weeks 1-4): During the first four weeks of class, each student will complete the Case Research Section of their Case Study focus. Please read the applicable resource identified in your “Assigned Reading and Research” section of your weekly assignments to ensure you understand the respective areas of the case study prior to beginning your case study. As with all problems to solve, properly identifying the problem, and designing a good strategy for solving the problem at the onset is crucial. If you do not address these areas properly, the case study will not turn out successful. Also, each student should include the theoretical framework(s) they are basing their premise on. Therefore, your approach in the case study must be informed by known frameworks and supported by data and relevant information.

Each student will submit a draft of their Case Research Section of their Case Study in Week 4.

Components of the Case Research Section:

a. Identify the Problem, Purpose, and Research Question

b. Using Literature/Literature Review

c. Selecting and Bounding the Case/Selecting a Design

d. Designing the Case

e. Considering Issues of Validity and Reliability in Designing Case Study Research

2. Data Gathering (Weeks 5-8): During Weeks 5-8, each student will complete the Data Gathering Section of their Case Study. There are six data selection sources that you should consider for this part of your Case Study: documentation, archival records, interviews, direct observation, participant observation, and physical artifacts. Each student will submit a draft of their Data Gathering Section of their Case Study in Week 8.

Components of the Data Gathering Section:

a. Collecting Data

b. Analyzing Data

c. Integrating the Study Findings

3. Presenting the Case (Weeks 9-12): During Weeks 9-12, each student will conclude their Case Study, and present their findings. An essential component of this section is a conclusion. In Week 11 (or Week 12 at the latest), each student will submit their Case Study to the Discussion Board, along with a narrated PowerPoint presentation representing the Case Study. Please remember that your audience for both the report and narrated PowerPoint is a Board of Directors. Include both the PowerPoint and written case study in your e-portfolio.

Presenting the Case Component:

a. Interpreting Findings and Drawing Conclusions

b. Writing and Reporting the Findings

c. Presentation with Conclusions

ACase Study for
Becky Skinner, RRT, BS
Specialized Care Coordinator
University of Iowa Hospitals and Clinics
May 30, 2013

UIHC Human Capital Strategies to Comply and Thrive Under The Patient Protection Affordable Care Act Regulations

Table of Contents
Mission & Vision

3
History of the

University of Iowa Hospitals & Clinics

4
Fiscal Year 2012 Facts 4
Statement of Problem or Challenge 5
Research and Background Data 7
Implications PPACA Has on UIHC Human Capital Management 11
Resolution Proposal 14
Summary and Conclusion 17
Appendix A: SWOT Analysis 19
Appendix B: Corporate Parenting Strategy 27
Appendix C: Portfolio Analysis 35
References 45

History of the University of Iowa Hospitals & Clinics

Vision:

World Class People.

· Building on our greatest strength.

World Class Medicine.

· Creating a new standard of excellence in integrated patient care, research and education.

For Iowa and the World.

· Making a difference in quality of life and health for generations.

Mission:

Simply stated, our mission is: Changing Medicine. Changing Lives.®

University of Iowa Health Care is changing medicine through Pioneering discovery

· Innovative inter-professional education

· Delivery of superb clinical care

· An extraordinary patient experience in a multi-disciplinary, collaborative, team-based environment

University of Iowa Health Care is changing lives by

· Preventing and curing disease

· Improving health and well-being

· Assuring access to care for people in Iowa and throughout the world

In 1873 The University of Iowa began providing medical services when it reached an agreement with Sisters of Mercy to operate a small hospital in the area. It began with two wards, one for women and the other for men containing four private rooms and a surgical amphitheater. In 1865 this agreement was terminated when the Sisters of Mercy moved across town and opened up Mercy Hospital. Today, the University of Iowa Hospitals and Clinics is a public -teaching hospital affiliated with the University of Iowa and a Level 1 trauma center. It has 711 beds including a 190-bed UI Children’s Hospital (About Us, n.d.). On an average day, there are close to 9,000 individuals providing care to patients, including employees, students and volunteers (About Us, n.d.).

Fiscal Year 2012 Facts

There were 32,000 patients admitted to the hospital for in-patient care with 59,000 emergency room visits. In the 200 outpatient clinics of the UIHC, 977,337 clinic visits were counted. In addition to the 1,300 volunteers of UIHC, it employed during FY2012:

·
1,548 physicians, residents, and fellows

·
8,221 non-physician employees of whom 1,845 are professional nurses (About Us, n.d.)

Since U.S. News & World Report began to rank hospitals in 1990, UIHC has made the list as one of the best and has over 271 physicians ranked as “Best Doctors in America”.

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June

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Statement of Problem or Challenge

The passage of the Patient Protection and Affordable Care Act (PPACA) as well as the poor economic conditions worldwide, have dealt the healthcare industry in particular, many challenges as depicted in a SWOT analysis found in Appendix A. There is an increased push to curb healthcare costs at the same time people are demanding high level, innovative medical care. The two do not always correlate. The University of Iowa Hospitals and Clinics is in a unique position to meet these challenges as a business unit of the University of Iowa, explained in Appendix B: Corporate Parenting Strategy. As a tax-exempt ‘charitable hospital’ subject to state funding by the State of Iowa, it has further requirements to meet that make maximizing reimbursement scales imperative for growth.

Such requirements and the increased pressure to meet benchmarks have become vital to maximize Medicare/Medicaid reimbursements and remain tax exempt. There are several problems that are being addressed or need to be addressed in the future to meet these challenges. Problems addressed in this specific proposal relate to how a new strategy in human capital management needs to be addressed which will assist in containing costs and complying with increased needs based on the PPACA.

1. Better strategic planning in human capital management. Strategic planning has, in the past, focused on expansion of services, land, equipment, and other traditional assets. In the past the University of Iowa Hospitals & Clinics was viewed as the premier employer in the state of Iowa. This is not the case anymore. Cuts in benefits and increased demands on staff have caused many employees to leave or abuse paid sick time leave. Staff had felt the benefits offered were worth a commute of an hour and a half or more. This however, has changed since benefits were cut in the past two years. While UIHC continues to attract a large employee pool that will only know the current benefits offered, it has a significant challenge with its current employees that felt the cuts firsthand and are resentful. This has created poor employee morale, attendance and thus poor customer service as a result. Each year over $2 million is spent in sick time usage in the nursing department of the hospital alone (Stafley, 2013)! The need is to nurture not only incoming employees, but to improve relations with the existing employees. If this is not addressed, the negative employees will continue to spread a poisonous attitude which will reach the incoming ones.

2. While educational opportunities are abundant as part of the University of Iowa, it is not always taken advantage of amongst the varying departments within the hospital. Some units take continuing education quite seriously and foster the importance of it among staff; however there are other departments that have remained stagnant in this. Improving education for all departments is needed to close the gap and provide better communication and teamwork. Improved communication and teamwork will assist in reducing costs and provide better outcomes.

3. Staff attitude is vital to patient satisfaction. Improving the attitudes of staff needs to be a priority in improving the image of the hospital. A large problem the hospital has in attracting a local market is from poor reports in satisfaction and a reputation as being a machine. The hospital serves as a choice only when specialized services are necessary that are not available in other facilities or in case of a complex emergency among local residents. Not all of this can be attributed to attitude of staff, but other issues as well such as location, the vast size of the hospital and the well-known long waiting times for appointments.

4. Streamlining processes is a must and a high priority need within the hospital. The first two problems are in need of improvement in communication among units and improving human capital management strategies because without improvements in those areas, streamlining is virtually impossible. Communication among units is needed to curb redundant costs, errors, satisfaction, and wastefulness.

These challenges are not impossible to tackle if there is a commitment among the varying units within the system. An increased emphasis on human capital management as further discussed in Appendix C: Business Unit Analysis is needed to show employees that they are just as valued as the facilities, technology, and patients.

Research and Background Data

The PPACA is the result of a broken health care system that has cost lives as well as tremendous amounts of money to individuals, local, state and federal governments. One such cause for the breakdown of the system is the fact that 45 million Americans lack health insurance which has ballooned from 23 million in 1976 and the fact that taxes have not risen as fast as the uninsured or health care costs (Sager, 2001) (Message from the Secretary, 2011). This in effect means, while there has been more uninsured patients seeking care, the amount of bad debt the health care industry and government has had to write off increases (Garrett & Roberson, 2009). It also means more Medicare/Medicaid patients that hospitals will have to care for. This not only is damaging to the health care industry because of the poor reimbursement scale from Medicare/Medicaid, it also is one of the causes the United States deficit keep skyrocketing. The government has to pay out for Medicare/Medicaid, but taxes have not risen proportionately to afford to continue to do so (Garrett & Roberson, 2009).

This cycle has also affected businesses and individuals negatively. As Edward Sanchez, former Texas State Health Commissioner stated, “those that have insurance through their workplace will pay for the uninsured more than once through taxes and through decreased benefits and increased premiums” (Garrett & Roberson, 2009). Premiums are increasing because of standard healthcare industry practices of charging the insured 150 percent of the actual costs of care. Health care facilities do this in order to pay for charity care, uninsured, and Medicare under payments (Garrett & Roberson, 2009). To recoup this over charge, insurance companies raise premium prices.

The HHS will oversee that the new requirements for health care institutions mandated by the PPACA to include:

· Community health needs assessments are held one time per three years. These results are to be published on the HHS website, “Hospital Compare” along with an implementation strategy and collected quality measurements (Smith, 2010) (Mangan K., Sick Economy, 2009).

· Implement and publicize a financial assistance policy outlining eligibility requirements and if assistance includes free or discounted care. It also must inform how people will be charged and how collection actions will be employed for non-payment (Jones Day Commentary, 2010).

· Set limits for emergency or medical necessary care given to the uninsured who qualify for charity care which enables the patient to be billed no more than what is generally charged to the insured (Jones Day Commentary, 2010).

· Submit annual reports as well as a five year trend study to the HHS and Treasury to Congress in regards to charity care, bad debt or cost shortfalls from public programs such as Medicaid (Jones Day Commentary, 2010).

· Pay a $50,000 excise tax for failure to comply with the new standards and complete the community health needs assessments (Message from the Secretary, 2011).

The reporting requirements will cause non-profit hospitals to provide more information, submit to increased occurrences of IRS reviews on all schedule H filings every three years and develop standards for patient friendly billing and collection methods (Health Care Reform, 2010). What HHS will require of non-profit hospitals, as well as those that are considered safety nets, and for-profit hospitals will be affected by the PPACA. Most of these impacts will be discussed in the next section.

The HHS will also require participating Medicare & Medicaid providers to report quality measurement standards that the Centers for Medicare/Medicare Services (CMS) develops. Each participant will receive a performance score based on its progress toward the standards set by CMS and the Secretary of the HHS (Smith, 2010). The highest total performance scores will be eligible for a value-based incentive payment for the year the score is tallied (Smith, 2010). In addition, certain standards and figures by HHS will result in a 1 percent Medicare payment penalty if the hospital is in the 25th percentile of certain types of hospital acquired conditions which will go into effect by 2015 (Smith, 2010). This penalty not only encourages better care, but helps keep unnecessary costs down. This penalty will also work as a deterrent for noncompliance because the percentage of penalty increases over time. The impact of this will be felt by 2013 and seen in reduced revenues generated by acute care (Smith, 2010). These types of penalties will cause the health care industry to reanalyze its business strategies and practices if they wish to survive.

The one certain conclusion that can be made is that it is too early to really predict what will transpire as more and more of the plans are set into motion. The first and already apparent struggle the health care industry will face is a workforce shortage. The United States has already been expecting a physician, in particular in primary care, shortages of approximately 35,000 to 44,000 by 2025 (Doherty, 2010). In addition the current nursing shortage is expected to climb as well. One of the primary reasons for the primary care physician shortage can be attributed to an increasing number of physicians unwilling to see Medicare/Medicaid patients or those with no insurance at all (Lewis, 2010). The reasoning behind these refusals is numerous. Medicare/Medicaid have low reimbursement scales, meaning physicians do not get paid at the level they desire (Reid, 2010) (Mirvis, 2010). When these types of patients are unable to get preventative treatments or seen for minor ailments, they tend to visit the emergency room (ER) or wait so long to get help that a simple cold has bloomed into a full-fledged acute respiratory distress syndrome requiring expensive intensive care. The Emergency Medicine Treatment and Labor Act (EMTLA) restrict providers from turning away an emergency or a medical necessity type of patient which is why emergency rooms are frequently abused (EMTLA.com, n.d.).

Medicaid patients cause a significant headache for hospitals. Not only are they 32% more likely to visit an ER once a year, they are three times more likely as the insured to visit the ER twice in the same year (Reid, 2010). Emergency care is not cheap. Hospital executives fear that although it is suggested that the PPACA will be a money saver in the health care industry because of more insured citizens, it may not turn out to be that way (Reid, 2010) (Mirvis, 2010). A technology based business solutions provider, the CSC, interviewed health care executives and revealed that approximately 25% of them predicted a “heavy burden” on their hospital’s finances as well as 43% saying it would hinder outpatient clinics and emergency room staff (Reid, 2010). It is important to note however that these figures come from health care executives more interested in turning the largest profits possible.

The PPACA is a double edged sword to emergency care centers and hospitals dedicated to charity care such as UIHC. Even with insurance becoming available to 32 million citizens, the Congressional Budget Office estimates that 16 million of those will end up covered by Medicaid (Doherty, 2010). There will also be 12 million ineligible illegal immigrants without any type of coverage to contend with (Mangan K., Health-Reform Bill Holds, 2010). Illegals will require a great deal of the charity care that will be proided mainly by non-profit teaching hospitals (Field, 2008). Large teaching hospitals in particular, account for 6 percent of the nation’s hospitals; however, these teaching hospitals are generally safety-nets that provide 41 percent of charity work (Mangan K., Sick Economy, 2009). This poses an additional culprit to the physician shortage. Medicare has a cap on the number of residency positions it will pay for. This will in effect limit the number of graduating medical students from even entering the workforce, exacerbating the shortage further (Mangan K. S., 2001) (Mangan K., Health-Reform Bill, 2010).

The passage of the PPACA will not eliminate charity care and with a physician shortage, this spells stress on an already stressed workforce and system. To assist in funding the act, $36 billion in cuts to Medicare and Medicaid have been instituted even though enrolled individuals is expected to increase by approximately 16-20 million citizens.(Mangan K., 2009)( Health-Reform Bill Holds, 2010) (Reid, 2010).

Operating margins have already nearly evaporated due to taking on more charity cases but receiving less money per patient from the government (Mangan K., Sick Economy, 2009). This is only expected to balloon as hospitals are unable to afford hiring more staff to treat the influx of patients. Yet another factor for diminishing operating margins lies with the problems associated with Medicaid. The federal government may pay for Medicaid for the poor, but the individual states set the rules as to who qualifies (Garrett & Roberson, 2009). Eventually, the states will be responsible for funding Medicaid as well (Doherty, 2010). Because some states, like Texas, have strict qualifiers, it will still leave many underinsured until states change their legislation (Garrett & Roberson, 2009).

Implications PPACA Has on UIHC Human Capital Management

PPACA is moving reimbursement scales from a fee-for-service system to a Physician Quality Reporting System (PQRS) or rather pay-for-performance. This means quality will be measures addressing such areas as preventive care, chronic and acute care management, procedure-related care, and care coordination, as well as a very important measure of patient satisfaction (Zimlich, 2013). Below are Patient Survey Results in Table 1 reported on the Medicare.Gov website and are factors that are being considered in reimbursement scales for Medicare (Hospital Compare, n.d.).

Table 1: Patient Survey Results: UIHC compared to National Average

UIHC

National Average

Patients who reported their nurses always communicated well

77

78

Patients who reported their doctor always communicated well

75

81

Patients who reported that they always received help as soon as they wanted

60

67

Patients who reported their pain was always well controlled

67

71

Patients who reported that staff always explained about medicines before giving it to them

61

63

Patients who reported their room and bathroom were always clean

67

73

Patients who reported the area around their room was always quiet at night

44

60

UIHC has work in several patient satisfaction measures. According to a survey published by Medical Economics, employee attitude is crucial to patient retention (Staff attitude, 2012). An important take-away from this survey was in the result that personal experience was the top reason patients choose a doctor or hospital. Personal experience is 2 ½ times more important in healthcare than other industries (Staff attitude, 2012). Staff attitude is a result of poor employee relations and stress from a variety of triggers. Hospitals and other healthcare providers must be extra dilligent in assuring a strong, positive relationship with its employees because of the stressful nature of the work. Burn-out is a common occurance in the healthcare industry and results in poor attitudes and high usage of sick time leave. An analsyis done by Amos and Weathington illustrates that when employees had a high value congruence with its employer, they were more satisfied with their job (2008). When employees perceived their organization valued employees as ‘individuals’, there was higher job satisfaction (Amos & Weathington, 2008).

With poor attitude comes poor communication and a lack of teamwork and poor communication will lead to poor attitude. Poor communication is tied to patient safety. This is a concern to any hospital because it results in medical liability and poor patient satisfaction. The American International Group, reported more than half of risk managers and exectuives of hospitals sited the top safety threat was related to teamwork, communications or culture (Tracer, 2013). Patient satisfaction and safety is of utmost importance to UIHC for a number of reasons: it is in the business of caring for people, it desires quality outcomes and service, and there is also the demographics of the patient population to consider. Demographics is becoming an increasingly important factor with the new health care laws for a number of reasons. H-CUP which is the Healthcare Cost and Utilization Project estimated that in 2008, 25% of patients in public hospitals were covered by Medicaid compared with 17.3% in the private NFP (non-for-profit) hospitals. Public hospitals treated over 75% more uninsured patients than did the private NFP hospitals (Fraze, Elixhauser, Holmquist, & Johann, 2010). This weighs heavily for a public hospital such as UIHC because of recent healthcare law initiatives linking patient satisfaction results to reimbursements by Medicare/Medicaid. In 2009, Medicare was the single largest payer for hospitalizations and accounted for 46% of the cumulative inpatient costs demonstrated in Charts 1 and 2 (HCUP Facts and Figures: Statistics on Hospital-Based Care in the United States, 2009). Compliance with the rules proposed by the largest payer for hospitalizations is obviously very important to UIHC.

Resolution Proposal

1) Implement a new benefit structure. Currently UIHC has separate accounts for sick time and vacation time. The accrual rate of sick and vacation time is dependent on the number of years employed with the University and the percentage of time worked. Abuse of sick time is prevalent and costly. UIHC needs to change its benefit structure to a single Paid Time Off account, one in which both sick time and vacation time are grouped together. While 80% of healthcare institutions surveyed in a World at Work Analysis responded that PTO is preferred, UIHC does not have such a system (Paid Time Office Programs and Practices, 2010). Implementation of PTO as opposed to the traditional method currently in use could save UIHC’s sick time usage. Consider Chart 3 results from the World at Work survey results on implentation of a PTO system (Paid Time Office Programs and Practices, 2010). If UIHC implemented such a system it could improve absenteeism by 55%, possibly saving over $1 million.

Chart 3: Effect PTO system had on absenteeism when first implemented

2) Increase efforts in employee satisfaction is needed to improve patient satisfaction numbers. The more employees feel they are valued, the better the chances are they will provide the exceptional care that is part of the UIHC mission. It is proposed Human Resources improves its efforts in hiring practices and counseling of problem employees. In the area of hiring, HR should implement pre-employment screening that will demonstrate how closely a prospective employees value are in congruence with UIHC’s values and mission. It is necessary to create new culture in UIHC. One important step in this goal is to hire those that are a close fit with UIHC’s mission.

3) Steps to improve employee relations with existing staff are multi-faceted.

a. Individual departments should be required to ramp up their continuing education and training available. The more staff feel prepared and confident, the happier they will be with their job. A worker feels better about their job when they have the necessary training to feel competent and supported by management. To implement this step, departments will be assigned a number of training, inservices, or other program offerings they are required to offer each year.

b. Re-design the performance appraisal system. Currently the appraisal format is designed to focus on rating the skills necessary to complete a job. This is rated on a scale of 1 to 5. Some managers routinely score employees with a 3 which represents ‘meets standard’. Meeting the standard after years of being more than competent in routine skills, does not motivate employees when they feel they are more than competent in a routine skill set. Rather than focus on rating skills that are more than routine, performance appraisals should spend more emphasis on Individual Development Planning (IDP). This assists in creating a culture that encourages, supports and invests in the development of employees. An IDP assists in identifying an employee’s career development goals and helps in strategies to achieve those goals (Individual Development Planning, n.d).

c. Improve communication to staff. Many patient care staff are unaware of the financial struggles UIHC faces. When staff members come to work, they see a new Children’s Hospital being constructed, large-screen television sets at every entrance displaying directions for staff, greeters, and constant renovations. They also see posters displayed by the union stating that UIHC proposes a 0% raise increase and is asked to do more and more. Many employees are unaware that capital and operating budgets are different and all they see is that they have to fight for raises while the hospital is growing and building constantly. It does not add up for morale improvement. What it equals is that staff feel undervalued and unappreciated. Communication needs to be delivered frankly as to the differences in budgets and the reasoning behind particular initiatives. The Service Excellence program provides as a perfect example. Rather than explain to staff that service improvements are necessary to maximize Medicare reimbursements, staff were just told that this program was being implemented to improve satisfaction thus the overall message staff received was that they were doing a poor job. Had they understood that the satisfaction is not just because of their behavior, but a number of elements, and is required to get paid, it may have been more well received. Improved Communication is VITAL.

4) Introduce Employee-Centered Action Committees. Employee input in the planning process is often ignored or reserved to the management level. More employees need to feel empowered. Those working with patients and visitors on a day-to-day basis are more equipped to improve the processes. Management can look at charts, surveys, and numbers and go through walk-throughs, but until they are in the ‘weeds’, they are too divorced from the realities of how things work or how it can be improved. These types of committees will not only assist in improving employee morale, they will serve in cost containment strategies. Only those using the supplies and materials know how the costs of those items can be decreased.

Summary and Conclusion

PPACA will have significant impact to hospitals and other healthcare facilities nationwide. As more of the new elements of the law are introduced, it will inevitably change the practices UIHC has been utilizing for a number of years. New strategies will be required. Patient satisfaction is a growing concern for UIHC. It must meet the demands patients have in their care while doing so on a tighter budget and with more stressed-out workers. With poor employee satisfaction already a concern, this increased stress forced on employees will likely become substantially worse.

The actions outlined are needed to address these problems caused by current practices and further stress on the system by PPACA:

1) Re-design employee benefit structure to a Paid Time Off system to combat absenteeism.

2) Institute changes in pre-employment screening and mentoring staff to align with the internal culture desired.

3) Improve employee relations by increasing training efforts and opportunities for career development, re-designed performance appraisal system, improving communication efforts.

4) For Employee-Centered-Action Committees to empower staff and get more accurate information on ways to contain costs and improve processes.

Implementing these strategies in the business units within UIHC will allow it to have the tools in place to improve patient and employee satisfaction, thus improving reimbursements and containing costs. Value will be created by developing human capital that is the definitive assets for future innovation and growth for the University of Iowa.

This proposal suggests ideas to better manage our human capital assets that will serve as a means in overcoming the challenges UIHC faces now and in the future. UIHC has such a diverse staff that utilizing those assets to their fullest will provide the solutions needed to continue reach its mission and vision.

Appendix A: SWOT Analysis

Strengths:

The University of Iowa Hospitals & Clinics (UIHC) has consistently been nationally ranked as a leader in many areas by U.S. News & World Report. Such services include: Cancer, Gynecology, Neurology & Neurosurgery, Orthopedics, Urology, ENT, Ophthalmology, Nephrology, and Pulmonology. It is also considered high performing in the areas of Geriatrics, Cardiology & Cardiothoracic Surgery, Psychiatry, Gastroenterology, and Diabetes & Endocrinology. Such a large number of service areas attract a large number of referrals as well as staff. UIHC is the ‘go-to’ hospital in the state of Iowa for neurosurgery and is also the only burn center in the state.

Recently, the UIHC recognized its deficiency in customer satisfaction and has since embarked in improvement. It has taken on the ‘Disney’ approach and has rolled out training to staff in how best to provide excellent customer service. Such training is part of a marketing initiative to not only provide better service but also to attract increased local usage.

UIHC has a Children’s Hospital; however it has always been incorporated in the main body of the hospital. Such an arrangement has not allowed UIHC to thoroughly capture the market share of the pediatric population. The new design of the Children’s Hospital will increase the bed capacity by 20% to about 200 beds. The site will be technologically advanced with a focus on key patient satisfaction areas of natural light, noise reduction, and spaces for children and their families that are useful in design (Heldt, 2012). It is slated to open October 2016 at a price tag of $285 million (Heldt, 2012).

In addition to the construction of the Children’s Hospital, it has added the Iowa River Landing facility. This facility will encompass a number of services the UIHC offers, but at a more convenient location than the main facility. In an effort to move a number of the clinics that have traditionally been located within the hospital, it will improve satisfaction by eliminating a great deal of congestion and crowding. This will free up the needed space needed when the Children’s Hospital opens.

UIHC is a leader in medical research and technology. This has enabled it to recruit outstanding staff and physicians. As a teaching hospital with national recognition it has the ability to be very selective in the resident students it accepts within its program. It offers a stand-out benefit package, further adding to its appeal. It has abundant resources for providing education to staff which subsequently aids in employee retention.

Weaknesses:

With as many resources UIHC has available to it, it still has been plagued with very poor patient satisfaction ratings. This has become increasingly problematic with attracting insured customers, in particular local residents. As a state hospital considered a ‘charitable’ hospital, it is required to accept all patients despite their ability to pay. All hospitals must treat a person in the case of a life threatening emergency, however, once the emergency is stabilized, most facilities can then transfer the patients on to another facility such as UIHC.

It is subject to funding cuts as a part of a state university system. This makes it more difficult, especially in today’s economic environment when states nationwide are making significant budget cuts.

In 1999, UIHC became unionized by SEIU Local 199. While this has been widely popular with staff, it has created problems for UIHC. In the past, raises were determined by performance appraisals and under the discretion of management. Now however, raises are negotiated and employees receive raises regardless of performance. It also makes disciplining problematic employees quite difficult. As a state institution and under union representation, regulations are strict in what management can do in recognizing strong performers as well. As a result, poor performance and behavior is widespread. For those employees that are doing an outstanding job, it creates a no-win situation because even if management wanted to reward good performance, it cannot in a way that makes much of a difference to staff. Those that are problem employees do not feel a need to change because they know they will get raises regardless. All of this has led to poor attitudes which affect patient satisfaction.

In such a large bureaucratic system, communication is a challenge. Many services must work together, however important information gets lost in the process. The outcome is a large waste in costs and poor patient satisfaction.

Opportunities:

The launch of the new Children’s Hospital in 2016, promises to be a new beginning for UIHC’s image. Not only is it designed to increase patient satisfaction, but it should open the market for more local usage of UIHC for children’s services.

Efforts to improve communication, processes, and employee morale issues are underway. The guidelines in the Affordable Care Act have increased the motivation to address shortfalls in these areas because if improvement in a variety of areas is not proven, Medicare reimbursements could be less by way of penalties.

UIHC and Mercy Hospital of Iowa City have entered into an Accountable Care Organization (ACO). ACOs are groups of doctors, hospitals, and other health care providers, that voluntarily give coordinated high quality care to the Medicare patients they serve. This ensures that patients, in particular the chronically ill, get proper care while avoiding costly duplication of services and preventing medical errors. When the partners will share in the savings it achieves for the Medicare program (Accountable Care Organizations (ACOs): General Information, n.d.).  

UIHC had higher than expected revenue for fiscal year 2012. This was very fortunate with the poor economy. In a poor economy, more and more patients are relying on Medicare/Medicaid or go without any type of coverage. This typically would mean UIHC would have an increase in charity cases and non-payment for services. UIHC is doing a better job at cutting expenditures which provides for numerous opportunities.

Threats:

While the Affordable Care Act has motivated UIHC to change its way of doing business in the positive, it also poses a significant threat. Currently UIHC falls under the scope of a penalty (.06%) for too many readmissions in the categories of heart failure, acute myocardial infarction and pneumonia (Fact Sheet, n.d.). While UIHC has nationally rated services for these areas, the problem is the patient population and a lack of follow-up. As a charitable hospital, it has a large number of patients that are extremely sick, without resources, and non-compliant in their care. When you have these factors at play, it is more difficult even with the best of services to decrease the readmission percentages.

Recently, Governor Terry Branstad has proposed revamping Iowa Care rather than expansion of Medicaid (Press, 2013). It is uncertain at this time if this will be good for UIHC or bad, however in 2010 and 2011; UIHC appropriations from Iowa Care were $74.3 million and $76.3 million respectively (Audited Financial Statement, 2012). Depending on what legislation is passed, this could mean fewer appropriations UIHC could count on in the future.

As a teaching hospital, there are a large number of physicians that are completing their residency at UIHC. Residents have less of a motivation and commitment in reducing costs because they know that their stay there is most likely temporary. A lack of commitment to an institution means that there is less of a motivation to reduce costs. Residents are also under an enormous amount of pressure from their staff physicians in charge of them. What happens is a lack of confidence, meaning more tests are ordered ‘just to make sure’ they are not missing anything. On the other side of things is the long-term staff. Long standing employees used to a certain process are resistant to change. This is problematic in a technology driven and ever changing industry. Improving processes often means eliminating extra steps and employees that were determined unnecessary as a result of the improvements. For employees that had it good with the old system, they are unhappy when the new system means they have to take on more work. Those that cannot adapt create a negative environment and it is often contagious in nature.

Recommendations

UIHC has much strength to capitalize on and needs to utilize these strengths in tackling the challenges it currently faces. It has recognized how crucial patient satisfaction is, now in particular with part of patient reports affecting Medicare reimbursement. While it has instituted the Disney approach, it has failed to recognize a core problem, employee satisfaction. Regardless of the number of classes and in-services you require staff to attend; it will not change the culture until the root of the problem is addressed. Patient satisfaction is not just related to employees. UIHC continues have poor execution in clinic areas in regards to appointment schedules. One of the number one complaints is waiting time in the clinics. If a patient is to be seen by multiple clinics, staff must be diligent on assuring these patients are able to make their other appointments on time otherwise other patients get pushed back and are angry.

Employees can improve and diffuse this anger from patients to some extent; however they will not be motivated to do so if they feel they are not fully recognized and appreciated. It needs to step up its efforts to empower its employees. When the SEICU union came to UIHC, it got very lazy in staff recognition. There are a great deal of restrictions on UIHC in the manner in which they can provide employee recognition because of the Union and state regulations, however for a facility that boasts about its innovation, it has failed to be very innovative in simple “Good Job!” measures. It may not be able to reward union contracted employees with raises based on performance, but that should not stop management for finding more creative ways to communicate to its staff that they are appreciated.

The threat of Medicare reimbursement rates dropping is significant. UIHC needs to improve its readmission ratios and its proactive measures. This is an extremely difficult task because such a large portion of the patient population at UIHC is uninsured, non-compliant patients with multiple co-morbidities. This is why improving its outreach and follow-up with patients is even more important to focus on.

Improving processes and communication needs to involve the staff more, not just management dictates. Staff working in the ‘trenches’ will have much more insight on what can be improved, eliminated, or streamlined than management who do not see what is going on routinely. My empowering employees in this challenge, it will not only provide better results, it will also assist in making employees feel more valued.

Diagram A.1 Pictorial diagram of SWOT Analysis

Strengths

Opportunities

Weaknesses

w

Threats

T

S

O

· Recognized leader in many service areas.

· Service Excellence program development.

· State of the art Children’s Hospital being constructed.

· Expansion of clinics.

· Leader in research.

· Strong recruitment of staff.

· Abundant resources for educational opportunities.

· Poor patient satisfaction.

· State facility subject to funding cuts.

· Charitable hospital.

· Not first choice among local residents for basic care services.

· Employee union.

· Communication challenges.

· Poor employee morale.

· 2016 opening of Children’s Hospital.

· Improving processes & increased awareness of communication shortfalls is recognized.

· Service Excellence program.

· Accountable Care Organization with Mercy Hospital.

· Streamlining services to improve satisfaction.

· FY 2012 had higher than projected revenues.

· Initiatives to improve employee morale.

· Affordable Care Act legislation.

· Competitors face fewer restrictions as private industry.

· Large number of non-compliant patient population.

· Iowa Governor, Terry Branstad’s proposal to eliminate Iowa Care program.

· Employee resistance to change.

· Lack of commitment by physician residents to consider costs.

Appendix B: Corporate Parenting Strategy

UIHC is affiliated with the University of Iowa and falls under the direction of the State of Iowa Board of Regents. The Board of Regents oversees Iowa’s public universities. Leaders of the University meet regularly to assess factors that affect decision making and develop action plans. The various colleges and units then develop its own strategic plans and align them to the University-wide strategic plan. The University of Iowa acting as the ‘corporate parent’ maintains financial control and strategic planning over the various units of the University and UIHC. It sets the basic strategic plan of the overall University and expects subunits to develop align their plans to keep in line with the strategy. It maintains financial control by issuing specific budget guidelines for the various departments. The University has identified the following goals as part of its control in strategic planning:

· Undergraduate education

· Graduate and professional education and research

· Diversity

· Vitality

· Engagement

The ability to accomplish these goals is a function of critical resources (strategic factors) such as: budget, size of the student body and their demographics, clinical enterprise, administrative efficiencies, space, and technology (President, 2005).

Analysis of Critical Resources (strategic factors) and areas of improvement needed

1. Budget: The top priority of the budget is to raise faculty salaries to be consistent with peers and restoring previous lost lines from budget reductions in recent years. Faculty salary competitiveness has slipped in the past decade which has decreased recruitment and retention efforts. The poor economy has caused delays in making tenure track faculty appointments because it involves long-term investments to do facilitate. Simultaneously it seeks to improve the competitiveness of staff salaries (President, 2005).

2. Clinical enterprise: This encompasses UIHC, practicing physicians of the UI Carver College of medicine and their mutual activities. The clinical enterprise faces substantial challenges in a turbulent reimbursement environment. It must improve methods for cost containment and patient education to limit the number of readmissions due to poor compliance to health regimes prescribed.

3. Administrative Efficiencies: Cost containment methods through ‘enterprise-wide’ collaboration have been adopted by the Board of Regents, State of Iowa as a resolution of “Administrative Services Transformation”. There has been a reorganization of internal audit, risk management, and fleet operations. This involves restructuring and cost-saving measures (President, 2005).

4. Student Body: With a student population of approximately 30,000 students which includes more than 20,000 undergraduates, it taxes the University’s ability to provide high-quality education by limiting space, faculty-student ratios, and other resources.

5. Space: Charitable donations play an important role in the construction of facilities for the University of Iowa. Current focus of capital expenditures is focused primarily at basic infrastructure needs and renovation of existing infrastructure.

6. Technology: Coordinating and aligning IT resources and service providers with one another are a key component in strategic planning efforts of the University of Iowa.

There are 44 indicators and benchmark measures used to measure the progress of achieving the goals of the strategic plan. The following table (B.1) includes a sample of the various areas of performance improvement outlined and various indicators used to assess progress towards these improvements. The (I) denotes an internal target and (P) is a peer benchmark. In addition to these indicators, other measures that are contained in annual governance reports are used to measure progress (President, 2005).

Organizational alignment of units

The role of the Board for UIHC is reviewing reports on planning, programs, operation and finance and for governing the UIHC. The CEO of UIHC submits reports to the President of the University which then go to the Board of Regents for quarterly review (Operations Manual, n.d.).

Alignment of such a vast structure between the University of Iowa’s educational side and the hospital side is a difficult task. Aligning the two sides of the University is crucial in maintaining a successful University and complying with a substantial amount of regulations dictated by the State and various hospital related regulatory commissions. Although both the University of Iowa and UIHC each have its own business units, these units must have their strategies fall in line with each other to meet the University’s strategic goals.

Diagram B.1

illustrates the UIHC administrative structure. The main business functional units within the UIHC are responsible for submitting these reports to the CEO.

Table B.1

Business Functions

Finance and Operations: At UIHC the functions of finance and operations fall into the same departmental control. It provides services in human resources, business services, finance, and facilities management. As outlined previously, the University has identified 5 strategic goals. Finance and operations has set priority levels to meet the strategic goals of the University of Iowa in its own strategic plan: Priority I: Organizational vitality, Priority II: Financial stewardship, Priority III: Quality Service, Priority IV: Process Improvement (Finance and Operations Strategic Plan, 2007). Each priority has a strong set of goals, strategies to achieve these goals, and measures to assess the ongoing progress in order to complement the University of Iowa’s business strategy. The finance and operation department then ensure that the varying working departments (nursing, physical therapy, phlebotomy, surgery, respiratory therapy, radiology, etc.) in the hospital are working to meet the same goals. It sets budget requirements for each unit and goals to achieve and improve. The budgets and strategy of each department must fall in line with the strategies and budget considerations set by Finance and Operations.

Diagram B.1Diagram B.1

These budgets are in part based on different benchmark factors. For example, the respiratory care department’s budget is in part related to mechanical ventilation hours. At times when ventilator hours are decreased, it suggests that there is not a need for more staff. This snapshot however is a gray area. While ventilator hours may decrease during a particular time frame, this does not mean it will remain low, nor does it reflect the other responsibilities this particular department’s staff may have. In regards to financial control, ensuring that each unit has particular budget guidelines is important. It is difficult to judge some departments based on particular measures that may not reflect all elements relevant to a particular job and or department.

Marketing: This business unit serves as the ‘voice’ of the University. It develops and communicates strategies and outreach reflecting the goals of the strategic plan. It does this by: 1) creating and implementing public relations messaging, marketing and branding, and strategic communications. 2) Provide council and anticipates responses for the University to public issues. 3) Develops materials and public relations for media purposes. 4) Serves as a center for general information of the University both externally and internally.

Human Resources: The primary focus of this business unit is to implement programs and policies that retain and recruit qualified staff and provides programming to augment effectiveness of the University as a whole (Administrative Services, n.d.).

Recommendations

1) In using specific measures to determine budget dollars, such as the example of the respiratory care department, it is somewhat demotivating. Although it is encouraged to decrease ventilator hours for improvement of patient outcomes, it in turn impacts the department’s budget in maintaining staff levels and services. Nobody wants to eliminate positions and resources based on some measure that fails to encompass all the responsibilities a particular department has. When ventilator hours decreased because of advances in patient care methods, the budget dollars allotted to the department also may decrease. This means that there is less money for the department to work with even though it is improving patient outcomes. When budget dollars are stretched based on this measure, it causes tough decisions for management. Cut staff, services, equipment, or other costs? It is a difficult balance. Although the goal is to improve patient care, in doing so, it also could cost jobs and resources that staff and management would not want to lose. Allotment of budget dollars should be standardized in such a way that does not create a conflict of interest. Management does not want to lose money for their budget; however it also wants to improve patient care. In some ways improving patient care, costs a department staff and budget dollars. It should consider changing its division of budget dollars based on measures that do not create an agency theory situation. Financial budgets should be developed based on the overall value a particular department provides in terms of revenue rather than the methods currently utilized.

2) The patient satisfaction survey target is especially important to UIHC as a result of the PACA. A part of the PACA revolves around an incentive pool. This incentive pool acts to reward hospitals scoring well on a value-based purchasing program. The score is determined by 12 clinical measures and a patient’s reported experience (Medicare Fee for Service Payment, n.d.). UIHC has had poor patient satisfaction survey results. This is an area of increased focus for improvement, especially with the passage of PACA.

3) Employee satisfaction needs improvement, in particular for certain departments. The department of nursing has strong resources and recognition available which creates a positive atmosphere for those within the department. Resources and recognition however for many other departments is lacking. UIHC must remember that there are more than just nurses and physicians providing important services to its patients. The ancillary services and departments should receive equal opportunities in education, recognition and the ability in advancing beyond patient care in administrative capacities. Many positions in administration will accept applicants with nursing degrees but there are few opportunities for non-nursing patient care providers in administration even when nursing experience is irrelevant to the position.

4) Facing significant challenges in medical reimbursements, UIHC must create a stronger culture of cost containment and deliver this message to staff, not just administration. Administrative personnel know the hurdles, limitations of budget dollars, and how the budget is decided, etc. Staff is not aware of many of the ongoing challenges behind the scene. If there was a larger effort for employee empowerment and in knowledge transfer of these challenges, it may provide incentive for employees to be better advocates in cost containment. It will also increase understanding behind certain policies the hospital introduces because without the knowledge behind why the policies are instituted, staff feel it is just more rules and work imposed on them that have no merit.

5) There is a disconnect with the strategies geared towards improving salary competitiveness and what is communicated to staff. On one hand, the strategy is to improve salaries and on the other what staff sees happening is during collective bargaining, UIHC is reported to not want to give staff raises. Posters and flyers distributed by the UIHC union, SEICU show that the union pushes for raise increases of a certain percentage while UIHC proposes no raises for the collective bargaining periods. This sends a negative message to staff regardless if staff is supportive of the union or not. UIHC needs to show some effort to reward employees even when it is negotiated in the long run through union contracts.

6) There has been a recent push to implement the ‘Disney strategy’ of service excellence to improve patient satisfaction. UIHC has failed to get to the heart of the problem. While it has staff education in ‘Service Excellence’ and attempted to implement a number of improvements, these improvements are cosmetic at best. For example, one such ‘solution’ has been spending $419,000 in a project to put greeters in the UIHC. Now instead of detailed maps for visits, large screen television sets showing location points, there are now people in red suit coats standing at key entrance points to direct patients and visitors to their intended destinations. As Andrea Rauer reported in an editorial to the Iowa City Press Citizen,

When my family made a report of poor service to UIHC a couple of years ago, it was our concern of lack of staff attention for a patient rather than poor signage and directions. Too much time was spent on getting information into the supposedly centralized computer system rather than time with the patient. Please use money for additional nursing staff so there are more hands on the patient and fewer on the computer (Rauer, 2011).

Another example of wasted funds has been in the new scrub policy. Some patient satisfaction results have revealed confusion in who is entering their room and in keeping track of staff taking care of them. Rather than educating staff on the importance of identifying yourself and explaining what you are doing, it decided to implement a pilot study in scrub (uniform) color coding among services. Its plan was to have each major service in a standardized color. Nursing would wear royal blue, respiratory would wear pale blue, and nursing assistants would wear purple, and so forth. The problem with this plan is that it would have to issue charts to patients and visitors for this to mean anything to them. How are a sick patient and distraught family member going to remember such a large color coding system and why would they care? They are still going to want introductions and explanations. This was a large waste of money, especially considering the contract with the scrub supplier has now fallen through and the project is on hold. Cosmetic solutions such as greeters and scrub colors are not why patients are dissatisfied. The heart of the problem is that UIHC has failed to empower employees and create a positive working relationship and as a result, staff is not very courteous. It has also failed to realize that patients and visitors care more about the time wasted waiting for appointments and the hassle of parking difficulties. Those two issues are of greater importance than the cosmetic effects UIHC has chosen to focus on and have yet to be addressed in a productive manner.

Appendix C: Portfolio Analysis

Although the focus of this case study is on UIHC in particular, it is necessary to understand that UIHC is a business unit of The University of Iowa as a whole and not a separate legal entity. Considering these special circumstances, the following portfolio analysis covers The University of Iowa while acknowledging UIHC as one of its business units. The University of Iowa has the following core business units:

· Educational Departments

· Auxiliary Enterprises

· Grants and Contracts

· Patient Services (UIHC)

· Academics

Educational Departments: This business unit not only provides education to students, faculty and the community but also has additional sales and services it generates for the University. It accounted for $103.7 million in operating revenue in FY2012 (Financial Report 2012, 2012).

Auxiliary Enterprises: It provides infrastructure and services to enrich technology transfer and commercialization of UI technologies, new company formation, and support of Iowa companies and in workforce development. This particular business unit has a significant impact on Iowa’s economy (The University of Iowa, 2011).

Grants and Contracts: Obtaining grants and contracts to maintain operations of the University and fund its vast research and development opportunities is critical in maintaining a competitive edge. Research drives innovation and that is a large part of the University mission.

Patient Services: UIHC generates 56% of the University of Iowa’s operating revenue (Financial Report 2012, 2012). It provides a large number of services through inpatient and outpatient means. It also serves as an educational source for thousands of students throughout the nation. It is one of the largest public university hospitals in the nation.

Academics: This, along with patient services unit are the soul of the University. Academics generate $357.1 million in operating revenue from tuition and fees collected by students (Financial Report 2012, 2012). Although it does not generate the volume of operating revenue that patient services does, it is the soul of the University.

Analysis

Each of these business units are critical in the University’s ability to achieve its mission of :

In pursuing its missions of teaching, research, and service, the University seeks to advance scholarly and creative endeavor through leading-edge research and artistic production: to use this research and creativity to enhance undergraduate, graduate and professional education, health care, and other services provided to the people of Iowa, the nation, and the world; and to educate students for success and personal fulfillment in a diverse world.

Chart C.1 breaks down the percentage of revenue these units generate for the University. This is one important aspect in analyzing the units. Patient Services provided by UIHC accounts for more than all other major business units combined. Specific financial reports for UIHC are found at the end of this appendix. Although UIHC provides the largest portion of operating revenue, academics are the driving force. Without academics, UIHC would not be what it is today. A large portion of UIHC is comprised of student resident/fellow physicians and research scientists. Staff physicians provide a dual role; providing patient services and educating students. A large portion of grants, contracts and donations the University obtains is based in part on its ability to teach and conduct research. UIHC contributes to the largest portion of operating expenses at 47% on the other side of financial analysis (Audited Financial Statement, 2012). It poses the biggest financial challenges for the University because of uncertain effects of the new health care law and its ability to provide state of the art medicine and outcomes on a tight budget.

Based on basic financial numbers presented in this appendix, one may conclude that UIHC should receive more focus from the primary business functions of finance and operations, marketing, and human resources, however that is simplifying things. In examining a GE Business Screen/McKinley Matrix Analysis (Figure C.2), both Academics and Patient Services provide for approximately equal importance.

Figure C.1 GE Business Screen/McKinley Matrix Analysis

UIHC is a large driver of business, but the academic grants/contracts and auxiliary enterprise units contribute to the ability for UIHC to recruit students, staff, research scientists and patients needing specialized care. From a human resource perspective however, UIHC should receive additional resources. Of the 22,278 University of Iowa employees over 35% are a direct part of UIHC’s staff. These employees have the greatest impact in retaining and growing patient services.

Recommendations

Targeting human capital assets in the business unit of UIHC can lead to better services provided to customers, the community and provide for better management of expenses through employee engagement and education. Presented in previous sections of this case study, human capital management must focus in the areas of: employee satisfaction, employee education on lean strategies, and fostering a culture of positive attitude.

The Department of Operations and Finance has a sub-department in Operational Excellence. This department focuses on lean methods. It offers consultation to any area of the University that seeks its assistance and is instrumental in all new planning for the University. Lean Strategies is a course offered four times a year to staff, however, a large number of staff are unfamiliar with what this is or know it is offered. Rather than do this training on a voluntary basis, this course should be scaled down to a point that it could be incorporated into the new employee orientation program. This will have a greater impact in creating a culture of ‘lean’. A large segment of UIHC employees are educated in medical fields and are unfamiliar with business concepts (until they go into management, that is), so when broadcasts announcing the class come out, it is often overlooked. If a culture of lean is desired, it needs to be introduced to each employee and the best time to do so is before they get too far into their employment tenure.

The contents of this particular course have far reaching consequences in human capital management, Figure C.2. It stresses the importance of involving all staff in developing more efficient, less costly processes. Involving staff will empower them and create more efficient working conditions, thus reducing stress.

Figure C.2 Mixing it all together

Positive employee attitude as discussed previously has a strong correlation to patient satisfaction results. Patient satisfaction is the crux of the UIHC mission. Without employee involvement, the mission is unattainable. Marketing needs to work in conjunction with Operations and Finance to better educate employees on the programs Operations and Finance has available to make their jobs better and easier. Although ‘Lean’ techniques have been a part of UIHC since 2005, it has been slow to integrate into the culture of UIHC. This is a failure of marketing. Marketing needs to direct more attention and commitment into marketing to employees, not just customers. Failure to educate staff on the direction UIHC is striving for will not allow it to fulfill its goals. Employee engagement is necessary and crucial to make everything happen. It has spent the majority of its focus on patient satisfaction, but it has forgotten that it cannot make employees ‘be friendly and happy’. It has to create a culture that employees FEEL happy and WANT to be friendly. Employees are not going to do this when they are not viewed as stakeholders.

While UIHC implemented ‘Service Excellence’ by training with the Disney Institute to improve patient satisfaction and reduce employee turnover, it received complaints because at the time of a tight budget, UIHC was proposing to spend $130,000 to send a group of executives to Orlando, Florida for the Disney Institute training. When this received criticism, it changed its plan to have two Disney Institute representatives to come to the hospital for a two-day training session at a cost of $13,000 (Heldt, 2009) (Heldt, 2010). The plan, before it even started, received bad press and had staff upset. It has not been received well because UIHC has failed to encompass a large theme behind the Disney Experience, and that is, EMPLOYEE engagement. Instead of focusing on how best to engage employees in solutions, it has told employees how to behave towards patients and not proposed solutions in preventing problems from erupting in the first place.

Failing to present Service Excellence properly to the public and employees has been a failure in marketing as well as human resources. Human Resources has failed to recognize that Service Excellence has not met the unrealistic expectations executives had. Human Resources needs to better match prospective employees to the UIHC values. It needs to better communicate with all the units within the hospital how important employee relations are to improving attitude and satisfaction. The over-arching theme is that these functional units need to communicate the common goals UIHC has and work together to implement a plan in improving employee commitment and engagement.

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Empower

Efficient working conditions

Reduce Stress

Positive Attitude!

Chart 1: 2009 Distribution of Cummulative Costs by Payer

Series 1 Medicare Medicaid Private Insurance Uninsured Other 0.46 0.15 0.3 0.05 0.03

Chart 2: Average Cost per Stay by Payer, 2009

Series 1 Other Uninsured Private Insurance Medicaid Medicare 9700 7500 8500 6900 11300 Improved absenteeism Had no impact Worsened absenteeism 0.55000000000000004 0.43 0.03

Revenues By Core Business Units

Revenues By Business Unit (In millions)

Educational Departments Auxiliary Enterprises Grants and Contracts Patient Services Other Academics 103.7 175.3 388.8 1319.6 46.5 357.1

Skinner, Case Study, 2013 Page 1

TargetIndicator

Complete a comprehensive study

of the undergraduate experience

at Iowa

Committee report to recommend

programmatic improvements (I)

Review collegiate general

education requirements to ensure

that all students receive a strong

background in the arts and

sciences

Committee report to recommend
programmatic improvements (I)

Women in executive positionsIncrease from 32.1% to 37.0% (I)

P&S salaries

Monitor salaries of P&S employees

at CIC institutions on an annual

basis; make determinations annually

related to the competitiveness of UI

Racial/ethic minority P&S staff as a percentage of total P&S staffIncrease from 6.5% to 7.5%

Faculty salaries as compared to

peer institutions

Increase nonclinical tenured/tenure

track faculty salaries to top third of

peer group (P); increase clinical

medicine faculty salaries to 50th

percentile in AAMC (P)

Percent of employees receiving

annual performance reviews

Increase from 85.0% to 100.0% (I)

Patient satisfaction rating

Improve outpatient mean score from

4.35 to 4.50 (scale=5.00) (I); improve

inpatient mean score from 86.8 to

90.0 (scale=100.0) (I)

Business Strength AnalysisAcademics Patient Services Auxilairy Enterprise Grants & Contracts Educational Departments

1 Poor, 5 Excellent 1 Poor, 5 Excellent 1 Poor, 5 Excellent 1 Poor, 5 Excellent 1 Poor, 5 Excellent

Rating Rating Rating Rating Rating

Characteristics Weight(1-5)ValueWeight(1-5)ValueWeight(1-5)ValueWeight(1-5)ValueWeight(1-5)Value

Carry out mission, goals & Objectives 20%51.0010%50.5020%51.005%50.2510%50.50

Sharp focus on concerns vital to large market 20%51.0020%51.002%50.105%50.2520%51.00

High appeal to those whose financial support is essential 5%50.2510%50.5010%50.5020%51.0010%50.50

Stable financial support 10%30.3010%20.2010%50.5020%20.4010%20.20

Volunteer leadership 2%50.102%50.102%50.101%20.022%50.10

Market demand 2%50.1052%40.085%30.152%30.06

Program results are reportable 2%40.082%50.102%50.105%40.2010%50.50

Alternative coverage 2%20.044 45%10.0510%30.30

Dominant market share 10%40.402%50.1052%20.0420%51.00

Better quality/value/service than competitors 10%50.5020%51.0020%52%40.082%50.10

Superior ability to produce and market 10%50.502%50.1020%510%40.402%50.10

Cost effective program delivery 5%50.2520%51.0010%50.5010%40.402%50.10

Strong match between program and future needs 2%50.102%50.102%510%50.505

Total (Weight must total 100%) 100%4.62100%4.70100%2.88100%3.74100%4.46

Academics, 4.62Patient Services, 4.70Auxilairy Enterprise, 2.88Educational Departments, 4.46Grants & Contracts, 3.74

0.001.002.003.004.005.006.00

Business Unit Strength Analysis

AcademicsPatient ServicesAuxilairy EnterpriseEducational DepartmentsGrants & Contracts

MediumHigh

Low

MediumHigh

Market Attractiveness

Low

20122011

Net patient service revenue, net provision for bad debts of$1,041,179988,234

$25,990 in 2012 and $22,589 in 2011

Other revenue57,11445,214

Total operating revenues1,098,2931,033,448

Salaries & benefits546,771488,546

Medical supplies and drugs222,447202,779

Other supplies and general expenses212,655211,714

Depreciation and amoritization69,72470,062

1,051,597973,101

Total operating expenses46,69660,347

Operating income

Gain (loss) on disposal of capital assets851(8,420)

Noncapital gifts3544,507

Investment income24,24337,472

Interest expense(4,051)(5,008)

Total nonoperating revenues, net21,39728,551

Excess of revenues over expenses before transfers68,09388,898

Capital gifts and grants2,323 —————

Net transfers out(15,467)(2,955)

Increase in net assets54,94985,943

Net assets, beginning of year1,107,0391,021,096

Net assets, end of year$1,161,9881,107,039

Nonoperating revenues (expenses)

(In thousands)

Statement of Revenues, Expenses, and Changes in Net Assets

Operating revenues

Operating expenses

University of Iowa Hospitals & Clinics

Years ended June 30, 2012 and 2011

Statement of Cash Flows

University of Iowa Hospitals & Clinics

For Years Ended 2012 and 2011

Cash flows from operating activities20122011

Receipts from and on behalf of patients$1,030,093988,973

Other receipts55,83042,244

Payments to employees(534,360)(478,690)

Payments to suppliers and contractors(431,055)(410,227)

Net cash provided (used) by operating activities120,508142,300

Cash flows from noncapital financing activities

Net transfers(15,467)(2,955)

Noncapital gifts3544,507

Net cash provided (used) by noncapital financing activities(15,113)1,552

Cash flows from capital and related financing activities

Purchase of capital assets(131,184)(76,572)

Proceeds from the sale of capital assets2,7716,081

Capital gifts and grants received2,323 —-

Proceeds from the issuance of long-term debt47,15537,571

Premium received on issuance of long-term debt819531

Principal paid on long-term debt(24,357)(4,538)

Interest paid on long-term debt(4,334)(4,588)

Net cash used in capital and related financing activities(106,807)(41,515)

Cash flows from investing activities

51,780159,186

Proceeds from sale of investments(63,810)(279,588)

Purchase of investments13,83318,519

Interest and dividends received on investments

Net cash provided by (used in) investing activities1,803(101,883)

Net increase in cash and cash equivalents391454

Cash and cash equivalents at beginning of year1,428974

Cash and cash equivalents at end of year$1,8191,428

Reconciliation of operating income to net cash provided by operating activities

Operating income$46,69660,347

Adjustments to reconcile operating income to net cash provided by operating activities

Depreciation and amoritization69,72470,062

Provision for bad debts25,99022,589

Changes in assets and liabilities

Accounts receivable(43,375)(28,303)

Inventories835(1,445)

Other assets(2,075)(2,057)

Accounts payable and accrued expenses25,61211,934

Other liabilities(7,916)5,690

Due to related parties(1,282)(2,970)

Estimated third-party payor settlements6,2996,453

Net cash provided by operating activities$120,508142,300

UIHC held cash and investments at June 30, 2012 and 2011 with a fair value

of $755,246 and $731,341, respectively.

During 2012 and 2011, the net increase in fair value of these investments was

$10,456 and 19,492, respectively.

(In thousands)

Noncash investing activities