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HSA 6185 UOJ Quality Assessment and Management in Healthcare Case Study
Florida National University HSA-6185 Management of Health Care Organizations: Assignment Week 6 Case Study: Chapters 14, 15 & 16. Objective: The students will complete a Case study assignments that give the opportunity to synthesize and apply the thoughts learned in this and previous coursework to examine a real-world scenario. This scenario will illustrate through example the practical importance and implications of various roles and functions of a Health Care Administrator. The investigative trainings will advance students’ understanding and ability to contemplate critically about the public relations process, and their problemsolving skills. As a result of this assignment, students will be better able to comprehend, scrutinize and assess respectable superiority and performance by all institutional employees. ASSIGNMENT GUIDELINES (10%): Students will critically measure the readings from Chapter 14, 15 and 16 in your textbook. This assignment is planned to help your examination, evaluation, and apply the readings and strategies to your Health Care organization. You need to read the chapters assigned for week 6 and develop a 3-4 page paper reproducing your understanding and capability to apply the readings to your Health Care organization. Each paper must be typewritten with 12-point font and double-spaced with standard margins. Follow APA style 7th edition format when referring to the selected articles and include a reference page. EACH PAPER SHOULD INCLUDE THE FOLLOWING: 1. Introduction (25%) Provide a brief synopsis of the meaning (not a description) of each Chapter and articles you read, in your own words that will apply to the case study presented. 2. Your Critique (50%) Case Studies in Finance and Accounting Mercy Hospital: A Case Analysis Abstract This is a case study which describes an account (names, other facts changed to preserve anonymity) in which an internal auditor in a hospital setting, due to personal biases and a lack of objectivity, performed a substandard audit of a capital asset acquisition and violated several standards of the International Standards for the Professional Practice of Internal Auditing as well as the Institute of Internal Auditors (IIA) Code of Ethics. Students use the Standards and Code of Ethics to form conclusions regarding shortcomings of this audit. The International IIA Standards and Code of Ethics are online and easily read, with the Standards being twenty one pages in length and the Code of Ethics being two pages. The case is designed to be taught in one class period. Students are exposed to actual standards and required to employ the standards in their analysis of the case. Mercy Hospital – Background Mercy Hospital is a leading health-care provider and one of the oldest hospitals in the region. The 300-bed, acute-care facility is known for its quality of care and respected for their expertise and innovation in the delivery of health care. As a leader in cardiac, trauma, surgical, orthopedic, neurologic, and vascular and cancer care, Mercy Hospital offers patients the latest treatments by providing its medical staff, comprising more than 600 physicians, with the most advanced technology available. Mercy Hospital is one of eight individual hospitals comprising a hospital network located across seven states ranging from Pennsylvania to Mississippi. The eight hospitals have a network headquarters which provides many of the financial functions including internal audit services. Collectively, the hospitals are members of the Mercy Health Network. Management at each hospital is decentralized except all of the hospitals participate in a consortium to purchase medical supplies for a more competitive price than otherwise would be available. 64-Slice CT Scanner The 64-Slice CT Scanner is a new imaging medical device that helps physicians diagnose and treat a variety of medical conditions by providing a more anatomically detailed image of the patient’s organs. Older CT scanners have been used for years to study internal organs, bones, soft tissue and blood vessels. They are particularly useful in trauma situations to identify injuries to the heart and vessels, liver, kidneys or other internal organs. The scanner is also used to plan for surgery and monitor the treatment of tumors for cancer patients Heart related maladies are all too common. The United States Center for Health and Human Services reported that in the USA for the years 2007-2008, over 5 million people arrived in emergency rooms complaining of chest pain (United States National Center for Health Statistics, 2010, p. 2). The new 64-Slice CT Scanner is judged to be faster and more reliable for diagnosing chest pain. It can evaluate a heart patient by capturing thousands of images of the heart in less than 5 seconds or capture images of the whole body in less than 30 seconds. The cost of these machines is generally expected to range from $1.5 to $2 million. Bidding on the 64-Slice CT Scanner can be a very competitive and costly commitment by vendors. They insist that Board approval be granted for the machine before final bids are submitted. The Audit Process Mercy Hospital’s capital-asset procurement process for any single acquisition over $100,000 is to have a formal proposal submitted to the board of directors (BOD) who vote on its approval. If the proposal is approved, the funds are transferred to the respective hospital for eventual disbursement. The internal auditors are charged with following up within one year of acquisition to check the propriety of the purchase and disbursal of funds. Recently, a proposal for a new CT scanner was submitted by Mercy Hospital’s controller. The other hospitals were told to “wait and see” until the internal auditors could inspect the documentation of the acquisition and the operating effectiveness and efficiency of the new process before being allowed to submit their own proposals. Mercy’s proposal was the one of the larger proposals submitted over the past several years at a total of $1.625 million dollars plus approximately $25,000 for the labor and other necessary expenditures to remove the old equipment to permit the installation of the new scanner. The cost of the new scanner by itself was listed in the proposal at $1.3 million. The internal auditor assigned to the acquisition was Jack Jones. Jack had been with the network for over three years performing mostly operational audits (on existing processes), reviewing internal controls, and payroll and travel expenses. Jack believed that the procedures associated with this capital-asset audit would be simple and routine. This was not Jack’s first visit to Mercy Hospital. In fact, Jack had performed an audit on the hospital’s payroll and travel expenditures only a year ago. Jack’s recollection of the experience was not a pleasant one. He had several “confrontations” with the controller, mostly as a result of clashing personalities. While all the expense issues were easily resolved, Jack felt there was still an adversarial relationship between them and he was “on guard” for any “preemptive strikes” this time around. It was a long drive to Mercy Hospital so when Jack arrived a little late the day of his audit he was greeted by the controller with a perceived air of indifference and promptly led to a secluded and windowless office room. The controller calmly explained that he was extremely busy and would answer any questions at the end of the day. Jack merely nodded his head and sat down in front of several tall piles of invoices that the controller had furnished and represented the documentation supporting the purchase, set up, and testing of this new technology. Jack was somewhat surprised, fully expecting to see only a handful of invoices, but did not ask for any explanations. As Jack began looking through the myriad of statements and canceled checks he soon found one particular invoice near the top of the first pile which indicated that the actual price paid for just the machine itself was only $902,000! Jack’s first reaction was to call the director of auditing. When he found that the director was out for the day and could not be reached, he decided to call the VP of Operations at corporate headquarters. Jack was critical of the controller in describing the seriousness of his suspicions based on this preliminary information. Jack didn’t realize that there was a scheduled BOD’s meeting that day and that the news would be passed on to the Board. The Board members were outraged over the alleged misuse of the funds and possible fraud. Jack was unaware that the controller was soon being lambasted by the chair of the BODs in a private conference call. Seconds after the call, the controller walked up to Jack and had only two words to say—“Get out.” Jack was flabbergasted; he called back to Network’s Home Office only to receive a rather icy response from the Chair of the BOD’s secretary suggesting that he return immediately. As Jack got into his car and drove back to the home office he wondered what he had done so wrong. Postscript Three days later Jack was called in to the director of internal audit’s office. The director told the story of how he personally visited Mercy Hospital the next day after Jack’s visit and performed the capital-asset audit himself. The director found that there were a number of reasonable explanations for the differences in the original proposal and the actual expenditure. To begin with, the companies who sold the machine would not talk about discounting the price until they knew that the funds were available. Once the proposal was approved and the funds were authorized for disbursement, only then did the competing vendors begin slashing their prices because of competition for the sale. This is what drove the cost of the machine down from $1,300,000 to $902,000. Other accessories and services provided by the vendor reduced the initial list price even further by some $57,000. Training and warranty costs were not subject to discounting. However, there were several factors that mitigated some of these savings. It would take close to a month before the new machine became operational because no one really knew how difficult it was going to be to remove the old machine which had been embedded in the concrete floor (to minimize vibration). It was decided that to save time and costs, the new machine would be set up in a new room adjacent to the room for the older scanner. The new space would have to be renovated and new electrical connections installed. Since the hospital could not afford to shut down for any extended length of time, the new space had to be renovated before the older machine could be dismantled. Then, while the new equipment was being tested, the old scanner had to be kept running in its temporary location. During the time that both machines were running, machine operators and supporting personnel were asked to work double shifts in order to test and become familiar with the new scanner before closing down the old machine. This took longer than expected because Mercy’s technicians were not familiar with the new machine and had some difficulty with even minor start-up problems. Therefore, for the first two weeks, special outside consultants were hired to operate the scanner at the proper specifications. These additional and unexpected outlays were costly and brought the total to just under $1.4 million ($1.17 million and $230,000 for the renovations and other expenditures) which was still lower than the original estimate of $1.65 million. Even though the list price came in at a reasonable $902,000 (saving $398,000 and other discounts provided additional savings of $57,000), the renovations amounted to $230,000 and exceeded the original estimated renovation costs of $25,000. The director went on to explain to Jack that the reason for the abnormally large number of invoices was due to the renovation cost, additional labor cost associated with the new machine, and the cost of running both machines during the transition. As it turns out, Mercy’s controller actually did a commendable job in overseeing the project and keeping accurate records of the disbursements. In fact, the controller created a specialized installation guide that will probably save hundreds of thousands of dollars when the remaining hospitals install more of these machines. When the director was finished, he told Jack that unless he changed his attitude and re-considered what it means to be a professional internal auditor, he was likely to remain a payroll auditor for the rest of his career. The director told Jack to go back and read a basic internal audit text on interviewing techniques, the Code of Ethics and the Standards for Professional Practice. Jack still didn’t understand. What was the director trying to say? CASE STUDY CHALLENGE 1. Students should be asked to read the case and discuss all procedures done during this auditory. 2. Comment on Jack’s interviewing techniques. 3. What could Jack have done differently? 4. What did Jack forget to do? 3. Conclusion (15%) Briefly summarize your thoughts & conclusion to your critique of the case study and provide a possible outcome for the Finance department. How did these Chapters influence your opinions about Managing finance and budgets? Evaluation will be based on how clearly you respond to the above, in particular: a) The clarity with which you critique the case study; b) The depth, scope, and organization of your paper; and, c) Your conclusions, including a description of the impact of these Case study on any Health Care Setting Organization and managing. ASSIGNMENT RUBRICS Assignments Guidelines 1 Points 10% Introduction 2.5 Points 25% Your Case Study Critique 6 Points 50% Conclusion 1.5 Points 15% Total 11 points 100% ASSIGNMENT GRADING SYSTEM Dr. G A 90% – 100% B+ 85% – 89% B 80% – 84% C+ 75% – 79% C 70% – 74% D 60% – 69% F 50% – 59% Or less. Chapter 16: Managing Information Chapter Objectives • Appreciate the interconnected nature of computerized devices in hospitals and other organizations. • Be able to define and explain the elements of an electronic health record system. • Appreciate the growing use of information systems in support of public health activities. • Understand that many health care providers and members of the public do not share the same enthusiasm for information systems that managers have. Outline • Electronic Health Records • Managing Public Health Information • Managing Inventory • Managing Human Resources Definitions • Health Information and Data • Result Management • Order Management • Decision Support • Electronic Communication and Connectivity • Patient Support • Administrative Processes • Reporting Health Information and Data • Provide immediate access to information such as individual diagnosis, medications, allergies, and laboratory test results to improve the ability or service to make sound clinical decisions in a timely manner. Result Management • Provide access to new and past test results, thus allowing all participating providers to make more informed decisions about the effectiveness of treatment regimens and patient safety. Order Management • Ensure that providers have the ability to enter and store orders for prescriptions, tests, and other services. This capability is intended to improve legibility, reduce duplication, and allow orders to be completed in a timely manner. Decision Support • Provide reminders, prompts, and alerts to facilitate diagnoses and treatments by improving compliance with best clinical practices, promoting regular screenings and other preventive practices, and identifying possible drug interactions. Electronic Communication and Connectivity • Promote secure, open, and readily accessible channels of communication among providers and patients to improve the continuity of care, increase the timeliness of diagnoses and treatments, and reduce the frequency of adverse events. Patient Support • Provide tools that give individuals access to their health records, provide interactive education on relevant health topics, and protocols to help people conduct homemonitoring and self-testing activities to improve control of chronic conditions such as diabetes and hypertension. Administrative Processes • Include computerized administrative tools, such as scheduling and record-keeping systems; such equipment should greatly improve the efficiency and performance of hospitals and clinics, allowing them to provide more timely services to patients and other clientele. Reporting • Provide sufficient supportive equipment (software, hardware, and memory capacity) that meets uniform data standards and enables health care organizations to respond more quickly to federal, state, and private reporting requirements, including those that support patient safety and disease surveillance. Acceptance of Electronic Health Records • Acceptance of electronic health records has been the most difficult barrier to overcome • Factors explaining slow acceptance include lack of user familiarity with computers, insufficient funding problems for purchasing equipment and software, concerns about return on investment, and concerns about security of system Structural Considerations • Systematic elements of an electronic health records system are similar to those found in a paper system. • Advantages of electronic health records include quick retrieval, far more compact, rarely lost or misplaced, reduction in error rates, and far less expensive to operate. • Major disadvantage is constant security threats and financial burden to implement systems. Impact on Quality • Use of electronic health records has led to higher documentation rates of hypertension, greater use of antihypertensive therapy, and more successful reductions in blood pressure as well as achieving better outcomes in treating a broad spectrum of diseases. • Electronic health records have been used to identify errors that are directly related to patient care. Managing Public Health Information • Information systems serve important functions in surveillance, program evaluation, and population outcomes assessment. • Privacy and security issues are a major concern in the use of public health information. • Privacy requirements for health information must be respected as a critical element of the interdependence and trust needed between health organizations and their clients and constituents. Managing Inventory • Information systems are used to manage a variety of other activities in organizations, including assuring an adequate inventory of supplies • With the use of computers the inventory process is performed much faster and more efficiently Managing Human Resources • Record keeping requirements have increased significantly since passage of the Civil Rights Act in 1964. • Information systems have aided in the responsibility of complying with record keeping and reporting requirements that fall on shoulders of human resource departments. Final Words • The potential for information management to improve the value and quality of services delivered by health organizations has dramatically increased in recent decades. • Successful managers will search for new opportunities to employ information technology to manage quality, human resources, inventory, and other processes and outcomes of their units and organizations. Chapter 15: Managing Finance and Budgets Objectives • Know the elements of a business plan • Be able to interpret a set of organizational financial documents • Understand budgets and explain the uses of budgets • Be able to construct incremental and zerobased budgets Outline • Business Plans • Financial Statements • Budgets and Budgeting • Operating Budget • Capital Budget • Cash Budget • Zero-based Budget • Implementing and Using Budgets • Using Budgets to Evaluate Organizational Performance Business Plans • Outline used to launch, maintain, or expand the activities of an organization • 9 components 1) Executive summary 2) Market analysis 3) Description of the organization 4) Ownership and management 5) Marketing and sales strategy 6) Description of product, program, or service 7) Funding needed 8) Prospective financial data 9) Appendix Financial Statements • Convey the financial position of an organization • 4 parts: – Income Statement – Balance Sheet – Statement of Cash Flows – Statement of Retained Earnings Income Statement • Also known as the profit and loss statement • Details the sales, expenses, and net income generated by an organization Balance Sheet • Also known as the statement of financial position • 3 sections – Assets – Liabilities – Equity • Assets = Liabilities + Equity Cash Flows • Reconciles changes in cash balances of a business • 3 sections – Operating activities – Investing activities – Financing activities • See Figure in text for an example Retained Earnings • Reconciles the equity section of the balance sheet • 4 parts – Beginning equity balance – Net income – Dividends paid – Final equity balance Budgets • Budget is defined as a comprehensive, detailed plan for achieving an organization’s goals and objectives expressed in monetary terms • Budgets include data which are: – Objective – Measurable – Obtainable Preparing a Budget • Budget preparation will likely include many revisions. • Approaches to budgeting: – Incremental: based on previous budget – Zero-based: starts with blank slate • Completing a budget should involve input from various levels of personnel (executives to front-line staff) Types of Budgets • Operating – detailed plans for revenues and expenses • Capital – plan for spending on improvements and additions to property, buildings, or equipment • Cash –detailed estimates of anticipated cash receipts and disbursements Operating Budget • Contains detailed plans concerning the anticipated revenues and expenses for every product, program, or service delivered • Created at the department or unit level but rolled up into a consolidated operating budget • Operating budgets contain four parts: statistics, revenues, expenses, and pro forma Operating Budget: Statistics • Contains information related to the expected extent and scope of activities. • 3 steps/decisions 1) Output expectations – estimates of the activities of a given department 2) Methodology – the approach used to calculate output expectations 3) Responsibility – accountability for meeting expectations placed with appropriately knowledgeable personnel Operating Budget: Expenses • Converts expected work activities into predicted expenditures • 2 main components: 1) statistical information – generally a unit of volume to measure service output 2) cost data – all costs can be defined as either variable or fixed • The time length of an expense budget can be fixed or rolling • Allocating indirect costs can be contentious Operating Budget: Revenues • Estimates the payments or other monetary collections used to offset expenses • Revenue budgets are driven by the statistics and expense budgets • Rates are designed so that the anticipated expenses break even at minimum Pro forma Budget • Designed to project revenue and expenses for a possible scenario • Contains information developed in the statistics, expense, and revenue budgets • Used as a final test to check the validity of the other budgets and the accuracy of their assumptions Capital Budget • A plan for spending on improvements and additions to property, plant, or equipment (generally fixed assets) • Capital budgets are long-term in nature (greater than 1 year) and require an analysis of the time value of money. – The time value of money is an analysis that determines the current value of future money Analyzing a Capital Request Non-financial Criteria: • Safety and Regulatory • Quality and Customer Service • Mandatory Replacement • Discretionary Replacement • Expansion Cash Budget • Used to evaluate an organization’s solvency in the immediate future • Uses information from the operating and capital budgets • Typically compiled for one or more defined periods within a budget cycle Zero-based Budget • Arranges an expense budget using the assumption that no existing program is entitled to renewal • Cost data is obtained and listed as in incremental budget • Importance of each budget item is prioritized and ranked • Rankings are split into two categories, those required by law and those not required by law Incremental Budget • A budget developed by modifying an existing budget, usually the current or previous • Modifications are based on changes in assumptions • Changes tend to be small and applied uniformly to all categories Implementing and Using Budgets • Creating an appropriate budget requires informed decision making and this can be accomplished by: – Budget reviewing and analysis – Enabling employee participation – Anticipation of funding needs over time – Context of quality and customer service Budget Options • Type of Budget – incremental or zerobased • Level of Detail – determine how thorough data collection activities should be • Sources of Information – deciding who should participate in budget creation and what sources of data should be used Budget Options (continued) • Approach to Information Gathering – Bottom-up budgeting – budget process starts with information provided by front-line workers – Top-down budgeting – budget process starts with senior managers influencing and controlling budget inputs • Expense Budgets – Fixed budget vs. flexible expenses • Bottom-Up vs. Top-Down Budgeting Using Budgets to Evaluate Organizational Performance 1) Monitoring the Budget – – – – Setting Performance Standards Using Industry Standards Comparing Organizational Performance with Industry Standards Evaluating and Correcting Organizational Processes 2) Variance Analysis Variance Analysis • Using monthly variance analysis is an effective way to compare planned budgets and actual expenditures • 4 steps: 1) focus on significant variances 2) identify the cause for each variance 3) concentrate on controllable variances 4) take action to correct variance Chapter 14: Managing Performance and Quality Objectives • Understand the importance of improving organizational performance through performance management, program evaluation, and continuous quality improvement (CQI) • Be able to explain the Turning Point model of performance management • Be able to explain a logic model and how it can be used to evaluate and improve programs Objectives (continued) • Be able to define quality from the perspective of health care delivery and from the perspective of public health • Understand CQI methods and techniques such as process maps, the Plan-Do-Check-Act cycle, Lean, and Six Sigma Outline • Performance Management • Evaluating Programs • Continuous Quality Improvement • Defining Quality • Overview of Quality in the United States • Six Sigma • Lean • Plan-Do-Check-Act Performance Management Defined as “a framework for organizational evaluation and improvement.” Used widely in both the public health and private health sectors. Performance Management in Public Health • Turning Point model: – Performance standards – Performance measurement – Quality improvement process – Reporting progress Performance Management in Health Services Delivery • Accreditation (Joint Commission) standards • Baldrige Criteria for Performance Excellence – Awards the Malcolm Baldrige National Quality Award, the highest level of national recognition for performance improvement – Criteria include: leadership; strategic planning; customer focus; measurement, analysis, and knowledge management; workforce focus, process management, and results Performance Management System • Uses performance standards, measures employee performance and output, regularly reports progress, and includes a quality improvement program • Example of measures: balanced scorecard – • employee satisfaction • financial outcomes • internal efficiency and quality • client satisfaction Evaluating Programs • Systematic assessment of the operation and/or outcomes of a program, compared to a set of standards, in order to improve the program • Two types of evaluation 1. Formative 2. Summative Formative Evaluation • Used to determine whether a service or program is evolving as intended • Involves the collection of evidence during the creation and implementation of a program • Allows for revision that can improve a program as it is in the development phase Summative Evaluation • Directed towards a general assessment of the degree to which the outcomes have been attained over the entire course of the program • Used to determine the merit of a program by evaluating it when at full strength • Results in a final judgment about a program Framework for Program Evaluation Program Evaluation Framework (Centers for Disease Control and Prevention): Assess • Program Implementation: what took place? • Program Effectiveness: did it improve health outcomes? • Program Accountability: cost-benefit, cost effectiveness Logic Models • A logic model is a graphical representation of the logical relationships among the resources that go into a program, the activities the program undertakes, and the benefits or changes that occur. • Depicts how program goals, activities, and expected outcomes link together in a chain of reasoning Continuous Quality Improvement • Use of deliberate improvement techniques, responding to health needs, and focusing on activities that improve health Underuse, Overuse, and Misuse Underuse: program or service has not been fully or optimally utilized Overuse: program or service in which demand exceeds supply, or when potential risks outweigh potential benefits Misuse: otherwise appropriate program or service is provided in ways that result in undesirable complications or outcomes Defining Quality A single definition of ‘quality’ does not exist due to varying perspectives of stakeholders 1) Institute of Medicine: “the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge” 2) US DHHS: “the degree to which policies, programs, services, and research for the population increases desired health outcomes and conditions in which the population can be healthy” Defining Quality (continued) 6 Aims of the Health Services Delivery System (STEEEP) •Safe (S) •Timely (T) •Effective (E) •Efficient (E) •Equitable (E) •Patient-centered (P) 9 Aims of the Public Health System •Population-centered •Equitable •Proactive •Health promoting •Risk-reducing •Vigilant •Transparent •Effective •Efficient Process • All quality improvement systems analyze the processes followed in order to improve them • A process is a series of steps designed to produce activities associated with a desired outcome. A process has a beginning and end. Process Map • Process Map – visual diagram that reflects the steps associated with a process or activity – Process maps do not intend to show all steps but only those that have the greatest influence on a process Process Map Process maps can identify 4 types of problems: 1) Disconnect – poor transfers of work from one group to another 2) Bottleneck – a point in the process where volume overwhelms capacity 3) Redundancy – repeated activities at two or more points in the process (may be beneficial if designed) 4) Rework – occurs when work must be repeated. Overview of Quality in the U.S. • CQI experts estimate only 15 percent of quality problems can be attributed to people; the rest are due to flawed processes • Health services often fail to deliver potential benefits • Public health services, while underfunded relative to clinical services (97% of health care expenditures are devoted to treating sick people; 3% on primary prevention), can benefit from quality improvement as well Overview of Quality in the U.S. (continued) • CQI was introduced in U.S. clinical health care in the 1990s • CQI is relatively new in public health • Core processes vs. support processes Six Sigma • An approach designed to reduce the incidence or number of defects or errors associated with a process, with a goal of 3.4 errors per 1 million operations • 5 Steps: – Define – Measure – Analyze – Improve – Control Lean • A method intended to eliminate waste in processes • Also known as Toyota Production System • Gets rid of work that does not add value; minimizes downtime and smooths work flow Plan-Do-Check-Act • A common QI method used to implement quality improvement projects • Plan- Gather and analyze specific data and observations. • Do- Test appropriate solutions to the situation. • Check- Compare results of tests through measurements and analysis. • Act- Make the change permanent. Be prepared to go through PDCA again if needed.