St. Vincent’s Hospital is a 200-bed hospital in a northeastern city. The institution was established in 1908 by the Sisters of Charity, a Roman Catholic religious order. The hospital has been known for providing humane patient care in a Christian environment. In 1999, the hospital joined a nonprofit, Catholic, multiunit system based in the Northeast called Health care Services, Inc. The reasons for the merger were to achieve economies of scale and lower purchasing costs and to obtain greater managerial expertise in certain areas. Recently, however, St. Vincent’s has been receiving pressure from the home office to reduce patient lengths of stay and total costs per case, both of which are above the average for the city. Sister Elizabeth, the administrator of the hospital, has spoken with Dr. Thurston, president of the medical staff, about the problem. His response was that he would discuss the issue, but was “reluctant to push too hard” because it might be viewed as “infringing on the physician’s right to practice good medicine.” After meeting with the medical staff, Dr. Thurston reported strong resistance to “any type of controls on the practice of medicine.” The staff also asked him to express disappointment that Sister Elizabeth would even raise HA255: Human Resources for Health Care Organizations the issue. In their view, each case is unique, and only the attending physician can determine what length of stay or total expenditure is reasonable. The staff also stated that bureaucratic standards on averages for large numbers of dissimilar cases are irrelevant and that Christian institutions, above all others, should support the principle that patient care comes first. Several months went by, and the performance level of the facility did not improve. As occupancy rates declined, the hospital began to develop deficits. Pressure on Sister Elizabeth increased, and she knew she had to do something. Although she sympathizes with the medical staff in terms of their concern for patient care, she is also disturbed by their unwillingness to curb their use of resources and their support of one another.

1. What is the major problem? How did it develop?

2. What alternatives does Sister Elizabeth have? What are the advantages and disadvantages of each?

3. What solution would you propose? Why? Provide a step- by-step plan for implementation of your proposal.

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