Financial Crisis at SMH
Organizations can experience crises due to changes in economic conditions. In an economic downturn where individuals lose their jobs, many also lose their medical insurance coverage. With fewer employees on the payroll, states receive less revenue from taxes and thus have less money to pay for Medicaid and other services. This compounds the problem of healthcare funding. Hospitals lose out on high-margin procedures and, at the same time, see an increase in charity care in less profitable areas of the hospital.
This assignment requires you to analyze the SMH data and develop a strategic plan that can be used in the event of a financial crisis. For your paper, you will consider the following two scenarios:
- Scenario 1: The nursing union has begun bargaining and has demanded a 10 percent increase in salaries, a guarantee of no lay-offs, and an increase in pension benefits. The increase in pension benefits has a $1 million annual impact.
- Scenario 2: Your community is suffering a significant decrease in employment. Employees are losing their health insurance. You anticipate a 10 percent decrease in patient revenue. However, your costs will not decrease to the same extent. You anticipate many of these individuals will continue to visit your emergency room (ER) and consume resources. The net impact is a significant increase in bad debt.
In your strategic plan, include the operating and capital requirements the organization would need in order to navigate the crisis.