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HRM 630: Topics in Health Administration

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Course Project: Shady Acres Healthcare System (SAHS) Overview

 

Overview

Shady Acres Healthcare Systemwas initially established in the early 1970s as a not-for-profit entity. Its humble beginnings included two community clinics, a nursing home, and a mobile immunization unit. Total employees numbered 107. Since then, it has grown to have a respectable portfolio which boastsseven community clinics, four skilled nursing facilities (one of which is the largest in the state at 275 beds), two assisted living facilities (both moderate size), a home health care unit, a 120-bed hospice facility, a pharmacy distribution service, and a large laboratory capable of enormous growth (currently running at only 33% capacity). There are 742 total employees today.

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Reputation in the community is excellent; however, there have been some recent complaints about the downturn in quality in the community clinics.

Newer health systems in the area have actively recruited some of the staff and have offered them more money and better benefits.

All licenses and accreditation are in good standing.

SAHS has not integrated EHR on the level of its competitors.

Recent employee surveys demonstrate a continued high level of satisfaction.

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Current Financial Situation

The community where SAHS operates is not unlike most areas in the contiguous United States. The housing slump and levels of unemployment have increased the numbers of individuals without insurance. Also rising are the numbers of homes being converted to apartments and duplexes. Current housing prices are falling. The process of gentrification (revitalizing communities with new dollars) has slowed significantly in the last five years. In summary, the market has slumped, and trends do not indicate any signs of rapid improvement.

As a result of the downturn, the community clinics have seen a sharp rise in use. The current system of SAHS, which was written in the initial bylaws, allows individuals seen at these clinics to pay on a sliding fee scale. Unfortunately, as a result of this policy, the system has been losing money ($75,000 per month) operating these clinics. Until recently, all four of the skilled nursing facilities have been operating at a profit. The changing case mix has increased the number of individuals on state assistance, and the rates paid recently dropped. The flagship skilled nursing facility, at 275 beds, is still operating at a profit; however, current trends have noted a decrease in net operating income.

The two assisted living facilities continue at a small profit; however, a lack of marketing efforts has made them the best kept secret in the community. Both the home health care and the hospice facility are showing signs of decreased occupancy/census as a result of the lagging economy.

The pharmacy distribution service operates at a respectable 40% net operating income (NOI) and continues profitability trends. The laboratory operates on an as-needed basis only and as such is break-even only.

In all, SAHS remains profitable; however, if current trends continue, the system will be non-profitable in 18 months.

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