Middleboro Business Plan
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The Health Systems Administration program at Georgetown has its students complete case projects for a fictional community, Middleboro. Throughout the program we created several deliverables: Community Profile, Community Health Assessment, Strategic Plan, Marketing Plan, and Business Plan.
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Middleboro Business Plan
- 1. Medical Associates Middleboro Ambulatory Surgery Center Business Plan FY 2010 Jessica Jacobs. Karen Jose. Erin Lenhardt. Ve r o n i c a L o c k e . D a n i e l Lyn n .
- 2. Middleboro ASC • Duplication of Jasper ASC • Located within our Middleboro facility • Satisfy community demand and organizational needs
- 3. Rationale: Progression of Organizational Goals CPI#4: Financial CPI #2: Payor Mix •Return to nurse- •Clarify organizational Growth dominate staffing structure of the surgical structure (as opposed to •EHR implementation to department: hierarchy •Increase profitability and medical assistants) bill wider payer audience and decision-making market share and compliance with Medicare reimbursement guidelines CPI #1: Staffing Care CPI#3: Organizational Model Management
- 4. Rationale: Successful Jasper ASC
- 5. Rationale: Significant Increases in Demand
- 6. Demand: The Base Case Base Case Calculations % of Total Total Uptake Current Uptake Procedures Procedures Middleboro 23% 3455 781.5 Community Hospital MA Jasper ASC 20% 3046 609.2 •Limit the initial base case from our Jasper Total Procedures 6501 1390.7 ASC to 20% of existing cases •60% of our 37.7% market share, for a total of 23% of MCH’s ambulatory surgery market
- 7. Demand: Projections and Utilization
- 8. Finance: Debt, Staffing, and IT Debt Financing Human Resources & IT • Borrow debt in two stages, once in 2010 and Human Resources: once in 2011. • HR structure will remain primarily the same • 8% Interest Rate • Hire, in conjunction with our Jasper ASC: – 9 RNs by 2013 • This debt will cover: – 6 Surgeons by 2014 • Facility Modernization • Pre, Post, and Operative Suites Information Technology: • Recruitment Costs • Implement EHR approved by MA • IT Investments – including mobile devices and imaging • Purchase flat screens and mobile devices for all staff members
- 9. Finance: Expected Returns Break Even Analysis Time Breakeven 4.37 Years Net Present Value $ 102,900 Horizon Value (2015) $ 2,063,377 Present Value (including Horizon) $ 2,711,571 Internal Rate of Return 25% Modified IRR 23%
- 10. Finance: Profit and Loss
- 11. Risk Management External Internal • Legal Risks • Technology – Stark Laws – Interoperability – Anti-Kickback Laws – EHR in an ASC – Anti-Trust Laws • Personnel & • Ethical Risks Management – Middleboro Community – Staff Competency Hospital • Patient Care – Community Impact – Infection Control – Sentinel Events
- 12. Risk Management Probability of Occurrence •Interoperability of newer technology systems (iPad, •Ethical risk – Relationship •Cultural risk: phase-in of flat screens, etc) with Middleboro nursing model •Personnel issues (hiring Community Hospital competent staff) •Inadequate patient care •ASC-tailored EHR •Legal compliance system •Financial – demand projections not realized Impact of Risk
- 13. Implementation Timeline 2010 2011 2012 2013 2014 2015 Renovation and Investment of Suite A Seek CMS Accreditation Electronic Health Record Implementation Organizational Restructuring Recruitment of RNs Recruitment of Physicians Labor Investments Investment of Suite B Opening of Suite A Opening of Suite B
- 14. Rationale: SWOT Analysis Strengths Weaknesses • Technological advancement • Liquid capital • Community benefit • Staff communication, ambiguous authority, and • Internal stakeholder benefit decision making • Debt financing • Organizational management and need for • Strong market position knowledge, skills, and expansion management SWOT Analysis Opportunities Threats • New and/or expanded service lines • Adversely impacted relationship with (orthopedics, cardiac services, and family Middleboro Community Hospital practice) • Market growth – expanded insurance coverage • Increased risk – debt, higher fixed, and • New payment & reimbursement opportunities variable costs • Meaningful Use Incentive Payments
- 15. Middleboro ASC • Questions & Answers
Notes de l'éditeur
- Following the successful deployment of our ambulatory surgery center (ASC) in Jasper, Medical Associates (MA) will be expanding our ASC in Middleboro. The new ASC will duplicate the Jasper model and will be located in the basement of our Middleboro facility. By expanding, we will satisfy the needs of our physicians who are unhappy over their commute to Jasper for their surgical obligations. To finance this venture, we will harness our superior debt financing rating to borrow approximately $820,000 for the modernization of our Middleboro Facility.
- Strategic plan for this initiative.
- The rationale for opening the Middleboro ASC includes several key considerations. Importantly, the operational success of the Jasper ASC is a strong indicator of the potential success of an ASC in Middleboro. That is, in January 2010, MA began an ambulatory surgery service at our Jasper location. This ASC is our only specialty service line where our surgeons perform orthopedic, thoracic, and general surgeries. The Jasper ASC quickly reached capacity after opening. Indeed, within months of opening, the facility was consistently operating well above the minimum capacity and occasionally nearing the facility’s maximum capacity. Furthermore, an examination of MA’s financials suggests a positive relationship between the Jasper ASC and revenue. When considering MA’s financials, it’s important to remember the organization’s unique physician payment structure which pays out to physicians most of the organization’s annual capital. As such, the following graph demonstrates the Jasper ASC’s positive financial impact as both physician compensation and patient revenue grew by 13% from 2009 to 2010 (since the opening of the Jasper ASC).
- Furthermore, we expect that without opening another ASC in Hillsboro, we will not be able to meet the demand of the community. Indeed, if we do not open another ASC, the Jasper ASC will be above capacity within the next two years. This inability to meet demand will translate into a $ 525,625 loss of patient revenue between 2012 and 2013 for Medical Associates. The overall growth of healthcareorganizations in Middleboro imply that by 2013, the Jasper ASC will have reached its maximum capacity.
- While our current Jasper ASC is an operational success, some of our physicians are unhappy about their commute to the Jasper facility to perform surgery. Currently, MA surgeons offer 60% of their pre and post operative appointments at the Middleboro location. This number is not inline with the number of surgeries performed in Middleboro. Indeed, only 30% of procedures are completed in Middleboro. As such, we expect that our surgeons will want to move 30% of ASC procedures out of the Jasper facility. To remain at capacity at MA’s Jasper ASC, we will cap the number of procedures at 20%. the demand for surgical procedures increases we will continue to shift the maximum number of procedures from our Jasper ASC to our Middleboro ASC. Projected demand for our Jasper ASC indicates that our Jasper Facility will be able to operate within its limits over the next five years.
- MA has three ambulatory surgical lines. These surgical lines include general surgery, orthopedic surgery, and thoracic surgery. We assume that each surgical line will have two types of growth – expected growth and environmental growth. Expected growth is the observed growth that has been seen from appointment data. Environmental growth rates are specific to Hillsboro County and were derived from a previous community assessment. Environmental growth rates are in addition to expected growth rates. Full calculations can be found in the appendix. To project overall demand, we generated an ASC utilization model for Middleboro using data from the Jasper ASC and our current ambulatory surgery market share at MCH. With the opening of an ASC at our Middleboro facility, we expect to gain 60% of the ambulatory surgery market from MCH. These numbers will be explained at length in the sections below and complete numerical models can be found in the appendix. Our overall projections for this ASC include a stepwise opening of our center. In 2011 we will open the first surgical suite and in 2012 we will open our second surgical suite to meet the increase in market demand.
- We will secureapproximately $820,000 in debt financing at an interest rate of 8%. This debt financing will cover the modernization, capital investments, and recruitment fees. In the first installment MA will borrow $471,333 to modernize our facilities and install a complete operating suite. In 2011, we will borrow an additional $363,667 to facilitate the purchase and installation of equipment needed for the second operating suite. These loans include enough financing to adequately recruit new physicians and nurses. In concert with our strategic plan, the opening of the Middleboro ASC will shift our staff model from a system that favors medical assistants to one which favors hiring registered nurses. Given the additional complexity of surgery, MA will initiate this staffing model change in our surgical departments. As such, MA anticipates employing a total of 6 RNs – 3 RNs with the open of the first surgical suite in 2011 and increase the number of nurses to ith the opening of our second surgical suite in 2014. The RNs will have a competitive base salary plus a 30% benefits package resulting in the total salary. Our physicians will work in both ASCs. While the number of physicians remains the same, we expect to hire an additional thoracic surgeon in 2014 with the opening of the second suite in the Middleboro ASC. We will not be hiring an anesthesiologist as a member physician of MA. Rather, we will be expanding our relationship with the local anesthesiology group who has indicated that they will be able to meet our demand for additional anesthesiologists. In the new ASC, MA elected to add additional features to the basic EHR package that the practice is implementing. These features include patient education videos deployed through the televisions in the pre-operative rooms as well as state of the art imaging capabilities in each surgical suite.
- We at Medical Associates have reached an inflection point. As our other strategic initiatives have been shown to be unfeasible due to the current status of potential affiliates we need to invest in another service line to ensure continued profitability. As exhibited in the graph below, this service line can, and will, be the difference between financial growth or financial loss in the coming years. Net Assets
- Stark laws:As we embark upon this venture, MA will need to ensure continued compliance with Stark laws. That is, we will need to continue to ensure that physicians who have a financial interest in MA are prohibited from referring patients to our new ASC facility. MA currently has in place adequate policies and procedures in order to ensure compliance with this regulation.Anti-Kickback Statue:With the opening of the new Middleboro ASC, MA will need to continue to ensure compliance with the anti-kickback statue. In particular, given Medicare and Medicaid will be paying MA for medical services provided to some patients, compliance with this law is essential.Anti-Trust:Legal analysis conducted for MA indicates that the opening of the new ASC facility will not jeopardize compliance with antitrust laws.Middleboro Community Hospital:MA anticipates taking away a significant portion of the ASC market share away from MCH. As such, this is likely to adversely impact the relationship between MCH and MA. To remedy, we will seek to develop new strategies for collaboration and engagement between the two organizations. his may come in the form of some community health-related partnership, health-convention, or potential future business partnership.Community Impact:MA expects the new ASC facility to have a positive overall impact on the Middleboro community. The community will benefit from enhanced access to an ASC facility. Patients will benefit from a wider range of services provided and they will benefit from enhanced convenience including location and reduced waiting times. The community will also benefit from the new competitive pressure we will bring to the market. This in turn may have positive price impacts for consumers. Additionally, the community will benefit from the latest technology provided at our facility – both medical equipment and EHR.TechnologyInteroperability of newer technologyEHR in our ASC is a concern since we need to tailor our technology system for an ambulatory care settingManagerial & Personnel It is important for the MA to hire competent staff (RNs, physicians, CIO, etc.) for our ASC. We want to maintain our reputation of being a quality-care provider, and in doing so, hiring appropriate staff.Patient Care With patient care, we want to minimize the risks for infections and sentinel events. Although sentinel events (ie: patient falls, burns, wrong site surgeries, etc.) are less common in the ASC setting, it is still possible to succumb to an accidental event. While there is not a high prevalence of sentinel events within ASCs, infection control is of importance since an infection can arise from many different places (improper hand hygiene, surgical hair removal cuts, airborne microorganisms, etc).
- In order to effectively assess probability, it is important for MA’s risk management team to look at two facets of each risk: the probability of occurrence and the impact of the risk on our objectives. To visually assess the probability of our risks, we will use a risk map similar to the figure.