Case Study Of a Hospital Costs

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Seymour Politz, Chairman of the Finance Committee at Glen River Hospital, has been charged with planning for a much needed hospital expansion. There are several options on the table, and Politz presented his thoughts to Dr. Bernauer, Hospital Administrator. The first option is to simply add at least 30 additional beds by raising money through a fundraising campaign. The second option is to reorganize, using the existing clinical beds for major illnesses only and expanding by adding only simpler, less expensive, rooms. This option would struggle to get doctor’s buy-in because they could feel their work and their less critical patients wouldn’t be valued as in the past. Also, this less expensive option could be paid for by loans from banks. Politz provided these options, suggesting the latter was the best way to proceed (Drucker, 2009). Dr. Bernauer stated that, “It won’t work even though it makes sense” (Drucker, 2009, p. 76). He suggested that without physician buy-in the plan wouldn’t work. He also shared the Board would not support an idea that secures funding through banks, because they believed that donors would not give once this happened. Dr. Bernauer suggested that selling Glen River to a for-profit hospital management company or making it a profit making hospital owned by the doctors would fix the problem (Drucker, 2009). Dr. Bernauer’s comments contained some truth, but they were slightly short sighted. Robbins and Judge (2011) emphasize the importance of group understanding and buy-in for organizational decisions. In this way, Dr. Bernauer is accurate. However, he has not looked at the various ways that this consensus could be sought. To assume that doctors could only understand the rationale behind business decisions if they could potentially benefit is an incorrect assumption. Dr. Bernauer himself even says that the “profits they’d make as

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