DCH case study. Health, Medicine & Nurcing Research Paper

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DCH CASE ANALYSIS
Executive summary
Industry Overview
The healthcare industry in the United States comprises of several medical entities. Some of the federal healthcare-related agencies within the system include National Institute of Health, and the Centers for Disease Control, the Food and Drug Administration, the Department of Education, Department of Health, Welfare. The developments in the 21st Century brought on board some complex healthcare legislation enacted to accommodate and give healthcare access to larger population groups. The healthcare spending in the United States had exceeded $ 3.5 trillion on an annual basis. This rates to approximately 18% of the nation's gross domestic product. The data provided in 2014 shows that health-related spending in Alabama exceeded $35 billion, which is approximately18% of gross state product. In the year 2014, the total medicare expenses for the State of Alabama enrollees totaled to close to $10 billion per enrollee. The state of Alabama ranks lowest in terms of Medicaid hospital reimbursement levels and has not expanded Medicaid under the Affordable Care Act. Such a move has left thousands of qualified Alabamians without healthcare coverage, as well as denying the industry close to $ 4.9 billion in federal funds (Houston 4).
The healthcare industry in Alabama is considered extremely uncompetitive with a Herfindahl-Hirschman Index (HHI), giving a score of 8,375. In this case, the HHI is utilized in measuring the distribution of market share across insurers within a market with values ranging from 0 to 10,000. For instance, HHI closer to zero is an indication of a market that is perfectly competitive, while, on the other hand, a score closer to 10,000 is an indication of a monopolistic market. Generally, an HHI index that is below 1,000 is an indication of a highly competitive market, which means that Alabama’s score of 8,375 is considered far above the uncompetitive level. The hospitals in Alabama face a lot of financial pressure especially in the areas of human resources as well as medical supplies. There are also high levels of medical malpractices in Alabama with lawsuits rating at 29.5 malpractices suits per hundred thousand residents.There are a number of health concerns facing the healthcare industry in Alabama, according to reports by Alabama Department of Public Health (ADPH). These issues include access to healthcare, mental health and substance abuse, poor pregnancy outcomes, nutrition, and physical activities, cardiovascular diseases, and sexually transmitted infections (Houston 6).
Company Overview
DCH Regional Medical Center serves as the only major full-service short-term acute-care hospital as well as the only Level III trauma center within the seven-county area that includes; Tuscaloosa, Bibb, Fayette, Hale, Greene, Lamar, as well as Pickens Counties. DCH provides variety of comprehensive services that include inpatient as well as outpatient services. These services encompass pediatrics, orthopedics, oncology, intensive care, as well as acute cardiac care. Additionally, the hospital also provides such services as endoscopy, neonatal services, physical and occupational therapy, and general diagnostic services (Houston 8).
PESTEL
Political situation
The prevailing political environment within the United States influences the legislative dimension enacted within the healthcare sector. Specifically, affecting the beneficiaries in the State of Alabama where the health facility is located. The current location of the facility is identified with political stability. Such dimensions as revealed in the case study influences the growth of business since the prevalent peaceful environment encourages the thriving of different business ventures. However, the current legislative regulations allow a significant group of population the accessibility to healthcare. The different legislative enactments, as experienced in both political, as well as social set-ups within the country, do not affect the status of security as well as intended operations of the hospital within the healthcare industry. Economic Situation
The state of Alabama is associated with increased rates of economic activities as well as foreign direct investments. For instance the existing trade relationships within the United States and its partner countries guarantee expansion owing to non-saturation within the market environment. Recent statistics from market research recorded low revenue collection between the years 2009 and 2011 owing to high cost of medicare. Consequently, high demand exerts negative pressure on services as provided by the hospitals, this has greatly influenced the level of profitability within the industry in the United States. There are other adjustments, such as high medical insurance costs, as well as hospital fee charges that interfere with the smooth operations within the sector due to existing additional expenses. Considerably, the occurrence of global recession presented spilling negative impacts on the social environment factors.
Social Situation
In the current United States healthcare sector, there is rise of a number of small hospitals within the other neighboring six counties, including other larger national hospitals. The high number of small and larger hospital facilities provides opportunities for services based on quality one desires. The State of Alabama is characterized by a high population of residents and a growing percentage of youthful working-class that are techno-savvy. Technological Consideration
The State of Alabama currently has a highly upgraded infrastructural network that includes improved road-network and hospital facilities within major counties. Such levels ensure that patients are served with the recommended facilities, therefore, increasing the level of efficiency. In most cases, the population prefers the use of online services to make inquiries as compared to face-to-face procedures.
Legal Considerations
The legislative rules and regulations safeguarding the medical service provisions are provided by the federal government. At the same time the Social Security Act enables operation a system that reimbursement of the operating costs for the cate of acute inpatients. Such legislative acts ensure the maintenance of order within the healthcare industry.
Porter’s Five Forces
Bargaining power of buyers: High
The healthcare industry is considered mature in the United States, therefore, having an experienced workforce that has high bargaining power owing to a large number of qualified population. According to market research report, the United States healthcare service industry is expected to experience a growth rate of approximately 7 to 8% by the year 2020.
Bargaining power of suppliers: Low
The supplier power is relatively low in this industry since quality medical attention can be readily obtained both locally and internationally. The bargaining power of suppliers is low owing to the fact that healthcare services can be obtained from other numerous suppliers within the market, in the event that other suppliers increase their prices. The aspect of monopoly is non-existent, therefore, not mandatory to depend on few suppliers, and this guarantees the company powers to switch to convenient suppliers easily.
Rivalry: Moderate to High
The competitive environment within the healthcare market is robust, comprising of small hospitals and larger national hospitals. The DCH faces stiff competition from rural hospitals including the Birmingham area hospitals. There is stiff competition especially in surgeries as well as other lucrative facilities within hospitals. There is also competition in the area of free-standing medical services such as dialysis, surgical, rehabilitation, orthopedic, amongst other services. Some of the medical facilities that provide stiff competition to DCH hospitals include, Tuscaloosa Surgical Center, North River Surgical Center, The Radiology Clinic, North River Therapy, Fyzical Therapy, and Balance Center, Champion Sports Medicine offers, ATI Physical Therapy, and Black Warrior Medical Center.
The threat from already established hospitals with lucrative services calls for the development of the business through the development of strategic principles that aim at giving affordable price packages. The established hospital facilities benefit from large economies of scale as well as well-positioned brand image. This ensures that the market situation becomes challenging for upcoming start-ups. However, the nature of similarities within the healthcare industry increases rivalry due to the fact the costs of switching services are low especially for the outpatient.
Threat from substitutes: High
There is high threat from substitutes within the healthcare industry, and this is since DCH is surrounded by other hospitals that offer similar services. Other options of treatment services are readily available, therefore, easily accessed by the population.
Entry Barriers: High
In the United States healthcare industry, there is a characteristic high barrier to new entrants due to high operation costs. There is also the existence of distinctive quality services cable of enhancing the consumer’s utility services. The existing strong brand ensures that the situation remains difficult for new entrants due to high competition.
Strategy
From the case study, the healthcare systems in the areas are constrained by a number of factors comprising but not limited to scant access to healthcare providers, inequitable financing, insufficient capacity and training programs, inadequate access and inequitable use of medicines and technologies, preventive and curative healthcare imbalance, fragmentation and lack of monitoring of information, weak or deficient supervisory and management systems, and increased incidences of disease and their impact on people’s livelihoods and economic productivity.
Moreover, the assumption that everyone has access to equal amounts of information on the illness or disease acts a major negative attribute, particularly given that the population may access communication tools. Hence, the focus of healthcare is an individual health solution approach rather involving the larger community in deriving solutions to the faced health problems. Therefore, information distribution may vary significantly with those basic education levels easy to understand and change health behavior. It also assumes that cues to action are widely prevalent in encouraging people to act and that "health" actions are the main goal in the decision-making process. Hence, presumably, promoting awareness on chronic diseases such as cardiovascular disease in the country will result in reduced health-related problems, which contradicts recent prevention approach taken. Despite increased advocacy through public campaigns and awareness of chronic non-communicable diseases across the country, the prevalence of the disease remains high, particularly in western Kenya.
The case study explains why a person adopts or holds reservations towards prevention exposed diseases. The various services are useful, depending on the health outcome of interest, but for the most effective use of the services, the DCH should be integrated with other service providers that account for the environmental context and suggest strategies for change, such as on technology acceptance in different areas. As suggested, people diagnosed, experienced, or aware of chronic diseases tended to seek ways of preventing, treating, or managing the condition even though they had reservation or resisted behavioral changes. For instance, people in rural areas might seek counseling, consultation, and treatment from medical profession and institutions with advanced tools rather than observing outdated traditional treatment and beliefs. Using modern technological innovations, there is easy prediction and access to medical attention amongst the Alabamas. However, the need for implementing targeted prevention as well as management strategies in order to enhance the effectiveness of medical intervention is crucial in this case.
The effectiveness of the system requires the overall development of an integrated system of health that includes the whole expanse of the value chain in healthcare. This provides a platform for development of new products in healthcare and delivers electronic health services to the public, among other needs. The program is set to revolutionize healthcare service provision in the country and achieve significant partnerships between private and public health providers. The strategic plan is expected to accumulate the coverage of the public sector and the resourcefulness of the private healthcare providers to improve the quality of healthcare delivery in the country. The need for health services is necessitated by the lack of sufficient staff including community health workers and doctors. The mhealth program could be a boon for the country as it enables access to health information by users through the use of the mobile phone. The system hopes to increase affordability of health services through such innovations as the use of text messages to remind clients about their appointments and when to take their drugs, among other benefits.
Appendix A
Pestel analysis
Political

Economic

Social

Technological

Legal

Environmental

DCH influencing State regulations

Shortcomings within the state budget

Population growth

Infiltration of the new innovations, training on the use

Agreements on sharing of health data

Improvement of facilities

Regulation from federal government

Reduced funding from federal grants

Significant percentage of uninsured population

Public health data collection system

Affordable healthcare Act

Implementation on the use of health impact assessments

Rules and regulations safeguarding consumers

Financial solvency

Business partnerships within healthcare

Real-time data accessibility



Appendix B
Driving forces
In spite of the various opportunities provided by DCH facilities, there still exist many barriers to full adoption of its services in Alabama. For instance, the coat of healthcare to certain individuals is still high; such costs could sometimes be prohibitive to some individuals as well as families especially in some counties.The quality of the low-cost healthcare cannot be guaranteed; thus replacement could be frequent, tending to additional costs for population on already low budgets. The quality of service provision is averagely reliable. However, at times, the facilities can be erratic or sometimes absent in certain departments.
From the case study, the use of mHealth leverages distribution of health information from the providers to a large consumer population in a short time. However, for successful adoption, the information itself needs to be relevant, understandable by the population, in the language of their choice, specific to the needs of the population, and to be delivered to them on time.
Suitable language literacy is thus necessary for the population in order to benefit from mHealth. As taken for our case study, this is considered as a combination of the preferred language, as well as the level of its understanding in terms of proficiency in reading, writing, speaking, and listening by the Alabama population.
Similarly health literacy, which is the cognitive and social skills that determine the motivation and the ability of individuals to gain access to, understand, and use information in ways that promote and maintain good health, plays a crucial role in the management of chronic diseases and self-management.
Whereas sensitization and the need to gain education and awareness on chronic diseases could be a motivating factor nonetheless, ignorance towards the same is a barrier to mHealth. The cost of receiving mHealth services should mostly be borne by the provider rather than over-stretching the already constrained finances of the consumer population.
These social factors can both motivate as well as hinder the provision of healthcare services. In this case, age, literacy levels, and socioeconomic status of an individual can also be influencing factors to adoption of services from DCH. Like in the case of any other technology, the population should have trust in the use of technology. Trust can be a combination of factors perceived by the population such as the benefits (usability), ease of use, and self-confidence in using the technology. The population that perceives to be vulnerable to a certain disease condition or its effects would be motivated to receiving health services, otherwise the lack of which can be a barrier to its adoption.
Multi-stakeholder effort is mandatory for the success of mHealth. Government policy to its use and adoption, and provision of the relevant infrastructure and environment is crucial. The other element to be looked into is the inter-operability of information system devices on provider-provider, provider-consumer, and consumer-provider communication channels.
Appendix C
Five forces analysis
Bargaining power of buyers

Bargaining power of suppliers

Rivalry

Threat from substitutes

Entry barriers

High

Low

High

High

High

Appendix D
Key success factors
The state of being healthy, as per the case study, is central to human completeness since it brings about economic progress in a healthy United States population that is disease-free and lives a long productive life.
In the case study, health resented as a multi-dimensional and comprises of various aspects such as Physical health, Mental health, Social health, as well as Emotional health. For an individual to be called healthy, all these aspects should be in a harmonious balance.
Public Health represents the science and art of prevention of diseases and promotion of health through efforts of education and awareness on various diseases. Public health is about elevating the health of the entire communities and population at large, with the efforts on prevention of disease. The provision of healthcare education on chronic diseases would fall under this umbrella.
The World Health Organisation (WHO) acts as the key global organization with the primary role of ensuring that all health organizations adhere to international health within the United Nations’ system. Some of the global health challenges in recent times as defined by WHO are: increasing costs of health services; increasing treatment costs, inequitable health resources where 10% of the population is believed to use 90% of global resources, global disparity in terms of doctor-to-population ratio, aging population, and consumerism where use of health services is a benefit for the rich.
There are several determinants that could contribute towards an individual to be considered healthy or of ill-health - biology and genetics, physical environment, social and economic environment, individual characteristics and behavior, health services, social support networks, education, employment and working conditions, and culture and traditions, gender.
In the case of our study, it will be important for us to understand how these different determinants of health shape the perception of our study participants on the adoption of mobile phones for health literacy.
Appendix E
Weighted Company Analysis
Break Even Cost for DCH $
* (Fixed costs /(Price-variable cost) = Break Even) $
Fixed cost = $7 million, Break even= $120 million
7/(x-y)= 120
In this case (x-y) = P
7/p = $120, Therefore, P = 7/120 = 0.06
0.06 = x – 8.2, x= 0.06+8.2, x =8.26
Break Even cost = $ 8.26 per unit
Charges involved to earn a normal level profit
Variable cost in this case (8.2 – 2) = $ 6.2
X = (0.06 + 6.2)
X = $ 6.26 @ unit
The case study focuses on the management of hospital services as well as control of costs by use of the appropriate accounting tools. In the analysis section, there is clear indication of cost overruns within the different ventures at DCH, especially where there is high responsibility leading to given results. There is a clear indication of the presence of information gap at DCH whereby the top management bears little responsibility for information that concerns different activities as well as costs that moves the different projects. The indicated cost overruns resulted from the presence of poor cost information systems leading to communication breakdown.
Appendix F
Financials
DCH Combined Financial Data for year ending 2018
Total Charges for Patient Services $1,997,182,757 100.00%
Charges Written Off to Medicare, Medicaid, BCBS (1,346,565,769) 67.42%
Charity Care (119,114,859) 5.96%
Bad Debts (30,818,165) 1.54%
Total Collected Charges for Patient Services $500,683,964 25.07%
Non-patient Revenue 16,480,638
Total Revenue $517,164,602 25.89%
Selected Financial Data of DCH Health System
Income Statement
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