Your system can’t supply us with any information that we couldn't easily put together ourselves. Look at that wall. Those stacks of printouts represent six different approaches to care monitoring and illness classification that I’m in the process of evaluating.
Harriet Bingley, M.D., Manager of Clinical and Financial Systems at Union Medical Center (UMC), was discussing the theoretical underpinnings of the Diagnosis Related Group (DRG) system with one of her assistants and a representative of a western data analysis firm. The representative was presenting a classification system and explaining its usefulness in comparison to other monitoring systems. Dr. Bingley was not especially impressed, however. She was much more concerned with how she would get physicians to buy into the new system—whichever one she chose.
UMC was a 400-bed acute care teaching hospital located in an old downtown neighborhood undergoing considerable reconstruction. The physician staff was predominantly salaried under a contract with the hospital. Several years ago, the Chief Financial Officer, Richard Veller, had joined UMC, bringing with him a strong interest in case mix, DRGs, and the belief that management of a hospital must revolve around its products, which are its cases. He intended to take an industrial model of management and apply it to the hospital.
Part of Mr. Veller's plan was to make those who manage the products responsible for resources used to produce them. This new structure thus required that a management team composed of a physician, nurse and lay administrator be responsible for specific hospital products or case types. Another part of the plan was to merge clinical with financial data. This required changing the accounting system to track product costs in addition to departmental costs, the traditional focus of hospital cost accounting. To date, substantial progress had been made on the accounting system aspect of the plan.
Dr. Bingley had begun working with Mr. Veller to implement these plans. Besides her MD, she had an MBA, which she felt gave her a better appreciation of the administrative aspects of clinical information. Her job entailed: (1) defining a care monitoring system; (2) refining the definitions of the hospital's products (case types); (3) development of patient care standards by which future performance could be measured and goals set; (4) design of incentives for the departments and/or physicians to reach these goals; and (5) development of fixed prices for certain case types to bid for HMO business. Dr. Bingley reported to the vice-president of finance and to the assistant director and administrator of the department of surgery. . . .
- What are the physicians' concerns with respect to management uses of case mix information? How might management address those concerns?
- What do the exhibits suggest about the kinds of responsibility centers the UMC has established. Are they appropriate according to the criteria for the design of responsibility centers? Why or why not?
- What is your assessment of the reports? To answer this question you will need to focus on the ways the reports relate to each other, and on the ways the chief of surgery (or any other chief) might use one or more of the reports. Specifically, if you were the chief of surgery, how would you decide which reports to review first each reporting period?
- What changes, if any, would you make to the management control system?