Practice Plan Revolt

Abstract

Magnolia University Medical Center (MUMC), established in 1858, maintains a rich tradition of providing prominent graduate medical education training as well as providing superior care to indigent patients. From the late 1960s to the mid-1980s, the medical center's service area has seen a rapid growth in the number of medical schools. As a result, the specialty care patients that MUMC graduate medical education, research, and training programs depended on began to diminish rapidly. The absence of clinical research at MUMC would result in a gradual and continuous deterioration of MUMC's national stature and would jeopardize its ability to successfully compete for specialty care patients with the four other medical schools in their service area. Recognizing this threat, the university leadership recruited Margaret Solomon to transform the financially challenged indigent hospital into a fiscallyviable academic medical center. Her assignment would also include generating a broad cross-section of patients necessary to sustain a wide spectrum of clinical research. Historically, much of the hospital's revenue has come from ambulatory careand is controlled by Magnolia's faculty practice plan. “Private” as well asindigent clinics were included in the system. The University Hospital clinicsprovided care to a largely indigent population and the clinics had been rapidly deteriorating and were considered barely acceptable. In an effort to generate revenue to replace failing facilities and to offset indigent care losses, the hospital, university, and practice plan agreed that all ancillary services in the private clinics would be provided by the hospital, and thus the hospital would receive the associated revenue. As Ms. Solomon's efforts to transform the hospital grew increasingly successful, the private clinics' volume continued to grow. Not surprisingly, the practice plan lamented frequently the challenge of making the private clinics financially viable in the absence of the related ancillary revenue. However, this revenue provided the only source for the development of new technology and sophisticated equipment that was necessary to support clinical research; therefore, Ms. Solomon saw this revenue stream as a vital component needed to achieve the goals laid out for her by the university leadership. Shortly after it had become apparent that Ms. Solomon's efforts to transform MUMC were successful, university president Dr. Frederick Bonapart was diagnosed with a significant disabling disease that would render him unable to continue in his leadership of the university. Following the announcement of Dr. Bonapart's departure, Mr. Smyth, the administrator of the practice plan, informed Ms. Solomon of the practice plan's intent to assume responsibility for the provision of ancillary services in the private clinics. In response, Ms. Solomon brought this declaration to the attention of Dr. Bonapart, who issued a public statement to uphold the previously existing agreement. Ms. Solomon has learned that Mr. Smyth and the practice plan leadership have scheduled a presentation in a closed session to Magnolia University's board. Ms. Solomon knows that the ancillary revenue from the private clinics is absolutely essential if her plan to transform MUMC is to be successful. On the other hand, Ms. Solomon recognizes that challenging the practice plan board's position will put her in direct confrontation with the medical staff, upon whom she depends for patient volume, and might thus jeopardize her ability to fulfill her objectives. Ms. Solomon has received a telephone message from the chair of the board of Magnolia University asking her to discuss the matter of private clinic ancillary revenue prior to Mr. Smyth's presentation to the board. DISCUSSION QUESTIONS Which course of action would you take as Ms. Solomon? As the chair of the board? What data would you want to help you reach a decision on what action to take? How significant is the pending change in the university president? If you were Ms. Solomon, would you ask to be invited to Mr. Smyth's closed meeting with the board? If you were Ms. Solomon, which of your positions are negotiable and where are the deal breakers?